Mr. McKenna, M.P., proposed a scheme for rating in respect of site values in a memorandum he sent to the Royal Commission on Local Taxation. This scheme is part of a larger scheme put forward by him for a revision of the present system of local taxation, including the imposition of a dwelling house rate to be paid by the occupier. This is roughly indicated in the following motion, of which Mr. McKenna gave notice in the House of Commons but which he subsequently withdrew.

"Local Taxation, - To call attention to the incidence of local taxation, and to move, that it is expedient to make provision for meeting the charge of local expenditure (1) by a land tax on a graduated scale, rising and falling only according to the rise and fall in the value of the land, and not according to expenditure; and (2) by a rate upon every inhabitant occupier of a dwelling in proportion to the annual value of such dwelling, in lieu of the existing rate levied in respect of rateable property; and that it is expedient to provide forthwith for the valuation of all land apart from any buildings thereon."

So far as site values are concerned, Mr. McKenna's scheme is that all sites should at once be valued separately from buildings upon them for the purpose of levying a special rate upon all future improved land values, and that the valuation should be repeated quinquennially.

Vol. IV. of Min. of Ev., App. No. XIX.

He suggests that every increase of value over and above what he calls the standard value, i.e., the value shown on the first valuation, should be the subject of a special rate, graduated so as to absorb a larger proportion of a greater increase, and a less proportion of a less increase of value. The amount of the rate, and the scale of its graduation, should be determined by Parliament. Mr. McKenna specially exempts all land of less annual value than 51. an acre. This would practically cover all agricultural land except fruit gardens.

But in estimating the increase in value over and above the standard value for rating purposes, allowance would have to be made for owner's or tenant's improvements. If the landlord agreed to give the tenant favourable terms, should the latter undertake any expenditure in improving the property, then the Local Authority could approve any expenditure made in raising the value of land, and allow for it in making the next valuation.

With reference to the application of the scheme to existing and future contracts, Mr. McKenna says:"The advantage of any improvement in the value of land is, for the time being, enjoyed by the occupier. The landlord only obtains the benefit on his again entering into possession. I should propose that the special land tax, on its coming into being, in respect of any land, should be paid by the occupier. But, on the expiration of the tenancy, the special land tax, at whatever rate it might then stand, should be made a charge upon the land, and, like the standard rate, should be deductible from the rent on a new tenancy. Any subsequent fluctuation of the special land tax should again be a matter of concern only to the tenant, for he alone would be affected for the time being by the rise or fall in the value of the land, and so on in regard to each successive tenancy."

The object of the suggested scheme is to secure a direct contribution to local rates in respect of the improved value of land due to "betterment" and "unearned increment," but particularly the latter, which, it is said, is largely due to public expenditure.