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IW^. 



A FEW HINTS TO 
LLOYD GEORGE 



Where is the Money to 
come from ? 

The Question Answered. 



By PHILIP SNOWDEN. M.P 



''Mr« Snowden made many 
suggestions "virhich w^ill be 
valuable no doubt to future 
Chancellors of the 
Exchequer." — Mr. Lloyd 
Gwrge, May 25th, 1908. 




Id 



Published by the Independent 
Labour Party* 23, Bride Lane, 
Fleet Street, London, £.C, 

1909, 



w 



-'mmcm'-^mm 



SOCIALIST LIBRARY. 



Vol. VI. 



The complex and difficult problem of 

The Drink Traffic 

is always with us. Social Reformers 
and Politicians of all schools of 
thought are focussing their attention 
on this great question. :: :: :: 

The book to read on the subject Is 

Socialism and 
the Drink 
Question 

BY PHILIP SNOWDEN, M.P. 



CONTENTS. 



The Problem Stated 

The Temperance MovemcHt 

Labour Organisations and Drink 

Who Consumes the Drink ? 

Causes of Drinking 

Social Conditions 

Other Causes 

Social Reform and Temperance 

Drink and Economic Poverty 



10 Economics of Temperance 

11 State Prohibition !\ 

12 Local Option 

13 Disinterested Management 

14 Trust Companies in Britain 

15 Public Control and Munidjjal- 

16 Mimicipalisation [isation 

17 Advantages and Objections 

18 Conclusions 



In this volume the Drink problem is attacked from the Socialist point of 
view. The Economic, Social^ and Moral aspects of the question are care* 
fully examined. Special attention is given to Social and Industrial con- 
ditions as the cause of the drinking habit. 

The relationship between Drink, Crime, Disease, and Lunacy is 
analysed. A criticism is made of the Temperance Movement and of orthodox 
proposals for the abolition of the Drink Evil. The book is admitted to be 
a splendid exposition of the case for the Municipalisation of the Drink 
Traffic. It is an authoritative and timely statement of the position taken 
up by the Socialists on this question as against the position occupied by 
orthodox Temperance Reformers. 



810 P»geB, Cloth, 1/6 net; Paper, 1/- net; Postage 8d. extra. 

May be obtained from all Booksellers or direct from the 

LL.P. Publicetioo Department, 23, Bride Laaet Fleet Street LoBdoa, E*C. 



Socialism and the Coining Budget. 

At the Special Conference on Taxation, recently held by 
the Labour Party at Portsmouth, a resolution was unanimously 
passed which set forth the ideas of the Party on the general 
question of taxation, and also formulated the financial de- 
mands for which the party must press in the present session of 
Parliament. The resolution laid down the principle that nat- 
ional taxation should be raised from those best able to pay it, 
and who receive the most protection and benefit from the 
State. It declared that indirect taxation falls oppressively on 
the industrious classes, and should be repealed; and after ex- 
pressing the opinion that the cost of social reforms should be 
borne by socially created wealth now appropriated by the rich 
in the form of rent, interest, and profit, called for the follow- 
ing reforms in the next Budget : — A super-tax on large in- 
comes; special taxation of State-conferred monopolies; increas- 
ed estate and legacy duties; and a really substancial beginning 
with the taxation of land values. 

THE RADICAL IDEA. 

Apart from the question of new social reforms, which will 
be pressed on the Government this year, such as employment 
schemes, afforestation, education, etc., there will be the nec- 
essity of meeting the cost of Old Age Pensions, the making up 
of the deficit, and, unfortunately, the provision of millions more 
for the Navy. In view of the prospect of having to impose 
new taxes to the extent of probably ten to thirteen millions, 
the outlook for a further advance on the road of social reform 
is not very rosy. Neither the Government nor their Radical 
supporters have yet accepted the idea to the extent of being 
willing to put it into practice, that social reform is the better 
distribution of national wealth, and that taxation is one of the 
two ways in which that can be brought about. It is still the 
general idea among Radicals that social reform must depend 
on retrenchment of national expenditure; and the threatened 
increase of the Naval Estimates is being put forward in Radical 
newspapers as making social reform impossible. 

THE THREE TESTS. 

This is not the position of the SociaHsts. Although we 
are as keen as the keenest in our opposition to increasing ex- 
penditure on armaments, we cannot accept that as an excuse 
for the postponement of social reforms which cost money. 
The matter of a better distribution of wealth which we want 
to bring about is a question apart from that of army and navy 

I 



expenditure. If the cost of supporting these services left no 
class in the countr}^ with a surplus income available for fur- 
ther taxation then social reform would depend on retrench- 
ment of expenditure. But it is not so. Wasteful, extrava- 
gant, unnecessary, and, indeed,, criminal, as is the expenditure 
of the sums now spent on the fighting services, there remain 
in the hands of the wealthy classes of this country resources 
which are ample for carrying out immediately large and long- 
overdue schemes of social reform. The coming Budget will 
test the Government in several ways. It will test their belief 
in the Radical doctrine of Retrenchment. It will be difficult 
to reconcile a proposal to increase the Navy Estimxates by a sum 
of about three millions with Radical principles and Radical 
professions. In the last year of the last Liberal Government 
(1895) ^1^^ ^os^ of ^he Navy was £17,545,000. For the present 
year the estimated expenditure is £32,319,000. With the in- 
crease to be proposed of three millions, the cost of the Navy for 
next year will be double the sum spent fourteen years ago. In 
the same period the cost of the Army has risen by over 
£9,000,000. To have a Radical Chancellor proposing to find 
nearly £65,000,000 for the Army and Navy is enough to make 
the Radical economists of the last century rise from their 
graves. 

The second way in which the Budget will test the Gov- 
ernment will be in the matter of the means they adopt to meet 
the deficit and the cost of Old Age Pensions. The third of 
the tests will be whether they have the courage, in the financial 
position in which they find themselves, to further increase 
their responsibilities by proposing new schemes of social re- 
form, as, for instance, to remove the Poor Law and other dis- 
qualifications in the promised Old Age Pensions Act Amend- 
ment Bill. In the third test might be included the promised 
reduction of indirect taxation. 

The second of the tests is one from which the Govern- 
ment cannot escape. The required mxillions will have to be 
raised, and, therefore, the question will have to be faced of 
the class on whom the taxation shall be placed. 

WHICH CLASS ? 

The middle and upper classes are already up in arms 
against any increase of taxation upon them. It is true that, 
if their speeches are to be believed, their opposition is not on 
their own account, but in the interests of the working classes, 
who are being warned that if they allow the rich to be taxed 
it will destroy the commercial stability of the country, and the 
workmen will be the ones to suffer first and worst. There are 
just two classes of people who can be taxed, the rich and the 

2 



poor. If the landlords and the capitalists are not taxed, then 
the working people must be. It is one or the other, and the 
fight is to be as to which it shall be. The first thing to con- 
sider is, which of these two classes can best stand the burden 
of additional taxation. The principle laid down in the Labour 
Conference resolution, that individuals should contribute to 
the revenue of the country in proportion to their means and 
in proportion to the benefits they enjoy under the protection 
of the State, is classical in its authority. This principle 
should be kept in mind in discussing the question of the in- 
cidence and form of the new taxation. 

WHO PAYS THE TAXES? 

The case against increased taxation on the wage-earning 
classes is overwhelming. Their claim for a remission of the 
burden of their present taxation cries aloud, for it is an out- 
rageous violation of the canon that individuals should pay 
according to their means and benefits. For the current year, 
the estimated revenue from Customs and Excise was £64,700,- 
000. The two other main items of indirect taxation are the 
receipts from stamps (£8,080,000) and the profits from the 
Post Office (£4,500,000). For the purpose of our comparison 
of the respective contributions of the rich and poor, these two 
items may be ignored, as all classes contribute to this revenue. 
The estimated revenue from Income Tax, Estate Duties, 
House Duty, and Land Tax for the current year was 
£55,000,000. We will regard this sum as coming entirely from 
the well-to-do classes. The Customs and Excise duties are 
paid by all classes and in fairly equal proportions; but as the 
non-income tax-paying class number about six-sevenths of the 
population we should be generous to the rich if we put down 
their contribution to the total from Customs and Excise 
duties at one-fifth of the whole, which will make the sum taken 
from the working-classes by these taxes nearly £52,000,000. 

The amount of taxation, therefore, which is borne by 
the working-classes is about £16,000,000 less than the amount 
contributed by the well-to-do. This is arrived at as follows: — 
Amount Paid by the Working Classes. 

4/5ths of ;£'64, 700,000 ;^5i,76o,ooo 



Amount Paid by the Others. 

• Direct Taxes ;^55,ooo,ooo 

I /5th of Indirect Taxes as above ... 12,940,000 

;£'67,940,ooo 

This, apart from all other considerations than the mere pro- 
portions, may not seem unfair, especially when one remembers 
3 



that the working classes are seven times more numerous. But 
we have yet to consider the most important factor in the ques- 
. tion, namely, the ability of the respective classes to pay. This 
is the crux of the whole question. The working classes can- 
not pay any taxation except by encroaching upon what should 
be necessary expenditure. Two million families have incomes 
of less than a pound a week. Any taxation on these people is 
the taxation of starvation. In the notorious speech the Chan- 
cellor of the Exchequer made at Swansea last October, he 
said: 'The first charge upon the great natural resources of 
this country ought to be the maintenance above want of all 
those who are giving their labour to its cultivation and de- 
velopment.'' If that sentiment be acted upon, then the State 
must not put one penny of taxation upon a wage which is not 
enough to maintain the individual and his dependents above 
want. This would involve the total repeal of all taxes on 
articles like tea, sugar, cocoa, coffee, fruits, etc. But if the 
Chancellor acts on the declaration of his Swansea speech he 
cannot raise one penny of the new taxation from the wage- 
earning classes, even if he does not relieve them of present 
taxation. 

THE POOR BECOMING POORER. 

The capacity of the working-classes is not only below 
taxation-bearing point, but their capacity is getting less. The 
figures published by the Board of Trade in regard to changes 
in the rates of wages during 1908 and in preceding years sup- 
port that statement. Since the beginning of 1901, and up to 
the end of 1908, there had been a net decrease of wages 
amounting to £1,925,076. It ought to be noted also that for 
the last two years the wholesale prices of commodities have 
been 4.7 per cent, higher than in 1900. Clearly, then, the 
working-classes cannot, in justice, be taxed for additional 
blessings they are now enjoying. 

THE RICH RICHER. 

But when we turn to the position of the other class we 
find ample justification for applying our classical canon of 
taxation. In the year 1885, the gross amount of income 
brought to the notice of the Inland Revenue for Income Tax 
purposes was £631,000,000. Ten years later, in 1895, the sum 
was £657,000,000; or an increase of £26,000,000. Ten yearns 
later still, in 1905, the sum had risen to £925,000,000, or an 
increase in ten years of £268,000,000. This rate of increase 
is being maintained, in the last three years the total having 
risen to £980,000,000. Sir Henry Primrose, the late chairman 
of the Board of Inland Revenue, fixed the number of people 
enjoying this income of £980,000,000 at 1,100,000. The wages 

4 



of the working-classes are lower by nearly two millions than 
in 1900, the cost of living is higher. The incomes of the richer 
classes are £147,000,000 more than in 1900. Surely there can 
be no doubt in the face of these facts as to the people who in 
justice ought to pay for the extra blessings they enjoy under 
State protection. 

Speaking last October, the Prime Minister said: 'There 
is a large reservoir of possible taxation and resources which 
has never been drawn upon as adequately and justly as it 
might be.'' The Government must now draw upon this reser- 
voir, and we will now proceed to suggest hov/ and to what 
extent they may do this. 

THE WAY TO GET THE MONEY. 

The Labour Conference resolution suggests four ways of 
raising new taxation : a super-tax, taxation of monopolies, 
increased death duties, and land values taxation. 

The Dilke Committee on Income Tax which sat and re- 
ported in 1906 recommended a super-tax, and expressed their 
opinion that it was practicable. This decision of the Com- 
mittee was arrived at in the face of the opposition of the official 
witnesses from Somerset House, and by a Committee, it 
might be noted, on which property was very strongly repres- 
ented. Of the three recommendations of the Committee, one 
has been adopted, namely, the differentiation of the Income 
Tax as between ''earned'' and "un-earned" incomes. Although 
for the previous half-century every Chancellor had declared 
the thing to be impossible, yet at the end of the first year of 
Its operation, Mr. Asquith stated that "differentiation has been 
proved by experience to be not only practicable, but smooth 
and easy in its operation." The difficulties in the way of 
applying a super-tax are neither so many nor so great as had 
to be overcome in regard to differentiation. The imposition 
of a super-tax would involve a personal declaration. The pres- 
ent system of collecting the tax at the source renders that un- 
necessary except where an abatement is desired. But even 
apart from the super-tax idea, it is very necessary that there 
should be a compulsory personal declaration from each individ- 
ual of total net income. The Dilke Committee were very em- 
phatic in declaring the desirability of such a personal declara- 
tion. In the absence of such a declaration there are no really 
reliable figures as to the number of very rich people and the 
amount of their individual incomes. The personal declaration 
is not at all inconsistent with the retention of the system of 
collection of the tax at source. It would certainly be very un- 
wise to abandon that plan in the case of the collection of the 
ordinary income tax. But the super-tax could be collected 

5 



from the recepient of the income in accordance with ^» return 
suppHed by him of his whole income. 

MAKING THE WEALTHY PAY. 

For a beginning it might be desirable to start the super- 
tax on incomes of £5,000 a year and over. A not excessive 
super-tax on such incomes would provide all the revenue the 
Chancellor is likely to require from this source at present. 
The relief of incomes between £2,000 and £5,000 from super- 
tax cannot be defended except as a temporary respite until the 
new system has been got into working order, when it would 
be easy to gradually descend with 'the super-tax. The experts 
who appeared before the Dilke Committee differed consider- 
ably in their estimates as to the number of persons with in- 
comes over £5,000 a year, but it is probable that the estimate 
of Mr. Bowley, who had prepared his case with great care, is 
not far from the mark. It might be added that Mr. Bowley 
admitted that his estimate of the income on the higher scale 
was somewhat moderate. The following table gives Mr. 
Bowley's estimate of the number of incomes over £5,000 a 
year and the aggregate amount of such incomes : — 



Size of Income. 


Number of Incomes. 


Aggregate Incomes, 


^5,000 to ;^6,000 
;^,000 to ;^I0,000 


... 3>57o 


£19,000,000 


6,010 


£"46,000,000 


£10,000 to ;f 50,000 


... 4,050 


£"85,000,000 


Over ;^5o,ooo 


350 


£"50,000,000 



i3j98o £"200,000,000 



The actual stages of graduation of the super-tax is a matter 
with which we need not here concern ourselves. It is enough 
for our purpose to get an idea of the possibilities of the super- 
tax applied to the incomes shown in the above table. A super- 
tax of 3d. on incomes between £,5000 and £6,000; 6d. on in- 
comes between £6,000 and £10,000; 9d. between £10,000 and 
£50,000; and IS. on those over £50,000 would bring in a 
revenue of over £7,000,000. When it came to be applied it 
would probably be found more just to graduate the sur-tax by 
easier stages ; but even if that were done it is quite clear that a 
comparatively small super-tax on large incomes would be a 
very productive means of revenue. No objection on the 
ground of hardship could be brought against such a tax. A 
total income tax of 7J per cent, on an income of £10,000, and 
10 per cent, on one of £50,000 is moderation, and is no ade- 
quate return at all to the State for the privilege of being pro- 
tected in the enjoyment of such an income. It is moderation, 
too, compared with the rates of income tax which are now 
being proposed by the German Chancellor. The latest advices 
6 



from Berlin give the following rates as those which are to be 
imposed for the next three years : — Incomes from £60 to £150 
to be additionally taxed 5 per cent.; those from £150 to £525, 
10 per cent.; those from £525 to £1200, 15 per 
cent.; aird so on to those of £1,750, with an augmented 
tax of 25 per cent., which is the maximum. An increase by 
way of super-tax beyond the moderate rates suggested above 
on incomes over £5,000 opens up the prospect of vast avail- 
able resources for the Chancellor of the Exchequer who has 
the courage to put a just and proportionate tax on such in- 
comes, made up as they are almost entirely of the proceeds of 
social exploitation. When these have been exhausted, there 
still remain the incomes of 32,000 persons having each between 
£2,000 and £5,000 a year, and amounting in the aggregate to 
£100,000,000, 

THE ESTATE DUTIES. 

The Estate and Legacy Duties might assist the Chan- 
cellor to a very considerable extent. Two years ago Mr. 
Asquith raised the rates in some cases nearly 100 per cent. A 
Socialist, therefore, could hardly be accused of extravagance 
if he were to suggest that the rates, especially on the larger 
estates, might be a little further increased. There is, for in- 
stance, no reason why a millionaire's estate of £3,000,000 
should pay 10 per cent, on the first million and 14 per cent, on 
the rest. The tax might be, at least, a uniform one of 14 
per cent, on the whole. But there is a splendid opening for 
raising an additional three millions or so by a revision of the 
Legacy and Succession Duties. At the present time the Legacy 
Duty varies from one per cent., when the estate descends to 
a lineal, be he either child, descendant of a child, or 
father or mother, or any lineal ancestor of the de- 
ceased, to 10 per cent, when the legatee is no rela- 
tion. The discriminations in the degrees of relation- 
ship, carrying different rates of duty, are arbitrary. There is 
no reason, for instance, why a great-great-nephew should 
get off with a 5 per cent, rate, while an adopted son, or a 
great personal friend of the deceased should be charged 10 
per cent. The legacy duty of one per cent, in the case of lin- 
eals is altogether inadequate. Without going into details, it 
it may be stated that if the present rates of 3, 5, and 6 per cent, 
on relatives not in the direct line were merged into one rate of 
6 per cent., an additional return from the Legacy Duties of 
about one and a half millions would be obtained. If the Suc- 
cession Duties, which are very similar to the Legacy Duties, 
were treated in like manner, together with an increase in the 
rate on lineals to 2 per cent., a further considerable sum would 
be obtained. 

7 



THE LIQUOR LICENCE. 

It is expected that the Chancellor will impose an increase 
of duties on liquor licences. The '' trade '' has never paid 
adequately for the privilege of enjoying a monopoly in the 
sale of alcohol. With the reduction of licences which has taken 
place in the last thirty years, this monopoly value has become 
more valuable, and the State has allowed that increased value 
to go to the possessor of the licence. The monopoly value 
of a liquor licence is State conferred, and to the State it ought 
to belong. The present rates of licence duties are not only 
u.njust to the State, but are unfair as between licence-holders. 
A public-house of less than £50 annual value pays a licence 
duty amounting to something over 50 per cent, of the rateable 
value, while the most valuable premises are rated at not more 
than one-fourth of i per cent. The Chancellor should, at the 
same time that he is increasing the return from liquor licences, 
grade the duties more equitably so that the licence duty will 
more fairly represent the monopoly value of the licence. The 
total receipts last year from liquor licences were about 
£2,000,000. Messrs. Rowntree and Sherwell show that if the 
licensed trade in this country paid licence duty at the Ameri- 
can rate there would be an additional revenue from this source 
of from seven to thirteen millions. Without injustice, without 
malice, and without reaching the American standard of taxa- 
tion, the Chancellor may obtain at least three millions by a 
revision of the Licence Duties. 

TAXATION OF LAND VALUES. 

In his present dilemma it is difficult to see how Mr. Lloyd 
George can allow the ground landlords to escape their share 
of taxation any longer. The Government as a body, and every 
individual member of it, are pledged up to the hilt to deal with 
the question of the Taxation of Land Values. There is a 
strong public opinion in favour of this reform. The scandal 
of the ground landlord appropriating unearned increment is 
so glaring that its dishonesty appeals to even the man in the 
street. We are very much in the dark as to the actual amount 
which the ground landlords are pocketing every year for allow- 
ing the people to live in their native country. But it is not at 
all improbable that the most extreme of the estimates put for- 
ward errs on the side of moderation. The assessment returns 
afford hardly an approximate indication of the actual value of 
the urban and semi-urban land, for so much of the land in the 
neighbourhood of towns is assessed at agricultural prices, 
although the land has a real and high value for urban purposes. 
An instance of this state of things was furnished last year by 
the case of the Northumberland County Council and the Duke 

8 



of that county. The Council purchased from His Grace a site 
for a school. The area of this site was three-quarters of an 
acre. The price paid to His Grace was £698 15s. 6d., fixed by 
arbitration! This was at the rate of £931 14s. an acre for 
land rated at £2 an acre, or 465 years' purchase! 

But leaving out of account for the moment the value of 
ripening land, we can get some little idea of the possibilities 
of land values taxation by reference to the assessments for 
revenue purposes. The latest Report of the Commissioners of 
Inland Revenue gives the following as the estimated annual 
value of lands, houses^ etc., as assessed for Income Tax pur- 
poses under Schedule A for the year 1906-7 : — 

£ 

Lands, including Rent-charges 5^^053? i35 

Houses, Messuages, Tenements, etc. ... 210,396,907 
Other Property, Manors, Tithes, etc. ... 1,291,502 



£263,741,544 

It is to be noted that a good deal of property which would 
be brought under the operation of a land values taxation 
scheme is not included in the above figures. Property vested 
in the Crown, cathedrals, churches, mines, quarries, railways 
are not included. If we estimate the value of the sites as one- 
fourth of the total value of " Houses '' we should get about 
£52,000,000; add to this the value under '' Land,'' and we are 
given in these returns a sum of £105,000,000 as the annual 
value of the land of the country. This, it must not be for- 
gotten, takes no account of the selling value of semi-urban 
sites. But taking the official figures only as our basis, namely, 
£105,000,000 as the yearly value, this gives on the basis of 
twenty-five years' purchase a capital value of £2,625,000,000. 
A tax of one penny in the pound on this would bring in a 
revenue of about £11,000,000. The Chancellor of the 
Exchequer may take heart surely; for ways and means are open 
to him to escape from all financial worries. 

THE SMALL LANDOWNERS AND FRIENDLY 

SOCIETIES. 

As usual, the selfishness of the little property owner will be 
exploited to preserve the big landowner. The Friendly vSocie- 
ties have money invested in land values, and the Dukes and the 
like are calling on the working men whose savings are thus 
invested to stand up and fight against the '^ hen roost " 
deoradations of this Government. 

X 

The Friendly Societies have nothing to fear from the 
taxation of land values. Any taxation they may have to pay 
9 



in this way will be saved many times over directly and in- 
directly. Money has to be got from somewhere for national 
expenditure. If it does not come in part from the taxation of 
the unearned increment of land it will come in ways which will 
exact far more from the working people. For instance, a very 
prominent Liberal daily paper is boldly suggesting that the 
Chancellor ought to reimpose the Sugar Tax which was taken 
off last year. There are, we believe, about twelve million 
members of Friendly Societies in this country. That is about 
one-fourth, rather more, of the whole population. If the sugar 
tax were reimposed, these people, not reckoning their families, 
would have to pay a million pounds of that sugar tax. This 
' would probably hit them ten times harder than would the taxa- 
tion of land values to the extent of a penny in the pound on the 
capital value. It ought to be remembered too that a land value 
tax would hit the big landowners infinitely more than it would 
any working class investments in that form of security. There- 
fore the Friendly Societies and the working classes as a whole 
would have returned to them fifty fold anything the tax might 
take from them directly. I do not want to use many figures, 
but I may support that statement by pointing out that accord- 
ing to the last report of the Registrar of Friendly Societies these 
societies had £30,000,000 invested in land, buildings, and mort- 
gages. It is pretty certain that not one half of that sum is 
represented by site values; but granting that there is 
£15,000,000 of it which would fall to be taxed by a land values 
scheme it means that the proposed tax of one penny in the 
pound on the capital value would raise £62,500. The whole 
sum which it is estimated would accrue from the penny in the 
pound would be £20,000,000, so that the members of Friendly 
Societies as citizens would get £6,000,000 for £62,500. 

The working man who owns the freehold of his house 
need not fear, but should welcome the taxation of land values. 
Let me show how it works out. Suppose his house with the 
land has cost £400, of which £100 represents the value of the 
land. If the proposed tax comes into operation this man will 
pay 8s. 4d. a year. But the tax raises twenty million pounds a 
year. That means that it will give that man, if he has a wife 
and three children, a national service worth just under 50/- a 
year for his 8/4, or in other words the taxation of land values 
would return that man six times more than it took from him. 
The difference of course would be made up by the large sums 
taken from the great and rich landowners. 

The taxation of land values would do much to stimulate 

the b: ilding trade. It would cheapen land, because if land were 

taxed at its real value the landowner would be forced to sell. 

I showed just now that the small houseowner would gain by 

10 



the land value tax. The householder who is not a landowner 
would gain much more. The taxation of land values would 
readjust assessments, and it would be found that to get the 
same aggregate value there would be a considerable reduction 
in the total rates paid on small houses and an increase on the 
palatial ones. This has been so in Germany. In Dortmund, 
the smaller houses were relieved of 40 per cent, of their former 
rates by the adoption of the rating of land at its real value. 

There is in every town in our country a large amout of 
land which has a high selling value, but which is rated at a low 
assessment. This fact in regard to Germany has been glaringly 
exposed by the new system of assessment on real value. In 
Breslau the change raised the assessments on empty sites from 
£540 to £15,800. A great many similar instances might be 
quoted. Up to the present time the reform has been adopted 
by no less than 350 urban and rural communities in Prussia. 
The opponents of reform in our country make much of the 
difficulties of imposing such a tax. The experience of Germany 
is that it is much easier to assess than our present plan or their 
former plan. In Cologne, with 21,000 total assessments on 
the old plan there were 2,700 appeals a year;, under the new 
system of assessing on the real value there are only 170 appeals 
yearly although the number of assessments is 50 per cent, 
higher. 

In addition to assessing land for taxing purposes at its 
real value, over a hundred German municipalities have an 
increment tax which entitles them to put a 30 per cent, tax on 
the unearned increment. This tax has brought in a return 
which has staggered all anticipations. When Cologne adopted 
this increment tax it was estim.ated by the City Treasurer that 
it would realise £1,000 the first year, but it actually brought 
in £27,080! Surely this should be an encouragement to the 
complaining British taxpayers to tap the golden seam in land 
values. 

I do not for a moment wish to convey the idea that the 
taxation of land values will solve the land problem. It will not 
do that, but it will be a means by which the community can get 
back a little of its own in the meanwhile. 

As I have said, the present Government is pledged to deal 
with the question of taxing land values perhaps beyond all 
other pledges. On the 12th of May last year Mr. Asquith gave 
a definite assurance that an English Valuation Bill would be 
introduced at an early date. Later on in the session he said the 
Government had Come to the conclusion that it would be better 
to postpone the introduction until this year. But there is no 
promise in the King's Speech of such a Bill. The hopes of 
the land taxers are now centred on the Budget. They are 

II 



trying to convince themselves that the mention of the matter 
was omitted from the Speech in order to give Lloyd George a 
chance to give them a paralysing surprise in the Budget. I 
hope they will not be disappointed. But we will wait and see 
before coming to a conclusion. 

The experience of those who are endeavouring to work 
the Small Holdings Act is adding to the conviction that this 
question of the unearned increment of land will have to be 
tackled before any of the great problems we are now beginning 
to approach can be properly treated. The demand for Small 
Holdings is being taken advantage of by the landowners to 
put up the rents enormously. A case came under my notice 
recently where the land which was demanded for Small Hold- 
ings was let at 16/3 an acre and the County Council acquired 
the land by agreement at 42/- an acre. It is no wonder that 
when this sort of thing is going on the Act is something not far 
short of a dead letter in many parts of the country. If the 
German plan of taxing the increment were in operation here it 
would deal with such cases. If we had the system of tax or 
buy at the owner's valuation it would put an end to it 
altogether. 

The Labour Party in Parliament will need no encourage- 
ment To back up either the Government or anybody else who 
will undertake to deal with this question. It is one which is 
rotten ripe for treatment. The wonder is that the people of 
this country have been quite so long under such an abominable 
and unjust land system. 

An apology is necessary for the moderation of the several 
suggestions put forward in this article. But by way of excuse 
we may explain that we have borne in mincf that a Liberal Gov- 
ernment is in power, and Mr. Lloyd George is Chancellor of 
the Exchequer. Our proposals have not gone beyond what we 
have reason to demand in the coming Budget. If these pro- 
posals were adopted there would be sufficient to meet the cost 
of Old Age Pensions, to remove the Poor Law disqualifica- 
tion, to meet the deficit of revenue, to repeal the sugar tax, 
to reduce the tea duty, and finance employment schemes. 

*' The Free Trade Finance Minister has not yet come to, 
nor is nearly approaching the end of, his resources in the matter 
of taxation.'' So said Mr. Asquith. We shall see. 

Philip Snowden. 



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