Mr. Moulton's proposal to the Commission was that the structural value and the site value of every hereditament should be separated, and that for the present rates there should be substituted a dual system. A rate should be levied on occupiers in respect of the structural value ot buildings, and a rate levied on owners in respect of the value of the site. He suggests that a special rate should be levied on owners in respect of site value. The total rate on the site should be larger than the rate on the structural value, and should bear a certain ratio to it. For instance, if the rate in the £ on structural value was 5s., the rate in the £ on site value might be 7s., but the extent to which the rate on the land could differ from the rate on the buildings should be controlled by Parliament.
Mr. Moulton proposed that site values should be valued quinquennially, and he stated: "I think that the property in a town ought to be valued independently of the particular contracts that affect it. I do not mean to say that a lease may not be a guide as to what the value is, but I think you ought to value it just as if there were no contracts on it at all."
Mr. Moulton would include in his scheme feu duties, and also leases for 999 years containing covenants that the lessee should pay all existing and future rates.
But he would not include mortgages on the ground that "it is only by the legal fiction of the form of a mortgage that the question could ever have arisen as to whether mortgages should be treated as a case of ownership . . .
I do not think it would be right for us, in considering ownership from the point of view of liability to taxation, to treat as owner a man who has really no rights of owner, but only a right to look to this property to see that he shall be paid a specific and determined debt . . . My view is that you should not look upon the history of the transactions by which persons have acquired their share of the revenues of this year; that for the purpose of taxation you should simply look at the persons who this year receive and keep the revenue, and that each 1l. of revenue should bear its taxation."
Mr. Moulton did not think that if sites and buildings were separately assessed, a large amount of additional rateable property would be created, but, he added, "I should increase the tax on land, because I think it is insufficient."
Under this scheme there would be partly a transfer of an existing rate, and partly a new rate.
The rate in respect of site values is to be collected from the occupier, but the occupier is to have the same right and duty of deducting it from the rent paid by him to his superior landlord as exists at present in case of the landlord's property tax.
So long as the rent that he pays is greater than the annual site value, the occupier will deduct from his rent the full rate upon the whole annual site value, and his superior landlord will do the same. But when the rent paid - generally by an intermediate landlord - is less than the site value, the person who is paying the rent is, to a certain extent, the ground landlord, and ought to bear the site value rate on so much of the annual site value as remains in his hands. He, therefore, will be entitled only to deduct the site value rate at so much per £ on the rent paid by him. "Each person who pays a rent higher than the site value, deducts the whole of the ground tax from his rent, one who pays a rent less than the ground value deducts from it at the rate of the ground tax in the £." " My principle," Mr. Moulton says, "always is that you look to the income of the present year, see in whose hands it stays, and make that person pay the tax, on so much as stays in his hands." To illustrate the mode of collection: A. let a parcel of land to B. for 10I. a year.
B. sublet to C. at 80l. a year.
C. sublet to D. at 150l. a year.
D. sublet to E., the occupier, at 300l. a year.
Moulton, 22,868, and Vol. IV. of Min. of Ev., App. No. XI., par. 8.
The annual value of the site is 100l., and the annual value of the buildings is 200l.
Assume the site value rate is fixed at 5s. in the £.
Thus, 5s. upon 100/. = 25l., would be collected from E.; E. would deduct the 25^ from the 300l. he pays to D.; D. would deduct the 25l. from the 150l. he pays to C. But C, who pays only 80l. to B., is in receipt of the annual site value to the extent of 20/. and is entitled to deduct 5s. on the 80l., and on no more than the 80l., which he pays to B., i.e., he would pay B. 60/. and bear 5s. on 20/. himself = 5l. B. is in receipt of 80/., and pays 10l. to A. He, therefore, is the owner of the site value to the extent of 70/., and must bear a rate of 17l. 10s. (5s. in the £ on 70/.). He is entitled to deduct the site value rate on the 10l. he pays to A., i.e., 5s. in the £ on 10l. = 2l. 10s.1