First, it is proposed to levy a tax on the increment of value accruing to land from the enterprise of the community or the landowner's neighbours. We do not propose to make this tax retrospective. It is to apply to future appreciation in value only, and will not touch any increment already accrued. We begin therefore with a valuation of all land at the price which it may be expected to realise at the present time, and we propose to charge the duty only upon the additional value which the land may hereafter acquire. The valuations upon the difference between which the tax will be chargeable will be valuations of the land itself—apart from buildings and other improvements—and of this difference, the strictly unearned increment, we propose to take one-fifth, or 20 per cent., for the State.
We start with the valuation of the present moment. No increment that has accrued before the date of the valuation will count. We value the land at its present value, and then count the increment from that point. You get the increment on two bases. You get at it when the land is sold. Then it will be discovered what the actual increment is. We propose to charge 20 per cent. on the increment which the landlord receives, ascertained by comparing what he receives with the valuation to be made immediately after this Bill. It would be also made on the passing of the property upon death, so that there will be an increment of estate duty; and if there is any increment which is not due to expenditure by the landowner himself on improvements, but is due merely to the appreciation of land in the neighbourhood owing to the growth of population or some other cause, then the same charge would be made on that increment. Corporations (which do not die) will pay upon property owned by them at stated intervals of years, being allowed the option of spreading the payment of the duty upon the increment accruing in one period over the following period by annual instalments.
An HON. MEMBER
What number of years?
I will give the particulars later on. Upon the creation of a lease or upon the transfer of an interest in land only such proportion of the increment duty will be payable as the value of the lease or of the transferred interest bears to the value of the fee simple of the land, and increment duty once paid will frank the increment or the portion of the increment in respect of which it has been paid from any further charge of the duty. As regards the duty payable on the occasion of the grant of a lease, provision will be made for payment by instalments, inasmuch as in such circumstances no capital sum is available for payment of the duty. As the standard of comparison is the value of the land at the present date, and the tax will be levied only upon the increment subsequently accruing, the yield in the first year will necessarily be small, and I do not think it safe to estimate for more than £50,000 in 1909-10. The amount will increase steadily in future years, and ultimately become a fruitful source of revenue.
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