We are asked to approach the consideration of this clause under circumstances of considerable difficulty. We were yesterday compelled by the Government to sit some 15 hours, and now, after an interval of nine hours only, we are compelled to be here again with the prospect of another all-night sitting. It is not in accordance with the traditions of the House or of good business that we should be asked to consider a highly important matter, which will affect the conditions of land tenure in this country for all time, under such circumstances as prevailed last night, and must prevail this afternoon owing to the fatigue of Members who sat up last night. I, therefore, hope and trust the Government will allow the discussion to terminate at a reasonable hour to-night, so that Members may get some well-needed rest. There is another reason which makes the discussion of Clause 10 considerably difficult. We are asked to authorise the imposition of this halfpenny tax on the capital value of so-called undeveloped land, but we have not yet been told by the Government how they are going to arrive at the value of the land, and what the cost of the valuation is to be. We are to be told in the future what machinery is to be set up to put the clause into operation. Surely it is asking the Committee to approach an important subject under very difficult circumstances to ask us to accept the principle and fix the amount of the tax, and not to be able to say when we are discussing it how the site value is to be ascertained and what the cost is to be. How can we say whether it is worth while having the tax at all? It may very probably be the cost of arriving at the site value, and the salaries of the officials will amount to more than the whole tax will bring in. If nothing else stands out clear from the discussion of the Finance Bill, this does: the Government have not made up their minds what their proposals will be in the end. They have been ill-thought out, and, owing to the Government putting off from day to day the real decision as to what their proposals are to be, the Committee is asked to discuss this very important question under circumstances in which they ought not to be placed.

The clause embodies two very startling propositions. First, that land is not, for the first time, I think, to be employed as the owner wishes when it remains in his possession; and, secondly, that it is better to use land for anything rather than for agriculture. Those are two very large and sweeping propositions. What justification is brought forward for the proposition that a man should not be allowed to use his land as he wishes? It is that land is wilfully held up from development. I do not think any real instances have been brought forward to support that case. It is contrary to human nature and all business instinct. Surely, if a person has land ripe for building purposes, he would be only too willing, if he can get a fair price for it, to part with it and get an addition to his income. I do not think therefore the suggestion that it is necessary to pass this clause in order to deal with the wicked landowner who withholds his land from putting up houses or factories, or opening brickyards upon it, will hold water. No doubt these two or three Commissioners will be men of the highest integrity and experience, but surely it is a very large proposition to lay down that officials of some office in London should go down into the country districts and say they think land would be better used as a brickfield than as a farm. Surely to give such unlimited power to men is to ask us to assent to a most amazing and far-reaching proposition, and one to which I, for one, cannot agree for an instant. I have here a letter from one of my Constituents, a nursery gardener, and as I think his case must be typical of many thousands all over the country, I would, with the Committee's permission, read it:—

"Sir,—In the Budget proposals now before Parliament, the duty to be levied on undeveloped land is a grave consideration for nursery-men, and, if imposed, it would throw upon them a heavy and most unfair burden. The halfpenny tax over and above the ordinary rates in nursery land would be a great hardship to the nursery trade. The great majority of nurseries are situated near, if not actually in, town areas, and consequently all are heavily rated. The produce of such land is not so much inherent yield as it is the result of applied, skilled, and expensive labour and great outlay in stocking the land, quite on a different footing from ordinary agricultural work."

I think the Committee will agree nursery work is quite different from ordinary agricultural work.

"There is really no undeveloped land in nursery holdings. Nursery land is, indeed, practically a factory for producing plants and trees, and is as much an industry as any other kind of factory or mill, any assistance from the land, although essential, being a small matter in proportion to the capital employed. The competition with our Continental neighbours has recently become most acute, and a further burden would mean comparative ruin to many nurseries throughout the country, which, as it is, yield a poor return for the money invested in them."

Surely the Government do not consider that this land which is used for nurseries and market gardens is not put to good use, but is being wilfully held back? What better use could it be put to than providing vegetables, fruits, and other necessaries for consumption? Surely hon. Members who are always talking about factory life, who want to see a smiling peasantry on the soil and to improve the physique of the nation, ought to hesitate very much indeed before they impose this new and grievous burden on nurserymen and market gardeners. We already see they have great qualms of conscience about the tax they are going to impose on these smaller holders of land. We have on the Paper already an Amendment by the Chancellor of the Exchequer to exempt small holdings of 15 acres from the Increment Value Tax, and if that is done why should nurserymen and gardeners be penalised in the way it is proposed to penalise them under this clause? Take the case of a market gardener. He must, from the necessity of his trade, live on the outskirts of a town; he naturally lives as near as possible to the market at which he sells his products, and if you impose this heavy tax upon him you will compel him to move further afield, to go away from the place where he has lived his life, and to more widen the distance between his garden and his market. I hope the Attorney-General, if he replies on this Amendment, will deal with these cases, and that he will agree that these are instances in which exemptions might be made in favour of people whose whole means of livelihood are bound up in these particular industries. Inasmuch as the exemption has been made in the case of the Increment Duty it can also be made in the case of this tax. There is another aspect of this Undeveloped Land Duty which, I think, has not been, perhaps, quite sufficiently considered by hon. Gentlemen opposite, and that is the damage to the aesthetic side of our suburbs which this Undeveloped Land Duty will effect. Any- body who walks out from any of our big towns must be pleased when he gets away from the wilderness of bricks and mortar, and instead of passing through dreary roads and streets, with, perhaps, a tree or two at the end or on the corner of some square, where orators spout on Sunday evenings, to get into a district with old-fashioned houses and old trees, sometimes with historic associations—houses with three or four acres attached to them where the owner cultivates a large garden, where, perhaps, he keeps a cow, and generally carries on, on a small scale, country life. Under this clause all this will cease, unless the man who lives there has a large income out of which he can pay the tax in the future. As I understand, only one acre of land is hereafter to be allowed in these cases, and on any excess of that this heavy tax will be imposed. Under such circumstances it will prove, in the case of land near our big towns, a crushing tax, and the land will consequently have to be built upon. Why do away with these old-fashioned houses and gardens? Why should they not continue to exist? What harm have they done? They are open spaces, where people get away rather more quickly than they otherwise could from the bad air of the towns. We do not want to cover all these gardens with buildings as soon as possible, and thus to destroy the amenities of the neighbourhood. It is not only near London that this will occur. It will equally affect many small country towns. I have a town in my mind at the present moment, in the middle of which are a good many gardens. There is no question of building; indeed there is very little going on in the outskirts of the town. But what guarantee have we that the Valuation Commissioners will not come down and treat these gardens as undeveloped building land? I presume they will have to do so, as all these gardens are inside the borough boundaries and are surrounded by houses. They add greatly to the health of the town, and, if they are built upon, that health will suffer, as will also the amenities of the locality. People who have not got gardens benefit from the fact that these gardens exist, and they certainly have the pleasure of looking out upon trees and bushes instead of on brick walls and stones. This matter should be considered by the Government. I hardly dare to mention the name of a duke in this House. There is no close time for dukes here; they are liable to be shot at all the year round. But even dukes are entitled to have some little consideration shown them, and I would ask the Attorney-General if he can tell us, from his legal knowledge, what will be the position, as far as the undeveloped land clauses are concerned, of the land on which Devonshire House stands. There is more than an acre of land there. Is it the intention of the Government to reserve one acre and to treat the rest as undeveloped building land? Here we have absolutely in the very centre of London large gardens. Is it the wish of the Government that these open spaces should be built upon, because, if there is no exemption for Devonshire House or for Holland House, or similar places, the land surrounding them will have to be built upon, because its site value will be so enormous that the owners will not be prepared to pay this annual duty upon it? There was a case mentioned yesterday by the hon. Member for Montgomery Boroughs (Mr. Rees), to which no answer was given. It referred to the position of land which is held by Harrow School for the use of the school. Will the undeveloped land clause be applied to that school ground or not?

The hon. Member is going a long way into Clause 11. Exemptions are dealt with in that clause.

Of course, I bow to your ruling, and I will not pursue that point any further, but I hope that when we come to Clause 11 an opportunity will be given us, outside the Closure, to discuss these very important matters which affect the public schools and many other institutions. Consider this. I must again refer to dukes, although I may offend hon. Members opposite; but, after all, dukes are British citizens and deserve consideration, like other people. I want to draw the attention of the Committee to the case of towns which have been practically built up through the instrumentality of one individual. That individual has spent large sums of money in building up that town, and if an Undeveloped Land Tax is imposed, he will probably be taxed upon the very value which he has created and which, in this case, the community has not created.

I will take the case of the town of Eastbourne, because hon. Members know perfectly well that if it had not been for the Cavendish family, who for years have been pouring money into that town, it would not be what it is to-day. I do not know anything about the true inwardness of this case or about the Duke of Devonshire, I only know it is a fact that Eastbourne's prosperity is owing to the Cavendish family. They have spent their money and are looking forward to some return. Do the Government say that they shall not have any return for their money because the community has created the whole of this increased value and not the Cavendish family; and are they going to say to that family, "We are going to tax you upon the undeveloped land round Eastbourne and you shall get no advantage from your expenditure"? Surely that is a point which has escaped the attention of the Government or they would not have refrained from putting down Amendments to meet it. I will take another instance which occurs to me because I am to some extent interested in it. I own an estate consisting of a certain amount of land in the West of Ireland. That estate, during his lifetime, belonged to Lord Palmerston, and he spent some £25,000 upon it with a view of turning it into a watering-place where visitors would come and spend their holidays in the summer. Unfortunately, like other things in Ireland, his project did not succeed. Another watering-place, a few miles off, took the popular fancy, and the small village still remains in the position in which it was thirty or forty years ago Supposing the Commissioners come down there to me and say, "You must develop that land. Here is every material for a watering-place; you must pay development duty on that land which you have not developed." Is that fair, when the houses which are let barely pay for the repairs which I spend upon them? I think there are cases, therefore, which are not covered by the Government Amendment, and that they ought to be considered, and I hope, when the right hon. Gentleman answers, he will deal with those instances.

There are a few more cases, arising out of this duty, which I should like to present to the Committee, but first let me say that there is one root objection which I have to this tax. It is an attempt to realise taxation, out of unrealised and in many cases un-realisable assets. That, I think, is the root objection to this tax on land, which has a potential value, greater than agricultural value. It is to be taxed, although it is perfectly certain that all attempts to realise that land at once would be absolutely futile. The hon. Member for Paddington (Mr. Chiozza Money), who, whether we agree with him or not, thinks rather clearly on this matter, said yesterday that the Committee must be aware that it is dealing with property on the basis that it could be put into the market at once, whereas the whole value of such property would be destroyed by any such attempt. The Chancellor of the Exchequer, in attempting to meet the point, said it is not true only in the case of land but of all other kinds of property, such as securities on the Stock Exchange, and he said that the soundest securities, if you put them on the market all at once, would be destroyed by such a step. He said he could conceive a case where, if the debentures of the London and North-Western Railway Company were thrown upon the market they could not obtain a purchaser. That is true, but then you do not propose to do in the case of the North-Western Debentures what you propose to do in the case of this land. You do not propose to put a tax upon their annual value, and any such principle would be scouted as impossible. Would it be possible for the registers of Somerset House to be ransacked so that everybody who possessed a nominal amount of stock should be taxed upon the annual amount of stock? It is only because the Chancellor of the Exchequer drew an analogy between the case of land, which could not be thrown upon the market en bloc or its value would be destroyed, and the case of stocks, that I press upon him to explain the analogy, and let him put a tax upon stocks, which would be futile, or abandon the attempt to defend this annual tax upon the reputed, but not the true, annual capital value in land.

Coming away from the root objection, however, there are, I submit, some grave difficulties in practice in regard to this tax. In the first instance, the tax goes far beyond the ground on which it is defended. The ground on which it is defended is the holding up of land, but many people will be hit who not only do not hold up their land, but wish to dispose of it for a mere ordinary return without taking any exorbitant profit, and at the very first moment that they can do so. I know there are certain exemptions and abatements which we cannot discuss now, but the theory of the tax is that any land which is worth over £50 per acre for site value and is not covered with houses, or used for some industry, shall be taxed. Surely that would result in cases of extraordinary hardship. For instance, in the South of England and sometimes in the North, but there are more in the South, there are residential estates of 100 acres, with a house, home farm, a certain amount of woodland, and two or three acres of garden. It may happen that just one corner of such property situated on high ground has a special building value, simply and solely because of the view and amenities. Supposing someone comes along and says to the owner of this property, "You have a beautiful site there of five acres on high ground, and I will give for that £80 an acre, or £400." Is the owner to be forced to accept an offer like that or else to be subject to the duty? Clearly that part of his estate has a value greater than agricultural land, but if he accepts the offer the value of the rest of his property will be seriously impaired, and perhaps destroyed, and yet you put him in this position: that he is to be taxed or to close with that offer and inflict irreparable damage to his estate; and, be it observed, there is no question of public advantage here. The purchaser wants to suit his pleasure just as much as the owner wishes to keep the land for his pleasure, and in this case you have the value of a residential estate either impaired or destroyed or it must come under the Development Land Duty.

I will take another example of a plot of land in the suburb of a town—in rather what the house agents would call a good suburb. That particular plot of land is not occupied by the owner, who lives at some distance, and what becomes of it does not very much matter to him. Suppose someone comes along and offers him a good price for his plot of land for the purpose of a tannery or a soap factory, and he refuses to let it for any such purpose because he says there is plenty of other land which is available for it, but if he lets this particular plot he would be doing very serious mischief, not to himself, but to the owners of the land adjoining. He might say that if he lets it he would impair the whole of the neighbourhood and his neighbours would justly complain, and he might therefore refuse. But is he to be subject to Undeveloped Land Duty because this land could be developed for certain purposes, and because, perhaps not in his own interests, but in the interests of others, he refuses to allow it to be developed for that purpose, although he is quite willing that it. I should be developed for others? There really should be a greater definition of what is the meaning of development. Take a further instance of a case of an estate which is being developed, on a definite scheme, for buildings of a high class. Of course, if the landlord really wanted it for housing purposes, those æsthetic considerations and the consideration due to neighbours would not stand in the way; but I will take the case, I will not say of Eastbourne, because it has been mentioned, but of any watering-place which is being developed by the owner or some company on a definite scheme. The land is sold or let upon very tight restrictive covenants, compelling those who take the land or buy the land to put up houses of certain types. That makes the process of development slow, but it produces results satisfactory from the financial and æsthetic point of view.

Supposing one of these watering-places, or the suburb of a large town, is in process of development in that way—it is partly in process of development, but it is by no means built over, and there are many vacant plots. Here, again, some of these plots could be sold for the purpose of some factory, or for the purpose of tenement dwellings, or for any similar purpose, which is contrary to the original scheme. Is the owner, in a case like this, to have his land treated as undeveloped and pay Undeveloped Land Duty when he only wishes to develop it, in a perfectly legitimate way, which he has set before himself to do, and which hurts no one by its being done? Is it to be said that if some-some came along who wished to erect tenement dwellings, or to use it for some other purpose, which, if the owner assented to, he would injure, not only his own property, but the comfort and amenities of the whole leasehold and freehold property of those who are already living on the estate—is it to be said that he must accept the offer or else pay the tax? I do not think this point has been paid sufficient attention to. Again, I would ask what do you mean by "development"? Do you mean getting rid of the land for any purpose for which it may be used, so long as the land is covered? I think in this connection that a great deal of evasion would be resorted to, and temporary buildings would be put up to evade this tax.

I take another instance of how the tax will work. Take land let on lease, with a dwelling house, of more than one acre. It may be perhaps 15 or 20 acres. Is the tax going to be charged, and, if so, who is going to pay it? I am told, to go no further, that in Addison-road there are six houses which have grounds of between one and two acres, and in some of these cases there are more than 50 years of the lease to run, and in other cases there is less. In these cases the land cannot be developed. The landlord cannot develop it because he has let on lease. He will not be able to develop it for 20 or perhaps 50 years, and the lessee, who is treated as the owner when there are more than 50 years to run, cannot develop it either, because he is bound by his lease not to do so. He has to hand back the property in the same state in which he found it. In all these cases you are in a perfect impasse. You are taxing the people for not doing something which the law prevents them from doing for a great many years to come. I do not know whether this case has been contemplated by the Government, but where in their Bill is there any provision to meet it? There is nothing in the Reports of previous Commissions which justifies this tax. I have looked at the Report of the Housing Commission and the subsequent Commission, which entirely overthrew it—even the Minority Report did that. It is a perfectly fair thing that where land is really wanted a municipality should have the right of saying "We want this land, and we will give you a fair price for it." In fact I would go further, though some of my hon. Friends would not agree with me, and I would accept Lord Balfour's suggestion in that Report that where there was land which primâ facie was being held back the local authorities should have a right to rate it, and if the owner disapproved of the rate put upon him he should have a right to call upon them to buy it. Up and down you may find instances, though this Minority Report thought there were very few, of land being unduly held up, and if there are these enormous possibilities in land like that I do not say for a moment that municipalities should not have the future benefit of it. In such cases let them pay the present price, let them do the development and get the increment if they want it. But this is an entirely different proposal. This is a proposal which can neither be justified in theory nor in practice. It will hit those whom you do not want to hit, and it will not effect the end which we all have in common.

The hon. Member has referred to the deliberations of Commissions and Committees dealing with the subject with which this tax deals. There is one sentence in the Report of the Commission of 1884 which seems to me so exactly to state the central circumstances, and which is at once the justification and the cause of this tax, that I should like to read it:—

"At present land available for building in the neighbourhood of our popular centres, though its capital value is very great, is probably producing a small yearly return until it is let for building. The owners of this land are not rated in relation to the real value but to the actual annual income."

It cannot be more neatly stated. The position it appears to me is this. You have land close to a large town appropriate for building, but not yet built upon, and its actual yearly return this year bears no sort of relation to its real capital value, in other words, its yearly return this year is not its true annual value at all. You are rated on it as though it was, but it is not. The true annual value of any profitable property necessarily bears some relation to its capital value. It bears a relation which depends upon the rate of interest which a person who invests in that sort of property would expect to get for his money, when invested, and it is impossible that there should be such a thing as the relation of this artificial return of the present year from such land to the capital value of such land on any capitalisation of annual value. So far you have two things quite distinct. One is the return of the few shillings or pounds which the land is producing in the present year in point of fact. The other is quite distinct. It is the real annual value, having regard to its real capital value at the time. The central situation, it appears to me, that is created by the proposal of this tax is this, that inasmuch as the only contribution which is now asked from the occupier or owner of such land in respect of its occupation is a rate not based upon its real annual value, but upon some very small fraction of its real annual value. Is there anything unfair or revolutionary or improper in asking for a more substantial contribution?

What is the suggested criticism in point of principle? The two hon. Members (Mr. Hope, and Mr. Ashley) have made certain criticisms which were rather criticisms of machinery and hard cases which they thought needed special consideration than criticisms which go to the root principle of this tax. But there are, of course, criticisms of weight and substance which have to be regarded and fairly met, and which do go, or endeavour to go, to the root and substance of the tax. It appears to me they really are two. First of all, it is said you are here perpetrating this wrong, that you are claiming to levy an annual toll on the basis of the capital value. It has been put again and again by hon. Members opposite, and by no one with more force than the hon. and gallant Gentleman (Mr. Pretyman). With great respect, it appears to me that, once the distinction is clearly observed between what I have called the return for this particular year and the real annual value, that criticism disappears. It is a matter of perfect indifference to me whether, if land of this sort is worth 20 years' purchase on its true annual value, you say you are going to tax it at the rate of one halfpenny on its capital value or 10d. on its true annual value, because 10d. on its true annual value and one halfpenny on its true capital value produce exactly the same thing. That really is the answer. Of course, if there is no such distinction as that between the return which the land happens to bring in while it is being let out to ponies to graze on and the real annual value of the land, considering its situation and circumstances, and having regard to its capital value, then I agree the criticism I make is without foundation. But if there is that distinction it is perfectly immaterial whether you describe the tax which you are going to levy as a halfpenny on the capital value of the land or upon 20 times a halfpenny on the real annual value; they are two formulâ which produce the same result. If you take any reasonable number of years' purchase at all—20, 25, or 30—and if you treat this land, which is not built upon, as though it was an investment as well secured as a ground rent, you would still produce a claim upon the annual value of 10d., 1s., or 1s. 6d., whatever it is, which is a very small trifle compared with the ordinary rates which are levied in towns and in connection with municipalities. Not only is the contribution, properly regarded, one which is based upon real annual value, but one which in point of amount is a very reasonable contribution. That is the first substantial criticism made against this tax, and I submit that the answer I suggest is the real answer to the point.

What is the second criticism? It is said you are perpetrating this injustice, this fiscal vice. You are calling upon people to make a contribution out of something they have not got. I am stating what many Gentlemen opposite feel to be a real, substantial criticism. But is it? There seems to me to be at least two answers to it. The first is this: It is not true that that value upon which it is proposed to calculate this annual tax is unrealisable. What is perfectly true is that you cannot now get for your land that which in 10 years' time you hope to get, and perhaps wall get. But if you want to discover whether the land can be sold or not there is a very simple test. Assume the case of undeveloped land, occupied, say, at £2 an acre, as though it were merely agricultural land when it is really nothing of the sort, and let us suppose that £40 or £50 an acre is the agricultural value. Offer the land at that price, and see if anyone will buy it. Of course they will. Hundreds of people will buy it, and it follows necessarily that if 100 people would offer to buy it at that price there is a point between that price and the ultimate price on which you have fixed your expectant eyes 10 years hence which is its market value now, and it is that market value upon which it is proposed to levy the halfpenny tax. Take the same instance as I took before. You have land suitable for building, not yet built upon, which the owner one day hopes will be built upon, and at present it is bringing in a mere £2 an acre. But then in 10 years' time he may be able to sell it for £1,000 an acre. Does he really mean to say he could not sell it now for £500 or £400? There must be a point at which he can sell it, and that is the point at which you arrive at the site value upon which you put your halfpenny tax, and the delusion which possesses those who say that this is a tax not based upon present value but upon future value, not upon realisable value, but on unrealisable value, not upon something which it is now, but on something which it is hoped or expected will exist in the future, is that they seem to think the halfpenny tax is to be levied on the £1,000. The tax is to be levied now upon what the land will fairly fetch now. If it will not fetch more than agricultural value, it is not undeveloped land; if it will fetch more than agricultural value, it is undeveloped land, and it is precisely that distinction which provides you with the test by which you can get in practice, with the help, it may be, of valuers and surveyors, at the value of the land now.

These gentlemen profess difficulty in arriving at any real value of their land now, and say it cannot be arrived at for 10 years to come. If a railway company comes along and wants to take some of their land under compulsory powers, what would they say if the companies said, "We will pay you, but we will not pay for 10 years. You did not expect to sell for 10 years, and we will not pay for 10 years"? The answer is, "You must pay me now, not what I should get in 10 years' time, but that small sum which is the real market value of my property to-day." Everyone does that in ordinary business under the Lands Clauses Act every day of the week.

Then I am told that this is an enormously complicated calculation which nobody can ever be expected to work out in a reasonable time accurately. I am a little amazed to hear that, for the Lands Clauses Act of 1845 has stood on the Statute Book all these years, and one of the provisions is that if a railway company or a local authority comes along and wants to take, under notice, land, such as undeveloped land, in 21 days the owner of the land has to send in his claim and put on his valuation, and I believe they constantly do so. If I am right that these two criticisms are seriously made in regard to this Undeveloped Land Tax, I do submit to the Committee that the answers I have given are answers which bear on these points. It is said in the first instance: "You are here attempting to levy an annual toll upon a capital sum," and my answer is that we are not really attempting to do anything of the kind. It does not matter whether you regard it as a toll on a capital sum or on an amount which represents annual value. In the second place, when I am told that this tax is sought to be imposed on a thing which is not in hand, and which cannot be realised, but on some future expectancy, I venture to submit that every landowner is perfectly willing to say here and now what is the value of his land if he is called upon to do it in connection with any compensation case throughout the length and breadth of the land. It is absurd to say that we have no instance in our fiscal system in which we call upon people to make contributions, although they have not the money in their pockets. The Income Tax is not levied on what you have in your pocket, but on the income which you had in your pocket. It is no answer to the Income Tax collector to say: "I have spent all my income, and, therefore, it is monstrous to call upon me to pay the tax." I will give an instance which is closer still. Is it really stated by those who claim to have a knowledge of the working of land in this country that the ordinary local rates are paid out of capital or upon hypothetical value? The whole basis of our system of local rates is a hypothetical landlord and a hypothetical tenant. If you take the case of a great landowner living in a house which he owns so that he is owner as well as tenant, he has got to pay rates on this hypothetical calculation. He has to say to himself, "What is the rate which somebody would pay me for such a house as this, after making certain deductions?" Can he say, "This house is so large that nobody will live in it"? [An HON. MEMBER: "They do so now."] I am always willing to live and learn. I possibly have not made my instance quite plain. I was supposing the case of a landowner who is living in his own house, and who is called upon to pay rates. In order to pay his rates he has to go through a hypothetical calculation by supposing that the house is let to somebody else. It is no answer to say, "I live here because I cannot find anybody to take the house." The whole English law of rating is based upon the hypothesis of letting. If hypothetical letting is a good and sufficient reason for exacting rates, as it has been for centuries, then I should have thought that the hypothesis of sale is an equally good reason for exacting this tax.

The real justification for this and for every other tax so far as I am concerned must be that it is calculated to raise money, and to raise money fairly. So far as I am concerned I do not care in the least for other arguments in favour of the tax unless these two conditions are satisfied. Hon. Gentlemen opposite say that the proceeds of the tax for the next year or two are not going to exceed the cost of collecting it. What is the reason of that? It is because the Chancellor of the Exchequer in proposing this tax says he is prepared to frank everybody's property up to the present moment. If we had adopted the method which the Germans did we should have gone back 20 years. [An HON. MEMBER: "That was in the case of the Increment Tax."] It was in connection with the Increment Tax that the Germans went back 20 years, I admit, but let me assume that the Chancellor of the Exchequer had gone back 20 years with this tax. [An HON. MEMBER: "You could go back for ever."] I am surprised that the hon. Gentleman should say that we could go back for ever. I should have thought he must have known that by the provisions of Clause 10, Section (3), "for the purposes of Undeveloped Land Duty, the site value of undeveloped land shall be taken to be the value adopted as the original site value." Does the original site value go back for ever? The original site value goes back to April of this present year. There is one aspect of the tax which I should have thought would prove particularly attractive to hon. Gentlemen opposite. It is a very unusual thing, but in this case the tax is one which is really going to make things cheaper. [Laughter.] I thought hon. Members opposite would be amused. I can imagine that it should be thought at first sight that that is curious. There are some hon. Gentlemen who are impressed, no doubt, by the argument that if you put a tax on tea you make it dearer, and who ask, "If you put a tax on land why should it be different?" This is not really a tax upon land at all. It is a tax upon those who have got land, and who prefer not to sell it until it becomes more valuable. The true analogy is not the tax on tea. The true analogy would be the case of the forestaller who, having made a "corner" in something, refused to sell until it had reached a particular price. The real analogy also would be the case of a man who instead of spending his income year by year put the greater portion of it for many years in a particular investment in order to have a large capital sum. That is what happens, and that is the strictest analogy in this case. Supposing this man did that with his income he would pay Income Tax every year, but the landowner does not It is to secure that contribution that this tax is devised, and that is the reason why it receives support from this side of the House and in the country.

The hon. and learned Gentleman (Mr. Simon) has made a very interesting speech, as he always does, but I cannot think that he was well advised when he cited, in support of this tax, the rating system of the country. It is universally admitted to be a most unsatisfactory way of arriving at the contributions either for national or local purposes. The hon. Gentleman instanced the case of the owner of a big house living in that house. Everybody knows that such houses do not pay their full share of the contribution to the rates, and for the very reason that it is impossible to get at your hypothetical tenant who will take such a house from year to year. I was amazed at the hon. and learned Gentleman holding up the rating system of this country as an example and a precedent for this tax. The truth is that one of the greatest political objections to this tax is that it will greatly impede that which I thought was desired by everybody—namely, a reform of local taxation. It is admitted by everybody that we cannot go on with the ridiculous hypothetical system indefinitely, and everybody assumes that some form of valuing the land must be a part of the reform. One of the difficulties of this tax is that it already interferes with the contribution to local purposes by definitely taking for Imperial purposes that which on a conceivable modification of the rating system would be really devoted to local purposes. The hon. and learned Gentleman submitted an interesting argument to show that the objections to this tax, based upon the view that it did not tax really annual value, was not well founded. Those questions of terms are always very difficult to discuss anywhere, and even in this House, because it is so difficult to arrive at a clear understanding of what you mean by the terms you use. I do not mean by real value something which I might receive but do not. Apparently that is what the hon. and learned Gentleman does mean. Does he think that real annual value—if you can attribute such an expression to any other article—is what you might receive for it but do not? It is really only darkening counsel by words to talk of the real annual value unless it represents something which comes into your pocket. Annual value means something paid annually, and if it does not mean that it has no meaning at all. It is not true that this tax will tax real annual value. Several instances have been given in the course of the Debate where land has no annual value at all at present, or only a very small value. It is not realisable in the sense the hon. Gentleman thinks it is. You cannot obtain the price which a valuer will put upon it as the value it has to you. It makes a great difference whether you say it is the value which it has to a man or the value which he might obtain by realising it.

If this Bill contained words that the tax was to be put upon realisable value, there would be some force in what the hon. Gentleman said, but that is not what the Bill says or means. The Attorney-General, in one of his charming and rather discursive speeches yesterday afternoon, did suggest that that was the meaning of the Bill, but when he was asked specifically if that was what he meant, he said that is the very last thing that he meant. He said it meant that the owner of the land could say to the Commissioners, "I have tried to obtain this price, and I cannot obtain it, and, what is more, you cannot show me any person who will give me that price." Does the hon. and learned Gentleman really think that the tax would only be leviable if the Commissioners could show a buyer who was prepared to give the price at which the land was to be taxed? That is the real test. I have put down an Amendment on the Paper to raise that very point, and I trust to receive the support of the hon. and learned Gentleman in the Lobby. Unless he is prepared to put words to that effect into the Bill, it is not time to say that this Bill proposes to tax in any sense the value which a man might get, and only that, but which he deliberately for his own purposes refuses to accept.

I take another illustration to show that the hon. Gentleman's conception of the Bill is not accurate. Are the Temple Gardens going to be taxed or are they not going to be taxed? As far as I can see, it is practically plain under the Bill as it stands that the Temple Gardens are taxable. [An HON. MEMBER: "They are open to the public."] They are not open to the public. Certain school children are admitted for an hour or two during certain months of the summer. Does the hon. Member mean that that would satisfy the condition of being open to the public? Everybody knows that they are not. They are closed to the public. Nobody would maintain, and I am sure that the hon. and learned Member for Walthamstow (Mr. Simon) would not maintain for a moment that they were open to the public. Yet they have unquestionably an enormous building value. If they were thrown into the market they would realise an enormous value. Does not that show the fallacy of the hon. and learned Gentleman's contention? Here is a piece of land which has an enormous value, but it is not realisable, that is to say, not practically realisable, because, as a matter of fact, I should doubt whether they would be entitled to sell to the public or not; but whether they major may not, clearly they would be committing a gross breach of duty if they did so; yet it would have an enormous building value, which in the words of Clause 14 would be the value which, if sold at the time in the open market by a willing seller in their then condition, might be expected to realise. If it was sold in the open market it would be expected to realise an enormous sum of money. That is not in any sense the real annual value of the property, because evidently it cannot be sold. Now, the hon. Gentleman repeated the old taunt that when landowners come to an arbitration where their land is being taken compulsorily, they find no difficulty in putting a value on the land.

I did not intend in the least any taunt at all. I merely stated what is a common well-known fact.

I am very glad to hear that the hon. and learned Gentleman did not join in the somewhat ignoble chase of landowners; but he is surely quite wrong even m the statement which I understand him now to have made. The landlords have the greatest possible difficulty in putting a value upon their land. What do they do? They put such a value upon the land as will certainly be sufficient to cover its real value. Then they go to the arbitrator and say, "What do you think is the value?" And the purchaser does precisely the opposite. He suggests a perfectly farcical value. An instance occurs to me on this point where land which was admittedly worth several thousands, if not several hundreds of thousands of pounds, and the purchaser suggested £50 as its value. That was merely in order to set the arbitration going. But there is no true valuation on one side or the other until you get the arbitrator. Then you employ the highest skilled men, very often at the highest price, to value for you on one side, or the other. They state on oath with the most elaborate reasons what they conceive to be the value and you have an arbitrator sitting in the middle who has to make the best he can of the varying estimates submitted to him. The thing is an extremely difficult and costly process, as anyone who has had anything to do with it, either as principal or professionally, is well aware, and the suggestion that it is quite a simple one is really not worthy of the hon. and learned Gentleman. That brings me to what I quite agree with him is really the essential matter. We are discussing a Finance Bill, and we have a right to know, and we want to know, what is to be the proceeds, that is, the net proceeds of this tax? And this brings me to what my right hon. Friend the Leader of the Opposition said yesterday. The figures which he repeated showed that on the statement of the Government this tax could not possibly bring in more than £87,000 to the Exchequer. We have every reason to believe that it must bring in a, great deal less. We do not know what the cost of valuation of the land of the country is going to be, but it is going to be an enormous sum of money. I leave out the exemptions, because the Chancellor of the Exchequer told us yesterday, with very undue optimism, that they were not going seriously to diminish the return of the tax. But whatever it may be upon that, that £80,000 is the outside which you are going to get from this tax, and you have got a perfectly unknown sum which you are going to pay for valuation. It really is absurd to suggest that that Land Tax can be justified on financial grounds. [An HON. MEMBER: "That is only for the first year."] An hon. Member says that that is only for the first year. That is a perfectly proper observation to apply to some of these Land Taxes. There is something to be said for it when dealing with Increment Duty and reversion; but I see no particular reason why the Undeveloped Land Tax should go up. There is only a certain amount of undeveloped land in the country that will be taxed, and I do not see any reason to suppose that there will be more undeveloped land next year. On the contrary, if the Government are right, there is going to be less. So far from bringing in more than £80,000 next year, it will bring in less next year. The hon. and learned Gentleman said, and also the Attorney-General said yesterday, that that is easily remedied by increasing the amount of the tax. Everybody knows that.

I did not say it.

We labour under very strange delusions on this side of the House to-day. What the Attorney-General did say undoubtedly was: "You make two contradictory pleas. You say that this tax is going to bring in nothing and yet is going to be a hardship on individuals." They are not in the least contradictory. On the contrary, it is the universal experience of history that taxes that have been very harsh on individuals have in fact been very little remunerative to the State. I may remind the hon. and learned Gentleman that a most elementary form of tax very frequently indulged in in mediæval times was: You took a member—then it was not of an unpopular class but of an unpopular race—and you extracted his teeth one by one until ultimately you induced him to pay up a certain sum of money. That was a hardship, I think, on the individual. Even the Attorney-General will admit that. But I believe it was not abandoned as a means of raising money on the ground of hardship on the individual, but because it was found that, in point of fact, it did not raise money in a convenient form for the State or raise money in sufficient amount. This tax is not finance at all. It may be introduced for the purpose of a universal valuation. It may be introduced, as the authors of the tax themselves say, for the purpose of preventing the holding up of land. I personally disbelieve in remedies of that description. You are not going to stop the wicked holding up of land by a tax of this kind. It will fail. The only effect will be to hit not the forestaller of land referred to by the hon. and learned Gentleman, but you will hit the people who are not selling their land very often, from motives of the highest possible public importance. The, whole history of the Liberal party during the last 50 years has been concerned with the preservation of open spaces and open commons; and who are the people to preserve those? Why, the landowners who have declined to sell land for which they could realise enormous sums of money by selling because they desired, for their own purpose, I quite admit, and their own amenities, but also in the public interest, to keep them. It will be the owners of heath land and down land that will be mainly hit by the penal character of this tax. I do not say that they are the people from whom you will get the greatest amount of money. You are preparing for yourselves precisely the same experience as you have been through with reference to the taxation of works of art under Death Duties. You found the result was so far from raising money from luxurious persons who chose to possess these works of art that the luxurious persons sold them and the works of art left the country, and you are now seeking a remedy. Precisely the same result will accrue from this tax. The truth is it is a thoroughly vicious principle to use taxation for the purpose of obtaining an indirect result, and the hon. and learned Gentleman seems to me to be utterly mistaken in believing that the effect of this tax or any other tax of this kind will be to render land cheaper. On the contrary the ultimate result must be, whatever the immediate result may be, to diminish the number of people who are going to invest in this commodity, and ultimately to make the transference of it more difficult and less desirable, and to promote the state of affairs which the hon. Gentleman professes to dislike, that it will be the possession and the luxurious possession of a small class of the community.

The Noble Lord has not chosen a very happy illustration of what he considers the precise results of this tax may be when he says that we shall see happen in this case what happened to works of art which were being sold and leaving the country. At all events, we are quite sure that if the sale of land is brought about as a result of this tax it will not diminish the national assets in that manner or to that extent. The Noble Lord has used another phrase which I should be sorry to see becoming current in this controversy. He spoke of the penal character of this tax. It seems to me an unjust view with regard to a tax of this character. Of course, the tax has the disadvantages which are incidental to every tax. Those who defend it, as those who do not, do not profess to say that it is a tax which diminishes nobody's property and which hurts nobody, though it adds to the national wealth. That is not the class of tax which we on this side of the House profess to construct. This is a tax which, like every other tax, will take money out of somebody's pocket, and to that extent will be a hardship on the individual, and to that extent it will confer some benefit on the community as a whole. The money which comes into the pockets of the subjects of a great commercial country like this is in a substantial degree devoted to their own necessary expenditure and also to their investments. I think it ought to be recognised on both sides of the House, as it certainly is recognised here, that we ought never to take any tax at all except for the most urgent reasons, and with full recognition that somebody is going to suffer. That, therefore, is common ground between us with regard to this tax, and I wish it were common ground between us with regard to other taxes. On the other hand, there are no advantages in regard to this tax which other taxes do not show. The main object of the tax is, must be, and ought to be, fiscal; but a tax produces almost invariably other than merely fiscal results. We are entitled, as hon. Members have done with such great astuteness during the last few weeks, to examine the effects of the tax; and I would ask hon. Members, when they denounce it, whether the advantages we claim for it can really be denied by them? What has been denied by them during the whole of these Debates? The denunciations poured upon this tax have been of a very general character—general propositions couched in strong language, and backed up by concrete cases of particular hardship. That has been the line they have followed; but look at the general character of the tax. I ask whether it does not possess, as compared with any other tax, some great advantages? First of all, it is a tax carefully adjusted, so as not to fall on any trade or industry. When the scope of the tax comes to be looked at it will be seen that this remark is scarcely susceptible of qualification or denial. It falls really upon no trade or industry; it is a tax on land. One does not quarrel with a short word describing a tax. Taxation is upon persons, but phraseology is used which gives the shortest description of a special tax, and we use the term "Land Tax," but, as I said, the tax is, of course, levied on persons. A tax which is imposed on particular profits accruing to particular persons in respect of their property is really not a tax on trade or industry.

We have exempted the agricultural industry connected with land. We have wholly exempted agricultural land from taxation. ["No."] I think we have wholly exempted agricultural land. If I am wrong, then no doubt some critic will make some observations later which I daresay will be fresh to me. We have exempted agricultural land, and I would commend that fact to the hon. Member for Blackpool, who made a speech for which, if he will allow me to say so, I was very grateful, because it was an admirable, temperate, and clear statement of all the popular misconceptions with regard to this tax. It was a brief compendium of the most pertinacious misapprehensions, and I am sure the hon. Member will forgive me if I refer students of the subject to his speech. The hon. Gentleman put his arguments temperately, and, of course, as ho always does, sincerely and effectively. He gave us the case of the market gardener, and said, "Here is an industry you are going to touch." The market garden has a very much higher value than that which ordinarily attaches to agricultural land. If the hon. Member were to refer to the definitions himself, in that case he would probably destroy the value of his speech as the vade mecum of misconceptions, because the definitions tell us that the market garden and horticulture are included in the expression "agriculture," and therefore come within the exemptions from this tax before the tax is imposed.

Surely market gardeners are liable to be dispossessed if the Commissioners think that their land ought to be built upon?

That is rather a different matter. The hon. Gentleman read a letter from a market gardener, who said that market gardens are not undeveloped land. He went on to say, "Why tax the market gardeners, whose gardens are not undeveloped land, but are fully developed land?" In that case I think the hon. Member should have written back to the market gardener to say that he was unnecessarily disturbing his mind. He will not be taxed if there is no undeveloped land, and if the land is being put to its full economic use.

If it has a building value over and above the market-garden value, then surely it is liable?

The Noble Lord should have waited until I had finished my sentence before interrupting. In the case he puts the land has not been put to its best economic use. I think hon. Members have not listened to the speech of the hon. Member for Blackpool with the attention which it deserves. Where you have a value over and above the agricultural value, and over and above the market garden value, then you have undeveloped land. But that is exactly what the hon. Member's market gardener has denied. His complaint was that we were going to tax him, although there was no undevelopment about his land, and that he was putting it to the best economic use he could. I say we are going to do nothing of the kind. If his land is being put to the best economic use, which represents its highest value, in that case in escapes taxation. Why is the complaint put before the House as a just one? The market gardener said, "The value of my market garden, as of all market gardens, is due to special skill." If the value of the market garden is due to his special skill, he can rest with perfect peace of mind amid all the terrible declamations against and denunciations of this tax. It is only when the market garden has ceased to represent the best economic use, when it begins to have a greater value for necessities, which from the point of view of the community are paramount necessities, that then, and then only, does it come under the tax. Let us consider what are the paramount needs of the community in relation to land. That brings me, I think, to another great advantage of this tax. The paramount needs of the community are undoubtedly its housing and its trade. They are not the only needs. I attach great weight, and listened with great sympathy, to what the hon. Member spoke of, namely, the imperilling of the aesthetic aspect of our suburbs; so that there are other needs besides those described as "paramount," which I hope will be adequately safeguarded. But nobody will deny the enormous importance of housing and of trade to a community like ours with so small an amount of land as this country possesses. What is the best indication of the value of land? I would ask hon. Members to remember this, in reference to the time when land ought to come under use for the paramount needs, even at the cost of some inconvenience to those who are using land for less important purposes, that the best indication is its value. It is the value of land which indicates the public needs. There have been put down to this and later clauses a great number of Amendments proposing that the Commissioners should be the judges whether it is reasonably proper or reasonably necessary that land should be taken away from agricultural purposes and devoted to building. We have a far better test, and a far better measure of the necessity than the opinion of the Commissioners on a point like this. We have the demands of the community, expressed in the price that it is willing to give for the land, and expressed in the value of the land. That is the best test, and whenever land gets to a value in excess of that which it commands for agricultural purposes it has reached a value at which the other needs of the community have a greater claim to be considered. Housing and trade are the more important.

On what does the tax fall? It does not fall on trade; it falls, to use the old phrase, upon unearned increment, which attaches to this form of property. When we are looking round for the subject matter of taxation, is there any better subject than that which comes to a man without any labour of his own—coming to him under our present social and commercial system? Is there any better subject of taxation than profit coming to him in that way, as compared with profit coming to other people as the result of their labour or their capital? Hon. Members opposite do not face that argument, and in all their denunciations of this tax they have never ventured upon that comparison. In all the Debates, if anyone reads the record of them in "Hansard," there will not be found the report of any hon. Member opposite who has boldly taken up this comparison and said it is a better thing to tax trade, a better thing to tax profits and the processes of labour, than it is to put a burden on the profits which come to a man without efforts of his own, but are really the result of the efforts of the community from whom you are demanding this tax. Nobody has ventured to make that proposition. Then there are other results attaching to the tax. As I have said, first it does not fall on trade; secondly, it falls on unearned profits; and, thirdly, there are other incidental advantages, not by any means the object of the tax, but important as collateral advantages to a tax of this kind. When you are selecting your burdens you ought to consider their collateral effects. It has been said again and again that this tax has not really a fiscal object. The object, we are told, is in order to prevent the holding up of land. We are quite entitled to consider the question of the holding up of land in connection with this tax, just as you are entitled to consider the question of temperance in connection with taxes upon alcoholic drinks. Everybody knows that the taxes on alcoholic drinks were not demanded simply from the point of view of their excellence as a means of temperance. They are imposed for the sake of revenue. but it is recognised as a great collateral advantage that they aid the cause of temperance by diminishing consumption. That is the real relation between the fiscal aspect of this tax, and the question of what is called holding up. We recognise that it is a tax upon a practice which is undesirable, and having that as an incidental effect, we are entitled to claim it as one of the reasons why this particular form of tax should be chosen rather than any other.

What is meant by holding up? Like many other phrases it receives a great many meanings. It is often attacked in one sense, and defended in another, in a way that perhaps would be convenient for controversy. I would venture to say that the case of holding up by no means refers to the case which I think is most in the mind of hon. Members opposite when they deal with this subject, that is to say, the case of a man absolutely refusing to part with his land. You may have holding up of the most effective character far short of that. If you speak of holding up in the absolute and unqualified sense, I agree with hon. Members opposite that there is some of it, but not much of it. But I think in cases where it prevails, serious and substantial cases, this tax may have some effect, although I am afraid it will not have as much as I should like it to have. We were being told yesterday that this tax is too much. I need only refer to Germany where it has been in operation at very nearly the same amount, and where it has been found inadequate to prevent holding up. The Germans move much more rapidly in these things than we do, and they are proposing to increase the tax. I am not suggesting or desiring that that should be done, but still it is a comment upon those who say that the tax is already excessive on the land. You get holding up far short of absolute holding up. I would rather cut the phrase "holding up" out altogether, or use it only in regard to the actual refusal to sell land at any price whatever, because whenever you get a I value over and above your agricultural value then that is an indication, as fair as any indication that you can get, that the needs of the community in respect of this particular piece of land are now in excess of their needs in respect of that land for merely agricultural purposes. In other words, their agricultural interests have become less important as indicated by the value than their building or trade interests. Therefore, that is an indication that the time has come for a change in the purpose for which that land is used. That seems to me quite sufficient. If we take the value as the indication of the public need, then the moment the value reaches a point at which this tax attaches, then we have the clearest indication that the land is needed for something else. Therefore, we have adopted the plan of taxing value instead of use. My hon. Friend behind me (Mr. Simon) and the Noble Lord (Lord R. Cecil) engaged in a discussion upon the meaning of annual value. I do not know that these discussions on phraseology carry one very much further. They clear the ideas of those who are writing on the subject, but I do not think they aid very much those who are going to vote on it. A somewhat simpler statement is required for them than for the learned economists who quarrel about terms. Undoubtedly it is clear we have proposed to tax value, the value in the market, the saleable value rather than the value which arises from existing use.

Our present rating system is based, of course, on existing user. What the land is actually fetching at the moment, that is a subject matter of the tax. We propose to tax not merely its value in existing use, but its realisable value in the market. We are told that that cannot be done, and the Noble Lord has given instances of the difficulty of ascertaining valuations under the arbitration with which we are all familiar. I have not the slightest doubt if the valuation of the land of England, instead of being put into the hands of Commissioners, were put into the hands of the profession, of which I am the humble and unworthy head, and if we had arbitrators, with counsel on each side, in order to decide the value of every piece of land in separate occupation, then this country might give up all other pursuits, abandon every other ideal, and turn itself to litigation for the rest of its natural life. That I do not think is necessary. [An HON. MEMBER: "Why not?"] The business of valuation goes on every day without friction and without difficulty. In the case of the Death Duties we already have a capital valuation. In the case of the Death Duites we do not value according to existing use, but we value according to market saleable value, while apparently, according to the argument of hon. Members opposite, taken literally, that would be wholly impossible. Experience teaches us that it is not impossible, and that it is not even difficult. Undoubtedly those who collect the tax receive great assistance from those who have to pay it, and I believe that will be the case in the tax with which we are now called upon to deal. They receive great assistance, and no doubt there is some measure of compensation in the form of very lenient and considerate treatment on the part of those who are imposing this tax. No doubt the assistance the Inland Revenue receives in this tax will receive a similar return. When one talks about the valuation of the whole of England owners will be left at liberty to send in their valuation. They may be relieved, and I hope they will be relieved, of the burden of penalties laid down in the present form of the Bill to send in their own material for valuations. They may be relieved of that plan, but they will still be left at liberty to do, as in the case of the duties under the Finance Act, to send in a valuation giving particulars which will enable the Inland Revenue Commissioners to judge of its accuracy. In the great majority of cases I venture to say that no further trouble will be caused by the valuation of the land. Where you are dealing with great estates, and where building value comes into question, there is really no doubt about the valuation. Nine-tenths of the land of England will come into this category—land where the existing rateable value enables everybody to decide its character.

Hon. Members are forgetting that already we have a complete valuation of all the landed property of England. I agree not a site value and not a value sufficient for our purposes, which would have saved a great deal of trouble, but we have got a valuation which will be a very useful basis in many cases and save an enormous amount of trouble, and which will reduce the amount of the figure which has gained currency, I think, by somewhat inflamed views. As to the possibility of the valuation for this tax costing 30 millions, I venture to say that to talk of 30 millions is an extravagant and impossible assumption, especially when it is remembered that the great volume of the land is already valued. That value will be of enormous assistance in dealing with the more complicated form of value. I think that really covers the observations I have to make and the ground so far as it has not been already covered by other speakers. The hon. Member for Blackpool (Mr. Ashley) made one observation I would like specifically to deal with. That is as to cur suburbs. I am glad to find that someone does appreciate the suburban charms of our great cities. No one desires to lessen them in any way whatever. When the hon. Member spoke of the tax as making it impossible to have any open spaces he was, I think, for the moment, letting his practical judgment be overcome by hypothetical fears. It is true we have already exempted an acre of land attached to a house. There are many cases where the land round a house is more than that—cases, I think, where the land is, by being attached to the house, already put to its best economic use, and in such cases where the land is really put to its best economic use by being attached to a house it is dealt with sympathetically under this Bill. Take the very worst case of land on which the tax has to be paid. Supposing that the owner of a villa in a suburb has got two acres, one of which is exempt, and that he has to pay on the other. Let us suppose it is worth £1,000. That is an enormous sum, because remember that the site value of £1,000 represents a total value of much more than £1,000. You are entitled before you get the site value to make certain deductions which have been already dwelt upon. You have considerable deductions before you reach the site value, but take the actual site value as £1,000. That would amount to £2 per year for this tax. Now, said the hon. Member, the owner would be driven to give up that acre intended for the amenities of his house, but ex hypothesi the owner has been content to forego interest on the £1,000, and is it that he is to be driven out by this last straw? He will only be driven out if, like too many owners of this property, they have not been applying their practical judgment to this tax but reading the speeches of the hon. Member.

The hon. and learned Gentleman has ranged over a wide field. I think his principal point was as to what the object of the tax was. The Chancellor of the Exchequer described the constitutional aspect of the tax, and the hon. and learned Gentleman the Attorney-General said that the real object of the tax was to prevent the holding up of land, or, rather, he said it was not a question of holding up, but when once you could show that land had a value in excess of its agricultural value, that that showed that the community had a need for it. I think that that proposition extends the character of this tax a good deal further than we have understood it. I believe that both sides of the House will agree that the real annual value of the thing is something which you can realise; but that is not what this tax is intended to touch. The real annual value, as understood by hon. Gentlemen opposite, is the produce of such value, not that a buyer is willing to give now, but that the Government valuer is pleased to put on the property some years hence. The valuer is to say, "Your property is producing, say, 30s. an acre. Its capital value, looked at from the point of view of agriculture, will not be more than £50 or £60, but we think there is some promise about it. Therefore we capitalise the value which we think it would have if there was a buyer forthcoming, and we charge you upon that." That does not seem to me to be a just way of dealing with property, but that is what is going to happen in connection with this tax. You set aside the exising produce of the land, you calculate what the land is likely to produce some years hence, you consider the income which can be derived on that basis, and you tax a man on that income. The Attorney-General appears to assume that for every bit of land which has more than its agricultural value there is a hypothetical buyer willing to give that value. It is conceivable that land, if it were put on the market at reasonable intervals, might fetch that value, but this tax is not based on that sort of calculation; it is based on the calculation that all the land of the country is put on the market at the same moment. When you are estimating the value of a country house to a hypothetical tenant, you ought, carrying that analogy to its logical conclusion, to assume that every country house was thrown on the market at the same moment. In that case I think the value of those country houses would be considerably diminished. The Government are calculating this tax on the assumption that a buyer can be found who will give more than the present agricultural value of the land, and they are dealing with the whole of the land of the country at once. That, to my mind, is not a fair way of estimating the value.

As regards the object of the tax, the Members of the Government speak with different voices. The Chancellor of the Exchequer, when introducing the Budget, spoke of land which was not used to the best advantage. The object of this Land Tax, as indicated by the Chancellor of the Exchequer, was incidentally to promote the better development of land, and mainly to bring into the market land which is wanted for housing or industrial purposes; but last night the right hon. Gentleman spoke of this land as land not fully developed, and said that the Government required the tax for a penal purpose. The Attorney-General rather objected to that expression, but I think if he looks at the Report of the Debate of last night he will find that the Chancellor of the Exchequer used those very words. So far we have had two purposes indicated for the tax—to promote the better development of land, and to punish those who hold up land which is wanted by the community. The Secretary of State for War told us that the object was to tax people on what they have got. It was pointed out that the Government were proposing to tax people not on what they had got, but on what somebody expected they were likely at some future time to get. The Secretary of State did not accept that view, and he said that if the Amendment of the hon. Member for North-West Manchester (Mr. Joynson-Hicks) were accepted, it would destroy the value of the tax—although that Amendment was directed to carrying out the view of the Chancellor of the Exchequer that the tax was a penal tax, intended to stop the withholding of land wanted in the interests of the community. What we really want to know is this: Is this tax a penal tax; is it a penalty for withholding land; or is it a means by which a benevolent Government desire to guide land-owners into the proper use and development of their land; or is it a means of raising money? If it is the first, it is a very indirect way, and a very unsatisfactory method of carrying out that purpose. If you really believe that land which is wanted for housing or for trade or business purposes is kept back, why do you not give the local authority compulsory powers to take the land wanted by the community—to take it en proper terms, but to take it? Then if, as the Attorney-General says, this enormous accretion of value is due to the efforts of the community, the community might get some benefit out of it. If that is the idea, give the local authorities compulsory power, but do not trust to the indirect operation of a halfpenny tax on undeveloped land. If the tax is intended to guide the land-owner to the proper development of his land, surely yon are endeavouring to divert land from the use to which, with the general consent of the community, it is now being put, and compelling people to put on the land buildings which are not wanted, in order that the land may cease to be undeveloped and liable to the tax. You are, in fact, doing what you are always charging Tariff reformers with doing, namely, diverting the ordinary course of trade; because you are diverting land from the ordinary and natural employment in order to carry out some scheme of your own. Lastly, is it a tax for raising money? No answer has been given to the speech of the Leader of the Opposition, who showed that in all probability the proceeds of this tax would barely, if at all, cover the cost of collection. The effect of the tax in unsettling the market for land and disturbing everybody's calculations as to what the land is worth will far outweigh the trumpery £30,000 or £40,000, or whatever it may be, that the Government expect to realise from the tax.

Now I come to the method in which the tax is raised. How is the value to be ascertained? You, first of all, deduct the agricultural value; then you make another set of deductions, and, looking at what is left, you put upon it any valuation that a valuer may be disposed to choose. The Secretary of State for War said that you take the actual value; but how is that actual value arrived at? The Chancellor of the Exchequer cheerfully assured us that we had very much overestimated the amounts which the valuers would put upon the land, and that really the tax would not lay so heavily as we supposed. I do not think that the owners of undeveloped land will derive much comfort from the cheery assurances of the Chancellor of the Exchequer. Then came someone who really does understand the subject—the hon. Member for Aberdeen (Mr. J. M. Henderson)—who said that there would be no difficulty about valuation, because any valuer can value anything he is asked to value; and he quoted a dictum of Lord Farrer to the effect that the real difficulty was to find a basis of valuation. I am quite ready to admit that any valuer will value any article of property, but I should like to hear from the hon. Member whether he knows two valuers who will value the same article of property at the same amount. Anyone who has had any experience of valuation for the purpose of rating appeals must be aware that any two valuers can put the most extraordinary and discrepant values upon the same article of property. With such small experience as I have had in these matters, I think the estimate which any given valuer will put upon any given piece of land is a mere lottery. The uncertainty arising from the extremely complicated character of the valuation which will have to be made will, I think, disturb the land market and the whole position of land-ownership for a considerable time. Take the case of an owner of land let at 30s. an acre for pasture, not in the immediate neighbourhood of but near a large town. He might sell the land for villas if he wished to do so, but he could not sell it for workmen's houses, because it would be too far from their employment. He can, however, let it for pasture, and does do so to the general advantage of the community, as the community does not want the land. Why should that man, because he is getting an income from his land which satisfies him, land which nobody wants to be employed for any other purpose, and which he wishes to hold, be placed at the mercy of the valuer, who may come along and say: "This land is really worth £200 to £300 per acre," when he is only getting 30s. for it, and out of that 30s. has to pay a tax of 12s.—no doubt for fiscal purposes, but certainly not in the interests of the community for either housing, trading or business? That is the real heart of the injustice to this tax—that you are left at the mercy of the valuer who contemplates a hypothetical buyer, and with all the prospects of litigation which will arise in the case of dissatisfaction with the discrepancy between the valuation of the Government valuer and with that of the valuer you may think it necessary to employ yourself.

The purpose of this tax is obscure. The amount which is to be obtained is practically valueless. The method by which the tax is to be raised is absolutely uncertain. The injustice of the tax, I think, is really manifest to everyone who is not prepared to swear by the illustrations of hypothetical buyers, prospective capital values, and averages of Income Tax. The arbitrary nature of this tax upon the owners of undeveloped land will be shown by the uncertainties which it will introduce in all questions relating to the purchase and sale, or even of the holding, of land, and the contemplation in the case of bodies who have to look ahead as to the disposal of their income; in the calculations of corporations, who certainly do not employ their income for other purposes except the advancement of education, and so on. All these things put together make me hope that not only Members on this side of the House, but some Members on the other side of the House—in spite of the instruction which the Attorney-General thought it necessary to give them as to how they should vote—may be with us in feeling that this tax is not a tax which any Government or any community should impose or accept.

I have more than once expressed my disapproval of this tax, and I now propose to support the omission of this clause. I propose, in a very brief speech, to give one or two main reasons which have prompted me to do so. My chief objection to this proposal is—I think It is shared by many hon. Members on this side—that I think for the first time in our history that an annual tax is proposed upon a capital basis upon a particular class of properly. That, I think, is the inherent injustice, the inherent unsoundness, of this proposal. Amendments have been moved which to a certain extent would appear to mitigate the hardships attaching to this tax on undeveloped land. The Amendment moved by the Chancellor of the Exchequer to omit from the purview of the tax all undeveloped property where it can be shown that £100 per acre has been spent—that proposal has been largely stultified in its future utility by the modification which was inserted at a late hour last night—or an early hour this morning—is to limit the scope of that modification to 10 years. Anybody who knows anything about the development of building property will know that 10 years is not really worth the paper it is written upon in a development of that character. Slices of property, where heavy sums have been spent, will have to bear the full brunt of this lax when 10 years have elapsed. What are the two main reasons why the Government have insisted upon inserting this particular tax in the Budget of this year? I take it the two main reasons are: First, in order if possible to diminish the practice, as has often been said in speeches—especially in this Debate—of the holding up of land. I am one of those who think that the charge of the holding up of land has undergone a good deal of exaggeration at the hands of those who advance this argument. At the same time, I am perfectly prepared to admit that there are instances of the holding up of land. I am also quite prepared to admit the arguments advanced just now by the learned Attorney-General wherein he said that it was not merely the owner who refused to sell, but the man who asked something above the ordinary market value—put on, in fact, a prohibitive value—which would not get any real buyer into the market to purchase the land. There is a certain amount of argument, therefore, to support the thesis of the holding up of the land. The other argument—and it is undoubtedly a very popular argument, and one which also has weight—is that the real value of property under our annual value system does not pay its fair proportion when taken in comparison with a value of that land when it is sold. That argument has been advanced by the hon. and learned Gentleman the Member for Walthamstow (Mr. Simon), and replied to by the Noble Lord opposite. That, again, has a good deal of weight. It is with the view of, if possible, diminishing these two evils that exist that I believe this halfpenny tax has been introduced by the Government. These evils are not of recent history. They have been stated and demonstrated for many years past in Royal Commissions and Select Committees. Anything that Parliament can do to diminish these evils it ought to do. The question is whether the proposal of the Government is one that is qualified to undertake that task. Those who advocate this particular form of taxation, I would venture to believe, fail to realise that the reason why vacant land, no matter how valuable that land may be as regards its capital value, escapes taxation is because it has little or no annual value as compared to its value when sold in the market. I have heard this: "If you accept the principle of annual value you must be consistent in your policy with regard to annual value. If the system in this country is to base your taxation for local or Imperial purposes upon an annual basis it is quite inconsistent whilst believing in that system, and whilst retaining that system, to introduce in an isolated form taxation based upon capital value." I have more than once myself contended that the time has arrived in this country when the whole basis of local taxation should undergo a drastic reform. The need has been demonstrated beyond doubt in various Commissions and the Reports of Committees, as I have already said. The Chancellor of the Exchequer, at the commencement of these Debates, charged me with inconsistency because I was opposing this proposal for a halfpenny tax whilst some years ago I presided over a gathering at Drury-lane, at which gathering a resolution was proposed and carried in favour of land taxation. I want to say, without delaying the Committee with any personal references, that if anybody is inconsistent with regard to the actual resolution passed on that occasion it is not myself, but it is His Majesty's Government. The resolution passed then was a perfectly proper one, and was drawn up in a broad form, to which I adhere, though I will not attempt to say that I adhere to everything that was expressed upon that platform on that occasion by my right hon. Friend the President of the Board of Trade. But I adhere to the general principle, and that principle was this: That there should be a substitution in the future for all Imperial and local purposes of the capital value basis for the present annual value basis. If the Government were proposing that such reform as that should be carried out we should immediately have removed half the inequalities and most of the anomalies which are attached to this halfpenny tax raised upon a capital basis, and applied to the present annual system. It would not be in order for me to develop this argument. All I would say is this: that I am quite certain the real solution and the only practical solution of this evil of the holding up of land, and of the inequality between annual value and capital value is, as is now demonstrated in our rating system, by complete reform of the rating system of the country and the substitution of the capital basis for the present annual basis. If you adopt a capital basis for rating throughout the whole of the country for all purposes everybody would be on an equal basis, and there would be no anomalies. Everybody would be rated on precisely the same basis, and with that equality all round you would find there would be a corresponding diminution of the rating that would have to be applied under the new system on a capital basis.

6.0 P.M.

There is another reason why I object to this tax. As I have already indicated, a tax of this character, if it is to be applied, should be applied for purely local purposes. It should not become any part of the Imperial taxes. If there is any tax in the country which should be applied to the relief of the local rates it should be a tax of this character. It is one quite different in form to the Increment Tax or the Reversion Tax. In these instances it is perfectly just that the State should say that it will take a portion of the revenue derived from them. It can be done upon different operations, on sale and death, by a stamp upon documents. In this case, where you are dealing with actual land in the locality where the enhancement of the land in the locality is the sole business of the people of that locality, if there is to be a tax imposed upon it surely it ought to go to the relief of the rates in that particular locality, and exclusively for that purpose? Then again, I object to this tax because it is singling out one particular form of so-called undeveloped land. We talk about undeveloped land, but there are all kinds and conditions of undeveloped land. There is insufficient development attaching to other conditions of property just as much as that attaching to conditions of land. If you are going to have a tax on undeveloped land I cannot see why, with quite equal logic, you should not have a tax upon an undeveloped house. If undeveloped land is to undergo a tax, why should not undeveloped houses have a halfpenny tax imposed upon them. If you take a street with a row of houses, the majority of which are six stories and the rest three stories, there is no reason at all, upon this argument of undevelopment, why the houses that have only three stories should not be erected up to the level of the rest, and all made to bear the same amount of rating. From the point of view of the ratepayer, that argument is just as sound as the argument for taxing unde- veloped land. Let me give one or two important anomalies that will arise from this tax. Most of them have been stated in this House already, but really in discussing this proposal I do not think they can be stated too often. You have, first of all, agricultural land exempt which is valued at £50 an acre. Of course, that will not exempt half the agricultural land in the country. There is an increasing amount of land worth more than £50 an acre, and that class of land which is purely agricultural is going to bear very heavy penalty under this tax. We are told it is an insignificant tax, and is going to bring in very little revenue. That may be the case when the cost of valuation has been deducted, but what little revenue it does bring in will be brought in with very great hardship to those who are occupiers of agricultural land, and who happen to possess land adjacent to the towns in the country, not only the great towns, like London and the great cities, but every small town throughout the country. The owners of all that land that surrounds these towns, which, if sold in the market, has something considerable in money value over and above its agricultural value, land which in many instances is let at 30s. an acre, but which, if sold, would bring in anything between £200 and £300 an acre, are going to bear, in addition to the present Land Taxes and the expenses attaching to the management of their land, a very considerable taxation, running in money to anything between 5s. and 10s. deducted from the 30s. an acre which they are deriving from their land at the present time. This particular class of land which is being penalised is by no means exclusively owned by the rich. I know from my own experience that it is a very favourable form of investment amongst small people in small towns in the country. They have not the same knowledge as some Members of this House have of the most favourable form of stocks and shares on the Stock Exchange. They do not look outside their own towns for security, and what they usually invest in is the land on the confines of their towns, and they are often prepared to undergo sacrifices for many years in order that they and their successors may enjoy the increment which they hope will in the future be derived from the land which they have bought, when the town stretches out towards it. That land is going to be taxed very heavily for many years to come. It still remains agricultural land, and its owner will only derive 30s. or £2 an acre for many years, and under the present clause of the Finance Bill there will be from 5s. to 10s. additional taxation imposed annually. If it is hard on those to whom I have been referring, what about the people who live in some of the progressive centres of industry in the country, and who own land upon the confines of these centres. Hon. Members upon both sides of the House know large tracts of land adjacent to many of the great industrial centres of England where, owing to the conditions of the town it is almost impossible to get any kind of cultivation out of the land. You can hardly grow cabbages on acres of land in the neighbourhood of some of the chemical, industrial, and mining towns in the centre of England. Undoubtedly there is a very considerable prospective value attaching to this land when the town develops, but at present what is the return to the owner of that land owing to the conditions of the town? It is practically nothing, and yet for many years to come the owner of that class of property will have to pay a heavy penalty upon capital value which will come to several shillings per acre.

Then there is that other class of property which is known as nursery garden property. In the early days of the Liberal party one of the avowed policies of that party—certainly it had been mine and will continue to be mine—was to advance and to promote in every possible way the higher cultivation of this class of property round our towns. These nurseries are in many instances what may be termed the manufactories for the towns of England. They are growing the very produce we want to grow in increasing numbers and quantities in this country for the communities in the towns. The land of this particular class of property is very valuable. Large sums of money have been spent upon its cultivation and manuration, and in many instances it has amounted to a capital value of a very considerable sum. I am not at all satisfied at the present time that under the provisions of the Bill this class of land is to be exempt. Any way, if it is to be exempt, I may point out this: That it will be almost impossible for the most skilled valuer in the world to discriminate and distinguish between the value of cultivation of that kind of land and the value of the site owing to the proximity of the land to the town. I do not believe any class of valuation can be established in this country which in equity or justice can discriminate accurately between these particular forms of value, that is the valuation for cultivation and the additional value of the site owing to proximity to a town, yet that will have to be done, if this scheme is established, in many districts where there are many nursery gardens around our towns. I venture to say that this proposal will have the most depressing effect upon the nursery garden system in this country, and therefore to these three different classes of property you will do a distinct injury if this tax is imposed. This tax will bring in its train a great deal of hardship and injustice because it is impossible to impose it upon political urban areas. As every one knows, there is rural land in urban areas, and there is urban land in rural areas. It will have to be imposed indiscriminately upon all that land which can be shown vaguely by a valuer to have some hypothetical prospective value, and in that case great injustice will be brought about, or else it will have to be fenced round by every kind of reservation just in the same way as the Increment Tax has been, and then you will have to employ not merely a staff of valuers, but a staff of scrutineers in addition to the valuers, not with the view of collecting the taxes and revenue for the country, but with the view of proving that every class here and there of property and people connected with that property are exempt from the tax. I venture to say that this tax is one quite unsound in principle, and I believe, as time proceeds, it will be found to be unworkable in practice. I greatly regret the Government have not seen their way to withdraw this clause and as they have not seen their way to withdraw it, I shall certainly vote for the Amendment.

Having sat in this House day after day and night after night listening with keen interest to the Debates that have taken place, I should like to say, if I may, that there is on this side of the House a much larger number of moderate Liberals who support the Government than is usually supposed. It has often been my privilege to sit on the very threshold of what I believe is known as "The Cave," but in regard to this particular tax—it is not a matter of any consideration to the Government, but it is of some consideration to me —I find myself in the most cordial agreement with them. If I may say so I should like to point to some little confusion of mind which seems to exist among those who resolutely oppose this tax. I listened last night to a delightful speech by the Leader of the Opposition, and I gathered from a careful arithmetical statement of his that this tax is not calculated to produce any revenue whatever. That, may I say, is all the better for the landowners. On the contrary, if it is calculated, as I think it is calculated, to produce a much larger revenue than even the Chancellor of the Exchequer has assumed, then I say so much the better for the Chancellor of the Exchequer. In any case, I am a little surprised to hear, coming from the opposite side of the House, an objection to taxes that produce no revenue, because, if I am rightly informed, there are many distinguished right hon. and hon. Gentlemen opposite who propose to inflict upon this country a system of taxation which will be all the more successful from their point of view the less revenue it produces. Well, perhaps I may be pardoned, and I hope I shall not be out of order, if I recall the attention of the Committee to one or two simple facts in regard to this proposal of the Government. One would suppose from the Debates that have taken place in this Committee that this question of taxing or rating undeveloped land has never been thought of before. It is well known to every hon. Member of this House that this subject has been actively canvassed, not only in this House, but by Royal Commissions with the most imposing personnel. I should like to remind the Committee that on the Royal Commission on the Housing of the Working Classes, 1884, the, principle which is now introduced in the form of legislation was sanctioned by a very eminent body of public men. Then there was the Local Taxation Commission of 1901, where we had a minority Report signed by some of the most eminent statesmen and publicists of this country approving of this principle. The principle has been approved by every great municipal authority in the United Kingdom, and I think I am right in saying that it has been advocated at elections by Conservative candidates on innumerable occasions. If the Government were proposing to impose a rate on undeveloped land there would not be many Members of this Committee who would object to it. I want to know what is the difference in principle between a tax and a rate, especially when under one of the concessions made by the Chancellor of the Exchequer one-half of the proceeds are to be devoted to local purposes? Surely the plain fact is that there is a great amount of urban and semi-urban land which is avoiding the rates. I am very familiar with two ancient boroughs in this country, and it is an undoubted fact that in both those instances there is a considerable area of land running into and in proximity to those boroughs which is essentially urban or semi-urban land, and some of that land pays no rates at all, and the rest of it is paying an agricultural rate, reduced under the Agricultural Rating Act. The fact is that this land is avoiding its rates, and that, I think, was a fact very much present to the mind of the Royal Commissions. It is also recognised by the great municipal authorities, and I think it is one of the reasons why this tax is more or less popular in the country. This land is able to hold its extraordinary value very largely by reason of the expenditure of the rates by other people, together with the general industry and energy of the community. The hon. Baronet the Member for Chippenham (Sir J. Dickson-Poynder) often adduces in this House certain awful examples of such a tax. He speaks of land worth £200 and £300 capital value producing a revenue of only about 30s. a year. In a former discussion the hon. Baronet mentioned cases where £1,000 and £1,200 capital value produced a rent of only about £5 a year. What is the reason of this extraordinary disparity between the capital value and the rental? Is it not obvious that the owner of such land is willing to stand out—and it is a perfectly legitimate speculation—of a possibly higher rent in order that he may realise a big lump sum later on? He is only able to do that, in my estimation, because of the rate expenditure in the populous centre near him, and because of the energy of the population occupying that centre. I think it is a perfectly fair thing to say to a man occupying that position, "If you keep in suspension these large sums of capital value in the hope that in the end you may realise at a higher price, the community is entitled to take some share at all events of that increment for the purposes of the community." I think it is a very modest share as proposed by this Bill. If it is true, as has been stated, that this tax will sometimes absorb the whole of the actual rent which is now being enjoyed by the landlord, the remedy is perfectly simple, and it is to throw the land into more profitable use. We have had some awful examples of the ill-effects of this tax. May I give one example of the ill-effects of the present system? I am familiar with two ancient boroughs which are very much under the sort of unreasonable landlordism that holds up the land. We have heard a good deal about health resorts. One of these boroughs to which I refer is a health resort. I do not wish to advertise it here, but it would be one of the most popular health resorts if it were allowed to develop; but in point of fact the land of this ancient borough is in only one or two hands, and the owners put a price upon the land which I do not say is extortionate, because they can charge anything they please, but I think it is most unreasonable. This borough is surrounded by a ringed fence of undeveloped land, the value of which has been created by the ratepayers in the borough, which would expand wider and wider if allowed to do so. I do not think it will be any hardship on landlordism of that kind if it were made to contribute something to the expenses of that borough, and I should enjoy it very much if one byproduct of this tax is to force this particular land into the market. My right hon. Friend the Chancellor of the Exchequer has made many concessions, and I think he has been wise to do so where they come within the spirit of this Bill. I think it would be in the highest degree unwise to tax as undeveloped land that land which at the present time is fulfilling the highest purposes of development. The Noble Lord the Member for Marylebone (Lord R. Cecil) referred to Temple Gardens. If they are not exempted under this Bill, unquestionably they ought to be, because those gardens, and others more in the centre of London, are in the highest possible form of development. I am glad my right hon. Friend has made concessions in regard to these taxes, because they are, to a large extent, experimental, and unquestionably every tax of this sort is bound to create hardship in cases here and there. I hope the Government will not concede so far that these taxes yield no revenue, because, if they do, they are depriving their tax of its chief raison d'être. If they do so, they will be exposing themselves to the sharp wit of the Leader of the Opposition, and possibly to some sort of obstruction in another place. I hope the Government will meet with every possible success in regard to this particular Land Tax, and if their right to impose this tax is challenged in another place it will be the very best thing that could possibly happen to this Liberal Government.

Of all the forms of taxation dealt with in this Bill the Undeveloped Land Tax seems to be at once the least defensible in principle and also the most novel. In the course of these Debates we have heard several theories of land taxation put forward authoritatively. With regard to the rise in the value of land, and particularly in regard to urban and suburban land, we have heard one theory put forward, which is that that rise is normal, regular, continuous, and progressive. We have heard another theory, that any added value to land comes in the nature of a windfall. We have been told by the Prime Minister that the Increment Tax is in the nature of a windfall. The Undeveloped Land Tax is, I suppose, rather in the nature of a tax upon land whose value is normal and progressive. I may observe that those two theories are really quite inconsistent with one another. If the rise in land is regular and progressive it cannot at the same time be occasional, capricious, and occurring only at uncertain intervals. For the purposes of the Undeveloped Land Tax I rather imagine that the second of those theories is the one which will be chosen, because it depends upon the assumption that all land over the value of £50 in excess of its agricultural value has an assured prospective interest, and that it only depends on the owner's will and his skill to make that potential increase a natural increase. I would like to call the attention of the Committee not to the speeches made in defence of this tax, but to the tax as it is in the Bill itself. Nothing has been more inconsistent than the utterly different grounds on which various speakers have based their defence of this tax, and the grounds which are contained in the Bill, which are the only grounds upon which we can go. Under the Bill itself it is assumed that anyone who holds land of the kind described can, if he will, develop it, and develop it at the word of command. If you want to find out whether your land is liable to this tax or not the test question is whether it is developed or whether it is in process of development. The question is not what orators outside have led the country to believe is a wicked withholding of land from building purposes; the real question is whether it is developed or in process of development, and if it is not then it ought to be developed, and anybody who does not develop it is liable to the strong compulsion of this penal tax. I should have thought that there was another question which was simple and business-like, and far more fundamental. Not has it been developed or is it being developed, but is it fit for developing? Can it now be developed profitably? not merely is it in general fit and suitable, but is it ripe for development? Is there a reasonable demand? Is there a market value? According to the Bill, if buyers are not forthcoming the landlord is penalised. He is to suffer for any want of desire on the part of the investing public. It is assumed that the owner is a wicked withholder of land which is wanted by somebody, but if it is not wanted it ought, according to theory, to be wanted. Yesterday evening the Secretary of State for War (Mr. Haldane) tried to explain the nature of this tax. I do not think anybody who reads the Bill can question the plain fact that it is a tax on hypothetical value. The Secretary for War said it is a tax on actual capital value, realisable in the market. He says the Government takes the solid fact of what the property would fetch in the market. Let us face the reality. What is the solid fact? It is a valuer's guess, and nothing more—a guess, I admit, that is based upon certain rational considerations, but still it can under no conditions be anything more than a fairly good guess. It is out of the question that any valuer could possibly say what at a given moment in a given year—for that is the problem—is the value of each particular plot of land if all the plots were thrown into the market at the same time. No valuer could give anything like a true estimate of that. Yet the tax is levied on land which may not be capable of coming into the market at all—land which has a value that may not be realised for years, and may perhaps never be realised at all. What is the object of the tax? According to its best exponents, it is to force land into the market, with the further intention of bringing down rents.

I would ask the Committee to consider how a tax of this kind can cheapen land. It is not, as has been suggested this afternoon, like a tax on tea, but it is a tax on the raw material of the building industry. It is the contention of hon. Gentlemen opposite that such a tax can stimulate production, can reduce the price of an article, and can increase the supply of that article. That is an idea in political economy, which I should have thought nobody held on either side of the House, whatever may be their differences in mat- ters of detail. According to this theory, all you need to do is to clap on additional cost to the builder, and multiply his risks. Remember the process of building is already slow, costly, and speculative. It is liable to many fluctuations. Advance is suddenly arrested, and the movement goes on in an unforeseen direction. It is checked in the direction in which it has already been going. What is the remedy for all this? All you have to do is to burden the industry with new liabilities, and to hamper it with fresh obstacles. Not only so, but after the land has been developed, if by any misfortune it should again, owing to various causes, cease to be developed land, if the public taste or fashion veers in another direction, and if the land becomes vacant and unoccupied, or used for some other purpose, then you have your sovereign remedy at hand. What is it? All you have to do is to water the soil again with this fructifying tax in order to make it bloom forth once more into building land. Was there ever such a preposterous notion of political economy?

May I in the course of two or three minutes call the attention of the Committee to the nature of this tax as compared with other taxes under the Bill? Take the Income Tax, the Increment Tax, and the Undeveloped Land Tax. Under the Income Tax a man is taxed on the annual value of property he possesses. Under the Increment Tax he is taxed according to the origin of his property. Under the Undeveloped Land Tax he is taxed according to the use he makes of his property, that is according to the moral deserts of the owner. I think it needs a far more delicate moral calculus than either an Act of Parliament or a valuer to decide what are the moral deserts of any person who holds property. Under the Income Tax he is taxed on something he has, and which he is assumed to have a right to. Under the Increment Tax, according to the prevalent doctrine seen in this House, a man is taxed on something he has, but which he is presumed to have no right to. Under the Undeveloped Land Tax he is taxed on something that he has not, but which he ought to have, if only he had made proper use of his property. Under the Increment Tax you are putting a tax on ill-gotten gains, and a man who pays the tax pays it in partial restitution for stolen goods. Of course, you cannot get at the original robber, so you take as the nearest man, starting from this year, the person who is his direct heir and successor. The Undeveloped Land Tax is not a tax on ill-gotten gains, but on ill-used possessions. It is a penal tax on the bad husbandry of your property.

I would ask just two questions. Is it a sound method of taxation to tax a man, not on what he has, but on what he has not? The Undeveloped Land Tax is far worse than the Increment Tax. Under the Increment Tax you at least have got a certain actual increment, although the way it is calculated may be very much guesswork. Under the Undeveloped Land Tax you have avowedly not got anything of a realisable value or anything perhaps which will ever be realised. It is at best a prospective increment, and may never become actual. Is it a sound method of taxation to levy taxes on castles in the air? Are such taxes, eating as they must into capital, likely to encourage the building of houses of solid structure that are on the earth and not in the air? The other question is this: Can the State profitably lay down one right use, and one right use only, for all land that is over £50 an acre in capital value? Can the State undertake to say if that land is used for agricultural purposes it is wrongfully used? Can the State say that, if that land is used or a part of it of more than one acre for a garden it is a luxury for which we must apply penal taxation? And, more generally, is it not absurd for any Legislature to describe one single specifying way in which land, infinitely varied in the conditions which affect it, shall be employed. I do not believe any House of Commons or any Act of Parliament can have the economic insight and foresight to lay down any such rule, or that any Government officials could possibly carry it out fairly. The truth is, it is outside the province of the State, and my belief is that any system of taxation that is based on that kind of intervention is unsound and perverted. It is sure to induce economic confusion; it is sure, also, to inflict great injury in individual cases, and I believe it is almost sure to bring about effects directly contrary to those you intend.

The hon. and learned Member for the Cambridge University (Mr. Butcher) criticised this tax on undeveloped land, because, he said, it fell on any land which was not used in one prescribed way. I venture to think that is not the effect of the Bill, because all the Bill says is, not that land in order to escape taxation shall be used in any one prescribed way, but that it shall be used for the best economic purpose. If land is fully developed, if it is used for the purpose for which the community want it, then that land, under the provisions of the Bill, escapes taxation. The hon. and learned Member, further, brought forward the argument that we were taxing under this Bill the raw material of the important industry of building. If this Bill had provided that there should be a tax upon all land, whether not built upon or built upon, then I think it would indeed be open for hon. Members to argue that this was, in effect, a tax upon the raw material of the building industry. But we must remember that the tax under this Bill ceases absolutely not only when land is built upon but when land so nearly approaches the built - on stage that a certain amount of money has been spent upon it in the development of roads and in other respects. So we have no more tax upon the raw material of the building industry than we should have on raw material of export should there be a tax on raw material and then a rebate. I think one of the chief points which has been taken in this Debate against the tax on undeveloped land has been the point that, in many cases, this tax will amount to a very large proportion of the annual value of the land. The hon. Baronet the Member for the Chippenham Division (Sir J. Dickson-Poynder) gave the Committee some very striking cases where land which, he said, was worth barely anything for agricultural purposes, because of its contiguity to a smoky manufacturing town, would have to pay in taxation under this provision several shillings per acre per year. The hon. Baronet gave another case of agricultural land worth £1 or 30s. per acre for agricultural purposes, which, he said, would have to pay some 5s, or 10s. per acre as Undeveloped Land Duty. But when one considers that land has to be of the capital value of £500 before it bears an amount of Undeveloped Land Duty equal to £1 a year, one must see that, in the cases given by the hon. Baronet, this land, of which he gave the agricultural value as £1 or 30s., must have a capital value of some £250. Surely hon. Members who know anything of the price of agricultural land fit for building when sold for that purpose must realise that that kind of land is not land which would be ripe for building fifteen years hence. It would not be considered as ripe for building now. It is land, in fact, which is over-ripe for building, and I think that in instances of that kind this land would in the normal course of events have been developed for building years since. It is not very pertinent, I think, to compare the amount of this tax with the value of land for agricultural purposes, and for this reason. Under the provisions of this Bill the capital value of the land is divided into two parts. There is one portion which is due only to its value for agricultural purposes, and that portion of the capital value is exempted from this tax on undeveloped land. But there is another portion of the capital value which is due to the fact that there is a demand for it for other than agricultural purposes, and for it consequently higher prices would be given. Why should a man who holds land of this character allow a large portion of his capital to remain vested in the land when, according to hon. Members opposite, it brings in no annual return? If some portion of the capital gives a return for agricultural use, the other portion, according to the hon. Member, gives no return whatever, and therefore should not be taxed under this provision. But owners are not so simple as to keep their money invested in this kind of land unless it brings them in some return. What is that return? Take the case of the Trafford Park Estate. I gather, from what has been said in the course of this Debate, that the shareholders have received no dividend on the money they have invested. Surely the shares are by no means valueless? The shareholders may not get an annual dividend, but they rest content in the knowledge that year by year the value of their property increases. When a man invests in land of this kind he does so for one of two reasons. Either he believes it will return him his interest in full at the end of a certain period of years, or else he keeps the money there because he gets, not an annual return in pounds, shillings, and pence, but an annual return in the shape of the enjoyment he gets out of the land. Take the case of a man who has a park near a large town—the kind of park which hon. Members opposite suggest will be broken up under the provisions of this Bill. That man is keeping invested in that land money which might be more profitably employed in business, but his return for the investment is the enjoyment he gets out of the park. I venture to suggest that the case of the Trafford Park Estate is somewhat similar, and the reason why a man keeps his money invested there is that he is convinced that land is rising yearly in value. It is the same in the case where a man has a large quantity of land around his house. He keeps his money invested in it because he is getting an annual return, not in pounds, shillings, and pence, but in the shape of enjoyment. That return pays no Income Tax and no contribution to the local rates, and I therefore submit that, on the ground of justice, it cannot be asserted that this Undeveloped Land Duty is not fairly payable by it.

I think it will be admitted, even by those who regard this tax as an eminently just one, that it requires some defence, for this reason if for no other. Plainly and obviously, by the admission of friends and foes alike, the tax is upon particular owners of a particular kind of property. Certain individuals in the community have been selected, not because they are specially able to bear the tax, but because they happen to own a particular kind of property, and having been thus selected by the action of the Government from the general mass of their fellow citizens, on them, and on them alone, is put a tax which has no justification at all except that which may be deduced from the property which they happen to possess. Everybody must admit that a tax of that kind requires special justification. I wish to know what the justification is. I listened to this Debate with a view to extending my knowledge and improving my mind on that subject. One hon. Gentleman, and one only, in the course of this evening has rested his case upon authority: that was the Member for Mid-Worcestershire (Mr. C. B. Harmsworth). He referred, as other Gentlemen have done on other days, to the findings of certain Commissions which have dealt with this subject, and which, he declared, have admitted the principle and accepted the theory on which the Government are now basing this tax. But the hon. Member is entirely mistaken. What those who defend this tax have got to show is why this particular class of the community are selected for exceptional treatment. What the Commission he refers to dealt with was whether certain people who owned a particular kind of real property within the area of certain boroughs should be exempted from the rating system which applied to their neighbours. These are things wholly different. I am not one of those who are convinced that this kind of property should be treated as this Government proposes, even from the rating point of view. The two things are not pari materia at all. The whole contention, and the contention of the hon. Gentleman himself, was that th3 people who owned this kind of property did not bear their full share of the rates of the town in which the property is situated, although their possessions were augmented in value by the rates paid by other people. The minority of the Commission on which he relied wished to tax this kind of property, as they regarded it as exceptional. But we cannot stretch the argument which impressed the minority of the Royal Commission in the matter of rating so as to include the proposals of the Government. The general nature of the argument is exactly opposite in the one case to what it is in the other. The minority of the Royal Commission thought the land which was exceptionally treated ought not to be so treated. I think it should not be. The Government think it should be, and I think the hon. Gentleman will see that that argument really disposes of any attempt to base this tax upon the findings of any Royal Commission. Then I turn to an argument which is a platform argument, and one which figures whenever a Minister wishes not to explain his Budget or to defend it, but to obtain cheers for the moment, and, if he can, votes in the future. That is the argument known as "holding up." I myself have a profound distrust of any legislation deliberately directed towards inducing any man to sell that which belongs to him for a smaller price than he thinks he can obtain if he is treated like his fellow citizens. I do not think it is a good plan. I think it is extremely difficult to justify on general principles, and I boldly assert that, whether it be just or unjust, it will not deal with this evil, if evil there be, of holding up. The Government themselves think it an evil. I have listened to the Attorney-General this evening replying to the arguments urged by an hon. Friend behind me, to the effect that this tax would bring into the market those suburban villas, with their trees, grass, and gardens, which are such an ornament to the suburbs of some of our big towns. What was the reply of the learned Attorney-General? The learned Attorney-General says, "Do you mean that a tax of this trifling magnitude can have the smallest effect in inducing any man to sell his land, or diminish the size of his garden, or cut down his paddock, and curtail his amenities?" The learned Attorney-General derided the idea, and I do not say he is wrong; but, then, what becomes of the platform argument that the amount of this tax is going to increase the amount of land which is thrown into the market for building purposes? It is clear that the very people whom you would wish to sell are the very people who will not be induced to sell by this tax. You may induce a man to sell whose property is mortgaged up to its limits, and who has no great hope that if he can hang on he will get an enhanced price. That is not, in the first place, the man you wish to penalise, and in the second place, by hypothesis, there is no great prospective value, and by holding up he will not make any prospective demand which is going to produce that great prospective value of that property. The man who will hold on to his land is the man who thinks that there is going to be a great prospective demand in the future, and, whether right or wrong, he will not sell; he will not put a single rood of land into the market, because you put this halfpenny in the £ tax on his capital value. Therefore, it seems to me, that by the argument of the Government themselves, when they are dealing with another part of the Bill, and also by the very nature of the transaction which we are considering there is no prospect—at least, I can see no prospect—of the tax having any such effect.

Then I turn to another argument, advanced by the hon. Member for Waltham-stow (Mr. Simon), who took quite a different line. He said this kind of property, which does not bring in any great income from year to year, but has a great prospective value reflected in its present market value. This land escapes Income Tax, which it really ought to pay; at the end of a certain number of years the owner of that land will find himself possessed of a capital sum, which has been accumulated without in the process, of accumulation the owner having to pay a single penny for it. That is an argument which the Government have forborne to use, probably for this reason, that they have not attempted to assimilate this to the Income Tax at all, and have not attempted or tried to say, here are owners of a class of property you may in imagination at least conceive that property in terms of income, that income escapes Income Tax; let us arrange our system of taxation so that it no longer escapes Income Tax. They have not done that; they have not attempted to put forward a single argument in favour of doing it, nor would it be fair to treat one particular kind of property as a special subject for this kind of Income Tax on an income which does not exist, but is capitalised in the imagination of the valuer. However ingenious that argument may be in the case of another Budget brought in by other Ministers, imposing other taxes, it really has no application to a Budget in which a tax on capital value is applied to one kind of property and has no relation to that accumulated Income Tax, the hypothetical belief in which is, according to the hon. and learned Member, the true basis of any taxation of capital. I do not dwell upon it, though I think it is one of the most ingenious arguments which has been used in the whole course of our Debate, but it is one which has not commended itself to the Government at any stage of our discussion, and is not applicable in regard to this particular kind of tax.

Then there was the argument, on which the hon. and learned Attorney-General chiefly based his contention, the argument of the unearned increment. The hon. and learned Gentleman said that we had never met, and we had never tried to meet, that argument; it was one which we had put severely aside and never touched in these Debates. I have never felt the force of the unearned increment argument at all. The idea is, in the mind of the Attorney-General, that in the case of every kind of property which is not due to actual present exertions of any individuals, and which increases in value, that increase must be taxed. Is that his view seriously? Property, I do not care what it is, depends for its value upon the community in its vicinity. That no one can deny. If you think that property is an institution which should be preserved, the mere fact that it depends upon the community and not upon the owner ought not to afford an argument for any species of taxation at all. We all desire—at least, it used to be the desire on all sides of the House—except on the part of those who think there should be no property at all, those who take the view of extreme Socialism—all parties have thought it an excellent thing to say to the working class and individuals, buy property, invest in property, and directly they do the thing which you desire, and which you have encouraged them to do, and which you have mourned that they did not do sufficiently, then when they have become owners of property it depends no longer upon their exertion but upon the community, and whether it rises or falls in value it is no longer the effect of the action of the possessor of the property or any particular member of the community, but of the action of the community as a whole, of the laws of supply and demand, of the changes of fashion and habits, and of all the complex social forces on which society is based. When you talk therefore of unearned increment on property, I would say that all increment on all property is unearned. I am not talking of the actual mills which a man may have organised; I am talking of the actual invested property. If I put my money into London and North-Western stock, and it rises, that is unearned increment of precisely the same kind, and is due entirely to the same class of social forces. It is certainly not due to me or anything I may do. The Attorney-General may differ from us on that point, but do not let him say that we do not meet the argument. We quite admit that property is liable in any society, and most of all in a complex society, to unearned increment and unearned diminution—increase and diminution for which the owner of that property is in no sense responsible. When it increases in value you are going to tax it, and when it falls you are not going to repair the loss; then, I say, that you are treating that property exceptionally, and you ought to find what you have not succeeded in finding yet, some justification for your particular proposal.

The next argument is that land, especially undeveloped land, is a particularly appropriate subject for taxation on capital value. I venture to say that it is an extraordinarily inappropriate subject, for that particular kind of taxation, and I will show why. Undeveloped land is in the nature of a speculative stock. I quite agree with the learned Attorney-General and others who have spoken that the Government do not mean to tax its future value. I quite agree with that. What they want to do is to tax its present value, but its present value depends upon speculation and anticipation which may or may not be realised, and which from the necessities of the case is peculiarly speculative in its character. Therefore, you are taxing property which has an appropriate market value. Therefore, you may tax property which has a real market value, but you ought to try and tax, if you tax capital value at all, capital values which have not got this immense speculative element coming in, to determine what that capital value is. You know much less in the one case what you are dealing with than you do in the other. There is another question which grows out of that, and is more important. It turns on that very difficult question, market value. What the Government say is, granting you may put a tax on land and a special tax upon undeveloped land, on that assumption we are only taxing what a man has got, and no doubt what he has got he has got, because there is an anticipatory value merged into its present value. Its present value depends upon the anticipation. In a large market like Consols, nothing in the ordinary way greatly varies the present value, but in the case of a very speculative stock that is not so. The mere fact that you are putting on this tax, if it carries out your anticipation of putting land into the market, will have an effect upon that value which it could not have if you were dealing with a great market like Consols.

The market for land is a small market—that is often what is forgotten. It is perfectly true that the amount of land is prodigious. The number of acres is very great around London and other towns, but the actual amount of land required, let us say in the North East corner of the great City, is a very small part of it, and if you force one property into the market you must force all, and thus gorge the market, and the value of neighbouring property goes to nothing. You cannot sell. The value of my Consols does not depend, in ordinary times, upon what my neighbours buy or sell to any great extent. Nothing short of panic will make any violent or great change in the value of that particular stock, but supposing one estate is sold in the neighbourhood of Fulham, no more land may be required for 20 or 30 years. It depends upon small local accidents of fashion and small controversies between this speculative builder and that landowner which of the possible sites is the site which will be chosen, and if you force into the market one acre more than is required to meet the needs, not of the Kingdom, not of London, but of that particular portion of the circumference of London, the whole of the rest of your land goes down in value, and this idea of the market value really becomes so loose and so uncertain that I do not think you can count upon it, and your own tax destroys your own valuation. That is the point. It is one thing to bring in a Valuation Bill in which the value will be taken without the tax, and another thing to associate that with a tax which will destroy the results of the valuation, and your tax, if it carries out your own intentions, must act in this arbitrary way. If it brings land into the market, it is inevitable that unless it is brought in in very small pieces—if it forces an estate into the market—the whole market in that region will be upset in a way in which no ordinary property is upset by the ordinary day-to-day transactions of the market. Therefore there is no analogy between the market for stocks and the market for building property. They do not resemble one another; there is no comparison between the two; and if you are to choose one kind of capital value to be taxed rather than another, you are choosing a kind of capital value which, from its very uncertainty, is the least susceptible of that special kind of taxation.

Another argument was advanced by the Attorney-General with great confidence. He said, after all, even the opponents of this tax must admit that it does not interfere with any trade or any industry. That was really a most astounding statement. He himself admitted that it interfered with the market-gardening trade, because, whereas the Government and their supporters have been congratulating themselves for the last two or three clays that they did not touch agricultural land, it now appears quite clear that in the view of the Government itself it does touch agricultural land, and is intended to touch agricultural land. The object of the Government is to force land into what they call the best economic use, and the best economic use, as defined by the Attorney-General, would lead to this conclusion: that if a shilling more per acre could be got for building purposes than could be got for market-gardening purposes the market garden is taxed. It really is absurd to tell us that it is not interfering with an industry. It may be substituting a better industry for a worse. It may be better to have tenement houses than market gardens. I do not argue that now, but you are interfering with industry. You are deliberately altering the course which industry would follow if you did not put on this tax. That is as much as to say that you are differentiating against agriculture by the imposition of this tax. I do not see how that can be denied. I am sure that it cannot be denied by any Member of the Government. There is another point of view in which I must press this particular branch of the subject home. The Government have, from their own point of view, quite rightly yielded to the stress of many unanswerable arguments so long as the number of voters affected was considerable. They have only shown a stern and iron front when they thought they were dealing with very small minorities. In obedience to this particular form of the law of self-preservation they last night laid it down that if £100 is spent on an acre within 10 years—they ventured on 10 years at five o'clock in the morning, when the Prime Minister and I were enjoying well-earned repose—that acre was to escape the tax. That was quite a good plan for conciliating a certain number of building companies and speculative builders; but I want to ask whether that Amendment was really sufficient to make it clear to those who own land, and who have in their possession resources enabling them to develop it on a large scale, that it is going to help them? I do not mean individuals; I am talking of the public. There are plenty of cases in which owners, who happen to be wealthy owners and are able to borrow, or who originally owned resources Which enabled them to carry out work for development, not by spending £100 on successive acres, but by roads, railways, large works and large arrangements costing money and of infinite value to the community, are going to remain unperturbed and unmoved by this halfpenny tax. In the view of the Government it is a small tax. I will not argue whether it is small or great, because by universal admission it is put on in order to be increased. From my present point of view that is a most important consideration, because it is the anticipation of an increase of the tax. I am not going to spend money in adding that value to land which will bring me not merely under the actual halfpenny tax proposed by this Government, but under an indefinite succession of future taxes, which like-minded Governments may desire to impose upon them. The resources which, under different circumstances, I would gladly have expended on improving my property for the benefit of the public I will use elsewhere, possibly at home, more probably abroad. I do not think it will be denied that these cases will occur. I do not think it will be denied that if they occur this tax will interfere in the most serious way with trade and industry, and that, which was the last argument used by the Attorney-General, seems to me to break down completely when you examine it.

There was one more observation of the hon. and learned Gentleman which I cannot leave on one side. He said taxes are very disagreeable things, and they must injure somebody, and the point is to make them as little injurious to the community and to that somebody as you can. That really brings one to a matter on which we cross-examined the Government for two days in vain. I have spoken in vain, if I have not made even those Members of the Committee who differ from me feel that this is a very exceptional treatment of a particular kind of property. I do not think anyone would desire exceptional treatment of a particular kind of property in a Budget Bill unless it was to bring in money to meet a great necessity. We all admit the great necessity. Where is the money? The hon. Member (Mr. C. B. Harmsworth) referred to some calculations on my part made last night with regard to the yield of the tax, and he said those calculations did not commend themselves to him. That is perfectly right, because those calculations were only based upon the utterances of the Government. The calculations of the Government, though few, are so untrustworthy that it is almost impossible even to form any estimate. May I repeat the difficulties that we feel on the financial aspect of the question. In your original Budget estimate you massed together two taxes, the undeveloped minerals and the undeveloped land. You said these two taxes together may be estimated in the first year to bring m £350,000. Of that £350,000 half was to go to the undeveloped land and of that half it is proposed to give half to the municipal authorities. That leaves a quarter of £350,000 as the whole result for the first year of the tax you are now putting on. That total result of £85,000 has to be diminished by the concessions which the Government made later in the evening with regard to certain undeveloped land which they proposed to exempt. Now, you are really raising a sum which, when you are dealing with £16,000,000 deficit and £160,000,000 of taxation, is absolutely ludicrous. What is the good of the Attorney-General telling us that of course taxation is a very painful thing to impose, and that it injures the taxpayer, but that there is a great public necessity. Your public necessity is going to be helped to the extent of £70,000 or £80,000. I do not see that this tax is going to increase. Why should it? Undeveloped land is going to diminish. The number of acres on which the precious £100 will be spent is an augmenting number, and I see no reason to believe that the number of acres which will come under your tax is going to be seriously increased in the future. If not so, perhaps the Government will explain how or why? They have not explained it so far. This we have a right to know.

The question to be put by you, Sir, presently, is, "Shall the clause imposing this tax be added to the Bill?" and will it be believed that we have been discussing this now for more than 24 hours? We have asked question after question and we have never yet got from the Government in charge of the national finances the smallest estimate of what the tax is going to bring in, or the smallest justification for producing so great a disturbance of public confidence, introducing principles so absolutely novel. For a paltry and contemptible sum, the price of a single picture which was preserved from going to America by the generosity, partly of the Government and partly of the public, you are going to upset your whole fiscal system, introduce these novel principles and introduce all this disturbance. When all these facts are enumerated, is it not perfectly plain that the Government are not introducing this tax for the purpose of getting money? Their desire is not to meet a great national emergency, to build "Dreadnoughts," to find money for old age pensions, to found Labour Exchanges, or to meet the deficit of £16,000,000. No great Government would ever have so perfectly preposterous a plan for dealing with so great a necessity. They have very different objects in view, and what those objects are are perfectly plain, not only from the Debates in this House, but far more from the speeches with which Members of the Government have favoured us in the country outside this House. This tax is not a tax to get money. It is a tax to get votes. It is a tax, and it is cynically put forward as a tax, which is going to catch votes, because it affects the few and leaves the many untouched. A more contemptible calculation, a more preposterous method of dealing with great interests under the guise of meeting the national necessities never was presented by any Statesman of whom this country has any record whatever. And though I understand that Gentlemen on the Ministerial Benches say that this tax is highly popular. [An HON. MEMBER: "Hear, hear."] One Gentleman thinks it is clear that it is—but I say that if it is popular it cannot bear even to the party that has introduced the tax any useful fruits whatever, and as regards our great national traditions of finance, it is one of the greatest shocks that any Government has ever inflicted.

I am sure every Member of the Committee, in whatever quarter of the House he may sit, shares my regret at the cause of the absence of the Chancellor of the Exchequer, who by the acknowledgment of all has in the Committee proceedings on this Bill exhibited, not only conspicuous ability, but unfailing temper. The right hon. Gentleman the Leader of the Opposition, both at the beginning and at the end of his speech, with almost unusual vehemence announced his conviction that this was a tax which needed what he called special justification. Well, all new taxes need special justification. I have known the right hon. Gentleman propose taxes which needed a great deal of justification, and I am bound to say that arguments were put forward in support of them with an austere disregard for their electoral, as well as their fiscal value, which he has been preaching so eloquently to us to-night. But I agree that this tax, like all new taxes, does require special justification. Why, says the right hon. Gentleman, are you selecting a particular class of owners for exceptional treatment? I am rather glad he has put the question in that form, because it admits of a precise and concise answer. They are selected for the purpose of this tax because of the exceptional position in which they have hitherto stood, which has enabled them and the property they own to escape their fair share of contribution to the resources of the nation. That is what the arbitrary selection, when it is analysed, really comes to mean. What are the real and undisputed facts in regard to this matter t It is not denied that what this Bill calls undeveloped land—that is to say, land which is lying vacant or being applied to agricultural purposes when, from the point of view of the community, it might be more advantageously and economically applied to other purposes—at is not denied that such land exists in large quantities in this country. There may be some dispute as to the precise amount of it. There always will be; but that it does exist, and in large quantities, there is no serious controversy. It is not denied—it follows from the proposition I have just stated—that much of this land which, ex hypothesi, could be more economically applied to other than its present purposes, is being withheld from building, and therefore checks the development of our great communities. Thirdly, it is not denied that the owner of such land only makes his contribution, whether it be to local or Imperial taxation, upon what, if the two previous propositions are true, is a wholly artificial and inadequate basis.

That is the case for the Undeveloped Land Duty, and unless these facts can be traversed and got rid of, the foundation in principle and justice for what the right hon. Gentleman calls this exceptional treatment of a particular class is well and truly laid. But I agree even if you admit that, questions of great practical difficulty and complexity do arise in the application of your principle. You have got to find some means of determining what, for the purpose of the tax, it is fair and politic to regard as undeveloped land. That is the crux of the problem. Now, I believe we all agree that agricultural land, in the true sense of the word, by which I mean land which is economically applied at the present moment and under existing conditions to agricultural purposes, ought to be exempted from the operation of a tax, of this kind. I do not think that there is any difference of opinion about that. But when you come to try to draw the boundary line between land which falls within that category, and clearly ought to lie outside the scope of your tax, and land which is undeveloped land in the proper sense of the term, there are only, it seems to me, two criteria which you can possibly adopt. They are on the one hand the criterion of local situation, and, on the other hand, the criterion of value. I do not know any other method by which you can find a solution of the problem. The criterion of local situation is obviously most misleading and most unsatisfactory. To take land which is within urban districts and say that any such land should be treated as undeveloped land, and to take land which is in rural districts and to say that any such land should be treated as agricultural land is a proposition which any one acquainted with the geographical and economic conditions of the country would say is a proposition absolutely impossible to sustain. Indeed, it often happens that it is in the rural districts which lie outside of the urban areas that the evils of the holding up of building land under the existing state of things are felt. Therefore, I am quite sure that anyone who, accepting our principle, practically sought to apply it in a reasonable way would abandon the criterion of locality.

Now we come to the question of value. I confess I listened with a great deal of surprise to the speech made by the Noble Lord the Member for Marylebone (Lord R. Cecil). The Noble Lord seemed to assume that you cannot tax except upon that which a man actually receives; any other form of taxation violates the eternal and immutable principles of justice. Consider what that means in such a case as this. It would mean that the owner of land on the fringe of a growing community could not only fix the purpose for which his land should be used, but dictate that, although it is needed for building, it shall continue to be used for farming, and that there is no right or power in the community under such circumstances to tax him on the footing that he might have received that which he could have received, and which by his own act and his own act alone, he refuses to receive. I know of no canon of taxation or principle in natural justice which would warrant any such proposition. It is admitted, and clearly it must be admitted in a case like this, that ex hypothesi the annual receipts from the land through the action of the landowner himself is less than the annual value. Take the case with which we are dealing. If, in dealing with land in the category that we can tax, you tax the annual capital value, is there anything unfair or unjust in the method by which we are proceeding? The difficulties of valuation—what I call the direct difficulties of valuation which have been paraded throughout this Debate—are, to a large extent, figments of the Parliamentary imagination. It is really a very simple problem. All this introduction of the hypothetical seller and buyer, and so forth, is part of the jargon of the law and the jargon of the profession of surveyors, and all it means is this When you come to value a man's land, you look not only at the rent he is actually receiving for it—for that may be much less1 than he might receive—you do not look at the particular buyer who happens to want to buy it at the time, but you take into consideration all reasonable probable buyers, and you come to hypothetical buyers, and you consider, having regard to all the conditions of the case, what is the price a buyer actuated by business considerations would give for the land. [An HON. MEMBER: "All at once?"] No, not all at once. I do not know what the hon. Gentleman means by "All at once." You do not make a valuation on the footing that the land is all going to be brought into the market at the same time. That would be an absurd supposition. I must repeat what was said with so much force by my hon. and learned Friend the Member for Walthamstow (Mr. Simon). There is no practical difficulty whatsoever in the solving of this problem of valuing undeveloped land when a railway company comes to buy or when a great corporation wants a site. I am not saying this—I know that one has to be very cautious of one's words in these days—I am not saying this in vindictiveness or by way of taunt. A landlord is entitled to exercise all his legal rights and to obtain all the money he can for his land. I am not complaining of that for a moment. I am pointing out that by perfectly simple and familiar processes well understood and practised every day of the week, when he is desirous of selling his undeveloped land there is no difficulty whatsoever in ascertaining its value, nor will there be much difficulty when we come to value it for the purposes of the Undeveloped Land Tax.

The right hon. Gentleman has spoken in a very interesting manner on the subject of what he calls the market value of land in this country. He admits, and I am very glad to note it, that this is a case not upon the prospective but upon the present value of undeveloped land. It is perfectly true that in the present value of land, as in everything else—the same thing is true of every commodity which is kept at any rate for any length of time—you anticipate so far as you can what the prospective demand and supply in future are likely to be. That is an ingredient which always enters into the valuation. What is sought to be taxed is not an indefinite and uncertain value, which may never accrue. It is the sum for which the land would sell in the market to-morrow if it had to be valued in the ordinary way for the purpose of acquisition by some corporation which wanted it. The right hon. Gentleman said that this was a peculiarly inappropriate commodity or subject to which to apply the principle of taxing capital, because of the speculative element which entered into, and must necessarily enter into, any estimate you make of the buying or selling value of undeveloped land. I was rather interested to observe that he illustrated that argument by the assumption which he had vigorously combated; that the effect of this tax would be to force land into the market. It was only on the assumption that the effect of the imposition of this tax would be to force land into the market, and, therefore, as the right hon. Gentleman said, to glut and even to gorge the demand, that he was able to make good his proposition that you would add an additional element of uncertainty to the value of land in this country. I will say a word about that before I sit down. I think that the right hon. Gentleman has a very imperfect appreciation of the growing demand in a community like this for what is called undeveloped land.

I shall hope to-morrow, on the Committee Resolution for expenses, to explain in such detail as is possible and proper at that stage of our proceedings, the modifications with regard to the method of machinery of valuation which the Government propose to introduce into the Bill, modifications which are mainly due to the fact, that we have come to the conclusion that the cost of the valuation should not be cast upon the shoulders of the owner but be transferred to the State. That concession, I observe, was received with very little gratitude, or if there was any it was marked by a total absence of articular acknowledgment, although, if my recollection of the earlier stages of the Debates on the Budget is accurate, it was this grievance which bulked most largely in the adverse comments of right hon. and hon. Gentlemen opposite. I am not anticipating anything which I will say on this subject to-morrow by saying that, given a competent set of valuers, proper machinery of valuation and adequate safeguards for appeal, the whole of this problem will be found in practice, as it has been found, in our Colonies and in other communities, instead of being the inscrutable, insoluble difficulty presented to the House in the course of these Debates, a thing that solves itself every day of the week.

I now come to the final charge against this tax. The right hon. Gentleman, having made it before, repeated it this evening. He said that this was not a fiscal proposal in any real sense at all, on the ground that the yield of the tax would be less, or certainly would not exceed, probably this year, the actual cost of valuation. I do not assent to the right hon. Gentleman's proposition. I defend this tax and all the taxes contained in this Finance Bill as fiscal instruments, and if anyone can demonstrate to me that they are not, I shall agree they ought to be excised from the Bill. I shall agree that they should be excised if anyone can show that they will not be useful, profitable, and fruit-bearing for fiscal purposes. But when the right hon. Gentleman comes to his calculation of the proceeds of this particular tax, and compares it to the value of a picture by Velasquez or Holbein, one of those pictures that the Death Duties have driven out of the country, and when the right hon. Gentleman tells us that the proceeds of this particular tax will be worthless, or will be an insignificant sum, I must remind him and the Committee of one or two facts which he has completely and, I think, for the purposes of his own argument, conveniently ignored. In the first place, I cannot regard the Undeveloped Land Tax as simply by itself and independent of the two other taxes with which it is a composite and coherent fiscal scheme, because I submit they all hang together. They are all put forward as integral parts of the fiscal scheme. And, in the same way, what can be more ridiculous and what can be argumentatively more unjust than to take the whole cost of valuation and debit it to this particular tax for the purpose of showing that this particular tax is not going to yield a larger amount? [An HON. MEMBER: "What is the amount?"] You will know to-morrow the best estimate and the most careful estimate which the Government can give, and what is admittedly, both as regards the actual proceeds of these taxes and the expenses of machinery and valuation, necessarily a very difficult and more or less speculative estimate. But the best material we have we will place at your disposal. I shall carry with me the good sense and sense of justice of the large majority of the Committee when I say that when you are estimating the fiscal yield of these particular taxes and debit against it the cost of valuation, you must take the taxes as a whole and the valuation as a whole, and you will then be able to judge as to what the real balance will be. And, regarded from this aspect, I shall be able to show conclusively that these taxes have a very sound justification. But I go further. I adhere entirely to the view that it is wrong to judge of the fiscal propriety of a fiscal imposition, certainly of a new imposition, by its yield, possible or probable yield, during 12 months, or even two years after. It has never been the principle on which the great financiers of this country proceeded. Let anyone read Mr. Gladstone's greatest financial statement, that in which he introduced the Budget of 1853, and they will see that in inventing then for the first time what has proved in the course of years to be one of the most fruit-yielding instruments ever devised, namely, the Succession Duty, he pointed out, and pointed out carefully, how its yield must be gradual and progressive. And in the earlier years in which it was to be in operation he estimated from it a comparatively modest sum, and a sum which was actually not reached for some time after the tax came into operation. It has been the same with the Income Tax, and the same with the amazing developments of the Death Duties.

When we come to this particular tax with which we are dealing this evening, let me point out to the Committee what the right hon. Gentleman has said. He seems to think that a year or a couple of years will absorb all the undeveloped land in the country, or, rather, that it will have led to its conversion from undeveloped into developed land, and that, therefore, there will no longer be a subject matter of any appreciable amount on which this tax will operate. I venture entirely to differ from hint. Anyone who has regard to the actual social and industrial conditions in this country, who sees not only the steady growth in population in so many of what were only 20 or 10 years ago purely rural communities, which have now developed into urban communities, and who observes still more the tendency that strikes everyone who passes along any of our great trunk lines of railway, the tendency of industries which used to be located and congested in great centres now to spread themselves out in the country with constantly increasing requirements for land, for building factories, for cottages for workmen, experimental works, and for a thousand other incidental purposes, anyone who watches that process going on and sees from year to year that not only does it not slacken, but that it accelerates in pace and extends in radius, will agree with me in differing profoundly from the right hon. Gentleman as to the likelihood of the source of supply of this tax being on any easily predictable day dried up. Speaking of return, I believe that this tax will be a growing one, not in magnitude, but growing in produce, just as I believe that the Increment Duty and the Reversion Duty will grow, and I believe that we are laying the foundation of what will be one of the most important and most useful and fruitful additions to our financial stock; and on financial grounds, if it were neces- sary—though it is not—I should be prepared to recommend this and the other taxes to the consideration of the House of Commons.

After the eagles of Debate have soared in our skies, it is, I know, presumptuous of me to flutter my feeble and almost untried wings. Yet the length of time which I have listened to other people speaking and the very great objections which I personally, in common with others of my friends, take to this tax must be my excuse for detaining this Committee for a very few minutes. Although it is a rash thing to differ from the Prime Minister, may I point out that he himself has just differed very widely from one of the leaflets issued by the Budget League—an authority which can hardly be denied by those who, we are told, are so largely benefited by its operations. The leaflet which I hold in my hand, called "The Land of the People," ends up by saying that the halfpenny tax could hardly be better defended than in the conclusions of Lord Balfour of Burleigh. The end of the seventh paragraph of Lord Balfour of Burleigh's recommendations and remarks is this:—

"And any attempts to remedy those defects (that is defects of rating) would show that there is no large undeveloped source of taxation available for local purposes, and still less for national purposes."

When hon. Members, such as spoke this afternoon, like my hon. Friend the Member for Walthamstow, and great masters of debate like the Prime Minister, have to advance fallacy after fallacy, I think it justifies us in the very strenuous opposition which we take to the principle of the incidences of this tax.

8.0 P.M.

The Government have to-day hesitated between the two courses as to whether they were taxing undeveloped land for revenue, or whether they were penalising a class for unjustly holding up land when the requirements of the population called for the use of that land. As regards the latter, I could never see any justification whatever for this form of taxation. If you want to use land for building, or for other needs of the people, you have hundreds of precedents for giving local authorities powers to deal with the land. This very Government passed the Small Holdings Act, which is a measure of which we are all proud. They gave to local authorities the power to acquire compulsorily land for the purpose of settling small holders upon it. The Housing and Town Planning Bill pursues exactly the same policy. As regards the fact mentioned by the hon. Member for Walthamstow (Mr. Simon) and the Prime Minister that it is immoral for the landowner to refuse to take the price which somebody offers to him whether he thinks it adequate or not, I want to know how they would have regarded tradesmen if, last winter, they had refused to sell clothing at less than the proper price on the ground of bad trade and because a number of people were ill-clad. Has the Government ever proposed to penalise shopkeepers, the baker, butcher, or anybody else for refusing to sell goods for less than they considered a proper price because of the needy condition of the population around them? [An HON. MEMBER: "Are they to perish?"] The hon. Member agrees that he would introduce legislation to that effect. But I am sitting here in support of a Liberal not a Socialist Government. In our opposition to this tax, we are adopting probably a fatal policy from our own selfish point of view. I believe that the knife is to be held to our throats, and we are told in reference to the cries and shouts about Keir Hardie as leader, and Lloyd-George as his prophet, that if we will not do what they wish we shall meet with political death. Hon. Members opposite have cheered me with a certain amount of warmth, but I am about to use a parallel which will probably toe less palatable to them. I want to point out that the Front Bench below me, with all its authority, and with all its brilliance, is doing the work of one small and extreme section of the Liberal Party. The same powers of disruption which rent hon. Members opposite in 1906 will rend this Party if they are not careful.

In regard to this Undeveloped Land Tax we are told that it is the very crux of the Budget. We are told that it is the spear point of the Budget, that we who will not accept it but fight against it, are not worthy to stay in the Liberal party, and that we have deserted the Liberal faith. We entirely dispute that. As to the taxation of agricultural land, I would point out that if you take, as ex hypothesi, that land used for agricultural purposes is undeveloped, you may put upon it a laundry, perhaps a mineral water manufactory, or, more horrible still, you may erect a brewery upon it, and then it is a fully developed property. Again, you may have a nursery garden, or you may have a piece of land devoted to strawberry cultivation, and employing hundreds of hands, yet we are told that is undeveloped land, and a man may be turned out of his occupation of that land, with all its goodwill, and all its associations, if it acquire a greater value for building than for agricultural purposes. We are told that revenue must be raised to carry on the Government, but in the country a very different argument is used. I would point out to the Committee what, I think, has not been pointed out often enough, that the country has been raked through in order to find examples of injustice by the landlords, yet, despite all the efforts which have been made, not one of these examples has been found to be perfectly water-tight.

I beg to move, "That the Question be now put."