Under the present system of rating a hereditament upon its net annual value, that is on the net rent at which it might be reasonably expected to let from year to year, every portion of the whole present annual value of the hereditament is, in ordinary circumstances, included in the assessment. The rates are charged upon the occupier, except in the case of "compounded" property, or where special contracts are made.

But a change in the present system of raising funds for Local expenditure has been advocated upon the following grounds: (1.) That owing to (a) the growth of population and industry, and {b) the expenditure of money by Local Public Authorities, the values of sites are being continually increased in the hands of the various parties concerned, and that, on the termination of leases, owners come into property which has increased in value through no effort or expenditure of their own. Shortly, the suggestion is to secure some contribution in respect of "unearned increment," and, to attain this end, it is urged that a rate should be imposed directly on the "owner of site value,"1 in addition to, or in lieu of part of, the rates now levied on the occupier in respect of the hereditament as a whole. (2.) That, even if lessees when making their contracts take into consideration the amount of existing and, perhaps, to some extent, the amount of future rates, it is impossible for them to calculate, with any reasonable certainty, the burden of future rates, due, either to the increase of old charges, or to the imposition of new charges, and consequently, that the owner escapes a share of the burden, which should fall on him during the lease. (3.) That, though it may not be possible to determine accurately the incidence of rates, yet, by levying a rate direct upon the owners of sites, the certainty of their being rated to some extent will be secured. (4.) That, by the present method of valuing hereditaments on the basis of their letting value in their present state, the whole true value of the site is not always included, because, in some cases, it might be put to a more profitable purpose than it now is. The suggestion is that the value of the site should, subject, perhaps, to certain limitations, be determined without regard to its present use. (5.) That, if a special rate was levied on site values, an additional fund would be secured, partly for expenditure on new purposes, and partly for the relief of occupiers from existing charges, and that the present concentration of the entire burden on the occupiers hampers the carrying out of desirable improvements, and the proper discharge of the duties of Local Authorities. (6.) That, if part 01 the burden of local taxation is placed upon site values, the buildings upon them will be to some extent relieved, and that, with the cheapening of buildings, more will be required and more supplied. This would, it is argued, more especially be the case upon the outskirts of towns, for the builder would be enabled to build in places where it would not hitherto have been profitable.1

6 & 7 Will. IV. c. 96, S. I. Cross, 21,676, 21,764,

21,793. F. W. Hunt, 22,607-17. De Bock Porter, 22,783-5. Sargant, 23,220-1.

See Chapter IV.

1 See note, page 1.

See Chapter V.

Costelloe, 20,000.

Lord Farrer, Parliamentary Paper C. 9528 of 1899, p. 81.

See Chapter XII.

Costelloe, 20,128.

Parliamentary Papers Cd. 638 of 1901, p. 167; Cd. 201 of 1900, p. 118;

1 In the first place, there is a strong argument for rating site values on the ground of public policy, regard being had to the effects of taxation on industry and development. Our present rates indisputably hamper building. Buildings are a necessary of life and a necessary of business of every kind. Now, the tendency of our present rates must be generally to discourage building - to make houses fewer, worse and dearer. As Mr. Fletcher Moulton says: "A tax upon buildings proportionate to their value necessitates that the rent of buildings should represent a high rate per cent. on their cost. In other words, it drives people to take (and, therefore, drives builders to build) poorer houses. Taxation on the land has no such effect."

(7.) That it would be practicable, and not unreasonably expensive, to make a separate valuation of sites for rating purposes.

(8.) It is also urged that a separate valuation of sites would enable a more precise and equitable calculation to be made of the deductions, which should be allowed for repairs and insurance, because such expenses apply, of course, to buildings only, and not to sites. Special attention has been drawn to the case of London, where the relative values of sites and buildings greatly vary, owing to the high value of sites in the City of London and other districts. It has been pointed out that the maximum scale of deductions provided by the Valuation (Metropolis) Act of 1869 is invariably allowed by the Assessment Committees,1 no matter how large a proportion the value of a site may be, as compared with the total value of the property; and that, in consequence, a certain inequality may be created as between property and property, and also as between districts contributing to a common charge on the basis of rateable value. For instance, if a hereditament consisting of a small house on a valuable site has the same "gross value" as one consisting of a large house on a less valuable site, the same deduction is allowed from the "gross value" of each hereditament, though if the houses are similar in all respects other than size, the average cost of repairs, insurance, etc, in the latter case must be greater than in the former.

Consideration of a concrete case will easily show the truth of this proposition. The effect of substituting a site-value rate for an ordinary rate in a town will be, roughly speaking, to decrease the burden in the outskirts and increase it at the centre. Now, an increased burden will certainly not stop building at the centre of a town - it will merely diminish the peculiar advantages of the central position, in other words, it will prevent the site-owner from obtaining so much rent. But a diminution in the burden in the outskirts may very well tempt builders to build, and occupiers to live, in places where before it was not worth their while to go, and, of course, any increase of building on the outskirts tends to reduce the pressure for accommodation all through the town; while the quality of the accommodation also is likely to be improved by the lightening of the burden on building value.