Price, Parliamentary Paper, C. 9528 of 1899, p. 185.

Sargant, 23,180-1, 23.199-F. W. Hunt, 22,542. Warner, 13,472-85. De Bock Porter, Vol. IV. of Min. of Ev.,App. IX., par. 4.

Sabin, 21,449, 21,450-3. F. W. Hunt, 22,542.

Warner, 13,472-85.

The extent to which the owner of a reversion profits by expenditure of rates on objects calculated to benefit property depends, of course, upon the proximity of the end of the lease. Improvements benefiting property made shortly before the reversion fell in would be a gain to the owner of the site. On the other hand, if the reversion was remote when the improvements were made, they might be exhausted before the reversioner came into possession. Consequently the position of owners receiving ground rents for sites for long terms, such as 999 years, must be specially considered. Practically their position so far as the value of their reversions is concerned, is no better than that of owners of feu duties, or of perpetual rentcharges, or, indeed, perhaps of mortgagees.

The view which Mr. Fletcher Moulton, M.P., expressed to the Commission was that no portion of the property of a town ought to be walled off by private contract from contributing to local expenditure, though he added that there are cases "in which you must consider what is a fair adjustment from the peculiarities of their nature." He justified rating the owners of such property on the ground that they obtain a benefit from municipal expenditure by getting increased security, and, further, that the value of town land is only maintained by the annual expenditure of the community. The value of the feu, he asserted, depends on the continuance of municipal expenditure, and it is wrong to allow the owner to feel perfectly careless about it.

Costelloe, 20,159-66. Rickman, 21,227-48. Price, Parliamentary Paper C. 9528 of 1899, p. 185.

De Bock Porter, Vol. IV. of Min. of Ev., App. No. IX., par. 2. Cross, Vol. IV. of Min. of Ev., App. No. IV., par. 9.

Sabin, Vol. IV. of Min. of Ev., App. No. III., par. 11.

Wainwright, Vol. IV. of Min. of Ev., App. No. IV., par. iv. Sargant, Vol. IV. of Min. of Ev., App. No. XL, par.3 (d). Fletcher Moulton, 22,880, 22,888, 22,935.

On the questions, how far expenditure from rates increases the capital value of the site, and to what extent the owner of the site should be charged, opinions differ considerably. The late Mr. Costelloe expressed the opinion that all expenditure, including that on poor law and education, in the long run, improves the value of property, and consequently of site, not necessarily to the whole extent of the expenditure, but to a material extent. And with reference to the share of taxation to be borne by the owner, he stated to the Commission that "I am quite willing to leave it to the ultimate development of the questions, and to the experimental development of the tax, to settle what is the reasonable adjustment in the end between a direct burden on the owner, and a burden falling upon the occupier."

Professor Marshall, in a Memorandum prepared for the Royal Commission, says: - "There may be great difficulty in allocating the betterments due to any particular improvement. But, as it is, the expenditure of such private societies as the Metropolitan Public Gardens Association, and much of the rates raised on building values for public improvements, is really a free gift of wealth to owners who are already fortunate." 1

Costelloe, 20,001-5, 20,115-23, 20,262-6.

Marshall, Parliamentary Paper C. 9528 of 1899, P. 1251 Professor Marshall's suggestions for rating land values are as follow: - "I propose that a preliminary rate for the purpose of poor relief be made of the public value of agricultural land, that is, of its value as it stands after deducting for any buildings on it and any distinct improvements made in it at private expense during, say, the preceding 20 years. This rate might be large or small. I should prefer it to be considerable, say a penny in the pound on the capital value of the land, per se. I regard this as practically public income reserved to the State rather than as a tax.

"As regards land which has a special site value, of which the test

On the other hand, Mr. Mathews, Land Agent and Surveyor, of Birmingham, contested the view that the expenditure of local rates increases the value of land to any appreciable extent. In support of this he analysed the rates levied in Birmingham as follows: Mathews, Vol. IV. of Min. of Ev., App.No. VI., par. xv., 22,086-8, 22,129-33.



Rates which directly benefit property, viz., street improvements, repairs, and drainage......



Rates which directly benefit the local community, such as police (1/2), poor rate (1/2), and health ...



Rates which indirectly benefit the local community, such as baths and parks, free libraries, art gallery, and school of art ...



Rates for the general benefit, or Imperial rates, police (1/2), poor rate (1/2), education, lunatic asylum ..................



Total ....................................



Commenting upon these figures, Mr. Mathews points out that the benefit to property of the expenditure of the rate of 2s. 6d. in the extends to one year only, and is enjoyed by the building lessee, or owner, who is in direct receipt of the rents and profits, except that part of it, not exceeding 6d. in the , which represents yearly sinking funds on some capital expenditure.

The evidence given to the Royal Commission by the following witnesses was in the same direction: - Mr. Cross, Surveyor and Valuer, of Lancashire and Cheshire; Mr. Wainwright, Architect and Surveyor, of Liverpool; Mr. F. W. Hunt, Architect, Agent, and Surveyor, of London; Sir A. De Bock Porter, Secretary to the Ecclesiastical Commission; and Mr. Sargant. Mr. Cross expressed the opinion that it would be impossible to earmark the value of improvements to the land, and he and Mr. Wainwright stated that it is only the frontage of building land which derives any benefit from local rates.




21,943, 21,971-2,

F. W. Hunt, 22,542-4. De Bock Porter, 22,681 and Vol. IV. of Min. of Ev., App. No. IX., par 4.

Sargant, Vol. IV. of Min. of Ev., App. No. XL, par. 7. Sargant, 23,371-8, and Vol. IV. of Min. of Ev., App. No. XI., par. II. Warner, 13,527-35. might generally be that its capital value is more than (say) 300/. per acre, my opinions are more decided. I think that its site value should be assessed to a rather heavier preliminary poor rate than I have suggested for rural land; and, in addition, to a 'fresh air rate,' to be spent by Local Authority under full central control for the purposes indicated above. This fresh air rate would not be really a heavy burden on owners; most of it would be returned to them in the form of higher values for those building sites which remained."

Mr. Sargant agreed that, so far as rates have been applied during the term of a lease in discharging the capital cost of permanent improvements, they should, in theory, apart from contract, be borne by the reversioner. But he pointed out that this portion of the rates is very small and difficult to calculate. In the case of London, upon the fullest possible estimate, which, he thinks, includes some improvements not strictly permanent, it would amount to only 1.618d. in the .

The late Professor Sidgwick thought that, when a temporary rise in the rate occurs from outlay, of which the benefit will last beyond the period during which the extra taxation is paid, it is no doubt possible for the occupier to pay for a benefit from which the owner will gain in the form of increased rent, but that it is most likely that this effect will be believed to occur much more widely than it does.

Mr. Cannan observes that so much of the rates as is raised to pay off capital expenditure ought, strictly speaking, to be paid by the owners, since it is a payment for a remote benefit, that is to say the freedom from the payment of interest on the loan raised for the capital expenditure. In the case of new occupiers, the payment will be allowed for just like any other disadvantage, but some injustice, he says, is done to old occupiers unable to revise their bargains with their landlords if new and unforeseen payments for capital expenditure are saddled upon them. The amount involved, however, is so small that it is, he says, perhaps, scarcely worth while to apply the remedy, which is the creation of redeemable rentcharges for the payment of interest on loans for capital expenditure. He points out that the occupier receives the benefit of the things provided by the capital expenditure till the conclusion of his term of tenancy, and should therefore pay the interest on the capital. It is no advantage to him, however, that the capital should be sunk, or written off; and therefore a charge might be created to be paid during his term, redeemable afterwards by the owner.

Sidgwick, Parliamentary Paper C. 9528 of 1899, p. 107.

Cannan, Parliamentary Paper C. 9528 of 1899,p.171.