8.—5

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[W. GOW

the unearned increment appertains only to lanel. Unearned increment is a community value, a value created by the community ; but that -applies to some other things ; even, for instance, to tho income of a solicitor practising in the Court carries with it to some extent a community created value: because in a larger town his opportunities are greater, and his services are more sought after than in a smaller community. But in the case of land the community value created in land is so obvious, and so much in excess pi the community value created in any other direction, that it seems to me that land is a fair subject of taxation. You mean for special taxation apart from the taxation of the income derived from it 1 -Apart from the question of the income derived from it. You cannot, of course, exclude the income deriveei from land. You cannot doubly tax the owner of land, but you can preferentially tax him -that is to say, that the tax on his privilege: will have precedence over any other tax. That being so, I hole! the opinion- -and, by the way, I may say that my opinions are not just picked up accidentally : 1 have given a great deal of study to the question and a great deal of thought -that there ought to be a tax upon land, because the owner of land is a privileged person and in receipt of great advantages arising out of the value which attaches to his property. That is more particularly the case with regard to town property, residential lands. Land is occupied for different purposes ; two, mainly : the one is merely a location for the individual, and the other is that it is an instrument for producing income, In the case of town land and small holdings they may be: simply the location of the: individual. In the case of country lands they are in the same category as machinery or any other instrument of production, with this difference : that there, is always at the back of it the: unearned increment raising its head and likely to appear. That being so, I think that taxation upon land is quite; a fair proposition ; but I do not think it is a fair proposition to make use of lanel-tax as an instrument to be used for political, purposes for the breaking-up of large estates. If we are to tax lanel at all it should only be taxed because of the privilege attaching to it, and for that reason only. To my mind, there is no real justification for making use of that tax for the purpose of breaking up large: estates. It may be desirable that large estates should be broken up, but that problem shoulel be attacked, in some other way than indirectly through taxation. Taxation should only be imposed for the purpose: of raising revenue. In regard to land-tax, the view I take is that there should be a flat rate of land-tax, and that that rate should apply upon all land —country lands and town lands. Though it might be unpopular to say it, I would make that tax applicable without exemption. A man who eiwns an eighth-of-an-acre section in the town, which is his location, is just as much a subject of taxation for his privilege; as is the man who owns a farm in the, country; that is to say, he has got possession of something to which the community is paying by adding value. And, as I said before, that is more obvious in the towns than it is in the country —very much more obvious. I advocate —it would be: unpopular no doubt —the imposition of a land-tax without exemption. Taking myself, on the half-acre on which I live I should pay land-tax on the full amount of its value, instead of being exempted to the extent of practically the full amount. The Chairman.] Would that be without any regard to any mortgage on the land or not ? — Without regard to any mortgage on the land. Some people, of course, hold that the mortgagee is a partner. Under the old system he was taxed as being in effect a piartncr ? —The mortgagee is taxed upon the income which he derives from that mortgage, and the privilege does not attach to the mortgagee. The privilege which lam speaking of taxing does not attach to the mortgagee at all. It is the privilege of the true owner of the land. If he is foolish enough to go and buy land at an extraordinary price and mortgage it up to the hilt—perhaps to more than its real value—that is his own lookout. lam speaking of the general principle, not of exceptional cases. Let me say a worel now with regard to country lands, and although I am a long time: away from it now I know from experience some of the: difficulties of those who have to deal with country land. I was at it for three: or four years in my earlier days, and I have been in contact with those who have been very hard pushed in that connection. Still, even to country lanel there is something attached in the nature erf unearned increment, and for that privilege the country people ought to bear just the same rate of taxation as I think should be: applicable to all town land. And here: again I would say that it should be' without exemption ; every one should pay. It should also be, in my opinion, at a flat rate, leaving the Government to deal with the question of the breaking-up of large estates by some other legislative means. We are not taxing for the purpose, of breaking up large estates. Mr. Shirtcliffe.] Have you any means of doing so in mind ? —Would you mind asking me that later on ? lam apt to lose the; thread of my thought. The tax ought not to be used as an instrument for breaking up land. If that is desirable, it ought to be done in another way. We are taxing people for the privilege: which those: people enjoy. Then, in regard to the valuation of these country lands for taxation purposes, I have always held that the present system of guessing at —for that is what it amounts to —guessing at the: unimproved value is a mistake. The value on which I think lands ought to be taxed is what might be called their naked value. Mr. Begg will understand the difference between unimproved value and naked value. To take the unimproved value, of course, assumes that you know what was the condition of that land when the Dominion was taken possession of, and an attempt is made by a process of guesswork to ascertain what would be the value of that land to-day if it were in that condition to-day. It is an impossible kind of problem to answer ; but there is no difficulty at any time in answering the question, What is the naked value of that land to-day ? What is the value of that land to-day minus buildings and fences ? If you say that that is not fair to the man who has improved his land, I do not sec where the unfairness comes in, because the man who has sunk his money in improvements in land, such as drainage and clearing and whatnot, may really plead that he has paid more for his land than the original purchase price, and he is in the same position precisely as the man who buys land in that condition and pays the value of it, The, one man buys the land as it stands to-day. The other man bought the land in its rough condition and has