Concluding then that a valuation of sites can be made, we next have to consider in what manner it should be utilised for the purpose of taxation.

A proposal has sometimes been made for the division of rates in proportion to the respective values of site and structure, i.e., a scheme by which the total rates levied in respect of each hereditament would remain the same as at present, but the part proportionate to site value would be charged on the "owners of site value," and the rest on the occupiers. But this scheme is open to all, and more than all, the objections which can be brought against the old scheme for the division of rates half-and-half between owner and occupier; and, on the other hand, it has none of the advantages which may be claimed for true site value taxation as we have defined it.

We therefore have recourse to the idea of a special site value rate, to be levied alongside of the existing rates.

Questions then arise as to the area over which, and the Authority by which, such a rate should be raised.

Division of rates in proportion to value of site and structure not desirable.

A special site value rate should be levied in urban districts.

1 Mr. Stuart signed subject to certain reservations,

The question of area is a difficult one. We have no doubt that the scheme should be confined to urban districts in a non-technical sense of the words, and to land which has received the large increase of value which is associated with a dense population and the execution of the great services of urban local government. But we frankly admit that to define the suitable areas by a precise formula is not easy, for it is well known that some "urban districts" in the technical sense are really more rural in character than some areas still known as "rural." It might be confined to boroughs and urban districts with a population in excess of 10,000, though it might be well to include any urban districts with a population between 5,000 and 10,000 in which the density of population was in excess of, say, 10 per acre. For London we think the area should be the administrative county.

The Town or Urban District Council, and in London the County Council, should be the authorities responsible for raising the rate and entitled to receive the proceeds. The actual collection should be carried out through the same machinery as the collection of the ordinary rates.

It may be urged that, since site value is included in the value on which rates are at present raised, the imposition of a special site value rate would be making the owners of site value pay twice over. We cannot admit that this statement is correct. The owner of site value would not be taxed twice over for the same purpose, for, of course, if the charge for an improvement were defrayed from the site value rate, the ordinary rates would be relieved from that charge. The result of the proposal indicated in the immediately preceding paragraphs would be that all urban rateable property would be taxed alike, as at present, for such purposes as poor relief, police, etc.; and that expenditure on improvements beneficial to site value would be defrayed by a special charge proportioned to the site value alone. Of course it would follow that the total rates on site value would be higher than the total rates on the structural value, and it is open to anyone to describe this arrangement as "double taxation." But, in any case, it is only double taxation in the sense in which the occupier of licensed premises can be said to be taxed twice over, because he pays both Income Tax on the value of his house and a license duty which is proportioned to the same value.1

The mode of charging the rate is a rather complicated matter, with regard to which it is not easy to choose between several alternative plans. We have more than once indicated our opinion that the real incidence of a rate depends mainly on the nature of the property in respect of which it is levied, and is but little affected in the long run by being primarily charged on this or that particular person. Thus, we believe that the real ultimate incidence of a site value rate would be upon the owners of site value in any case, even if it were simply charged on occupiers as the present rates are. The ultimate incidence cannot be affected by the mere legal mode of charge, so long as contracts are respected, because, when a new bargain is made, each party will take full account of the way the burden is distributed. Accordingly, we regard the question of the party on whom a rate is to be charged as a question of sentiment and temporary convenience; but within these limits it is of very considerable importance. The present system of concentrating the whole legal charge upon occupiers and leaving them to shift it so far as they may be able, or to contract themselves out of it, if they see fit, has very great advantages. But it has also serious disadvantages, to which we have drawn attention.

The rate should be charged in part on owners when existing contracts expire.

1 There are two other misconceptions which it may be well to remove : (1.) Students of Local Taxation and of Income Tax statistics are familiar with the division of rateable property into the two classes of "Lands" and "Houses." In this classification "Land" means uncovered land, i.e., mainly agricultural land, " Houses" means the entire hereditaments, site and building together. This classification has, therefore, nothing to do with the distinction between site value and structural value, which we are discussing in the text, and a Site Value Rate such as we propose would not increase the burden on "Lands" as distinguished from " Houses," except in so far as the new rate was applied to uncovered land.

(2.) For several reasons it would be a misconception to describe the site value rate which we propose as "a new Land Tax." For one thing, the Land Tax is an ancient fixed charge on immovable property, and the distinction of site and structure was never thought of in connexion with it. Thus, an ordinary rate is far more like the Land Tax than the new special rate which we suggest. If anyone can be said to impose a new Land Tax, it is the Local Authority which adds a penny to the Poor Rate, not the advocates of a special rate on site value.