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made; there is a continuous supersession of the worth of known processes and of the utility of old forms of work involving a supersession, or at least a transfer, of the labour hitherto devoted to them. All these things compel a perpetual shifting of seats of industry and of the settlements of man, and no organisation can be entertained as practicable which does not lend itself to those necessities. They are the pre-requisites of a diminution of the toil of humanity. As I have said before, the theory of individual liberty, however guarded, afforded a working plan: society could and did march under it. The scheme of collective action gives no such promise of practicability; it seems to lack the provision of the forces which should bring about that movement upon which growth depends. The economist of the past generation still holds his ground, and our best hope lies in the fuller acceptance of his ideas. Such, at least, appears to me to be the result of a dispassionate inquiry; but what may be wanting is something more than a dispassionate temper-a certain fervour of faith. The economist must feel, if he is to animate multitudes and inspire legislatures, that he, too, has a religion. Beneath the calmness of his analysis must be felt the throb of humanity. Slow in any case must be the secular progress of any branch of the human family; but if we take our stand upon facts, if our eyes are open to distinguish illusions from truth, if we are animated by the single purpose of subordinating our investigations and our actions to the lifting up of the standard of living, we may possess our souls in patience, waiting upon the promise of the future.

TOL. LIX.

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PART IV.

Some OBSERVATIONS on the DISTRIBUTION and INCIDENCE of RATES and TAXES; with SPECIAL REFERENCE to the TRANSFER of CHARGES from the FORMER to the LATTER. By G. H. BLUNDEN.

[Read before Section F of the British Association, at Liverpool, 1896.]

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FEW subjects, if any, have, in recent years, more constantly .engaged the attention of Parliament than that of local taxation. The chief outcome of this attention has been a great extension of the system, inaugurated fifty years ago by Sir Robert Peel, of charging upon the imperial revenues expenses which were formerly borne by the local rates. The magnitude of the increase, and the dimensions of the total sum so charged, are points upon which some dispute has arisen. In Sir Henry Fowler's return of 18931 the total of the grants and subventions for England and Wales in the year ended March, 1892, is set down as 11,846,4821. But this sum includes some items which can hardly be described as having been transferred from the rates to the taxes. Dr. Hunter omitted from the calculations for his well known "Contemporary Review article of October, 1893, the grants to schools paid on the reports of the inspectors. But the fee grant is also, for my purpose, not to be reckoned amongst the transferred charges, it being in place of the school pence and not in ease of the rates. I am, similarly, disposed to regard the portion of the proceeds of the beer and spirit duties which is applied to technical and secondary education as a new, rather than a transferred, charge. If, however, these deductions would reduce the total to about seven millions, the automatic growth of the subventions and subsidies on the one hand, and the Agricultural Rates Act on the other, will bring up the total sum transferable from the rates to the taxes for the

1 House of Commons Paper, No. 168 of 1893,

financial year 1897-98 to about ten millions. This is a quite sufficiently large sum to make its incidence and distribution profitable subject for study. But the most careful consideration has become a pressing duty, in view of the likelihood, almost amounting to certainty, that efforts will be made in the near future to secure for the other classes of ratepayers a measure of relief proportionate to that conceded to the occupiers and owners of agricultural land under the Agricultural Rates Act.

II.-The Distribution of the Burden of the Rates.

May I, then, first of all, ask your attention to some figures and observations relative to the distribution and incidence of the rates in England and Wales? In these I shall, for the present, ignore the Agricultural Rates Act, reserving a brief reference to this topic for a later stage.

Tables I, II and III of the Appendix to this paper give statistics of valuation, compiled from official sources, which may be left to speak for themselves; but Table IV has been prepared with the object, as stated in the footnote, of separating the ratepayers who pay income tax from those who do not. This can be done with some approximation to accuracy as regards the rates levied in respect of dwelling houses, but not as regards the rates paid in respect of other classes of holdings or property. Guided by experience, I have adopted a 271. rental as the dividing line corresponding to an income of 160l. a year. On this basis the proportion of the total annual value of England and Wales, furnished by the dwelling houses of those who pay no income tax, is found to be 27'4 per cent., and that of the houses of the income tax paying classes 25'4 per cent.

The proportion which the rates levied in respect of lands bear to the total rates has been the subject of careful investigation by successive Presidents of the Local Government Board. Mr. Goschen estimated that it was 66.66 per cent. in 1817, and 33 33 per cent. in 1868. Sir Henry Fowler estimated it at 15:31 in 1891, and Mr. Shaw-Lefevre places it at 1174 for 1893-94.2 It is of course a notorious fact that whilst the rates payable in respect of buildings, railways and other property have gone on increasing year by year, those payable in respect of lands have been steadily diminishing. In the former case there has been a rapid growth both of the total valuation and of the rate in the pound; whilst in the latter case there has been a reduction under both of these heads. Accepting Mr. Shaw-Lefevre's figures for 1893-94, we are confronted with the fact that whilst lands

2 House of Commons Papers, No. 470 of 1870, No. 168 of 1893, and No. 204 of 1895.

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(including farm houses and tithes) furnished nearly 21 per cent. of the total valuation as worked out by the Local Government Board, and nearly 20 per cent. as worked out from the figures of the Board of Inland Revenue, the proportion of the rates paid was only 1174 per cent. Deducting one-tenth for farm houses and cottages, it stands at 106 per cent. for lands and tithes, as in Table V.3 The amount of rates actually contributed by railways and other property" is not known; but as both of these classes are partly urban and partly rural, and as railways and canals only pay sanitary rates on one-fourth of their rateable value, the actual payments are considerably smaller in proportion than the corresponding rateable values. In Table V I have assumed that, as the rateable value of railways was 8.6 per cent., and of "other property" 6.8 per cent., the rates paid were 7 per cent. and 6 per cent. respectively of the whole amount. This leaves 764 as the percentage paid in respect of buildings (including farm houses). Dividing this up in the same relative proportions as were worked out in Tables III and IV for rateable value, it follows that 32 per cent. of the total amount of rates was paid in respect of their dwelling houses by the classes who pay no income tax, and 29 per cent. by those liable to that impost. The balance of 15'4 per cent. was paid in respect of mills, factories, warehouses and other purely business premises.

III.-The Incidence of Rates and Taxes.

Having these data to work upon, I have attempted in Table VI to distinguish the respective portions of the total amount of the rates which fall upon the whole community as occupiers or consumers, and upon the owners of real and personal property. It will be seen that I estimate the proportion falling upon real property at 12.6 per cent., and that falling upon personal property at 12.1 per cent. This allocation is made in accordance with the theory of incidence laid down in the essay upon the subject which I published in 1895.5 Perhaps I may be allowed to recapitulate the conclusions reached therein in a few words: "As applied to agricultural lands and tithes, the local "rates are mainly [in the nature of special taxation of these "classes of property. Subject to the reservations set out, it "may be broadly stated that this taxation falls upon the owners; "in the case of tithes, directly and immediately, and in that of agricultural land, by reduction of the rent at each readjustment or reletting. As applied to dwelling houses, the local rates are

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This still leaves the other farm buildings under the heading of "Lands.”
House of Commons Paper, No. 204 of 1895.

"Local Taxation and Finance." Sonnenschein, 1895.

"a rough and ready form of income tax on the occupiers. All "kinds of income are laid under contribution, no matter what "their nature or amount may be. The fact that house rent is "taken as a measure of the occupier's ability to bear taxation "must no longer be allowed to disguise the true character of the "tax."6

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"As applied to shops and other trade premises this taxation appears to possess a composite character. So far as the nature "and the circumstances of the trades are such as to permit of the “addition of the tax to the prices of the goods made or sold and "the charges for work done, the rates will fall ultimately on the 66 consumers. Where this cannot be done, the tax will fall either on the trader or upon the owner of the property, or partly on "each. If the trader's profits are not abnormal, and he cannot "add the tax, or the excess beyond a general average of such taxation, to the prices of the goods or work, the tax or some "part of it will be likely to fall upon the property owner and, finally, upon the owner of the site. Rates levied in respect of railways, canals, gas works and waterworks, are mainly taxes on the profits. Those on coal mines may fall partly on the owners of the royalties and rents, but are chiefly a tax on the consumers of the coal. In the case of metalliferous mines, the "incidence is much more largely on the royalty owners. Rates on quarries, pits and clay fields fall mainly on the consumers of "the products wrought but, possibly to some extent, on the free"holders also, as in the case of coal mines."

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We have seen that the non-payers of income tax pay 32 per cent. of the total of the rates as occupiers of dwelling houses. If to this we add their contributions as owners of real and personal property and as consumers of commodities produced or sold on rated premises, their share can scarcely be less than 40 per cent., and may be rather greater. The income tax-paying classes contribute 29 per cent. as occupiers of houses and a proportion, which I have placed at 31 per cent., as property owners and consumers, or 60 per cent. in all.

This very important matter is discussed at length in the work quoted, vide p. 44, et. seq. The teaching of Adam Smith, McCulloch and Mill, whilst in the main confirming the conclusion quoted in the text, was to the effect that a small portion of the taxes on houses falls finally on the owner of the site. Ricardo, however, held that "in ordinary cases the whole tax would be paid both imme"diately and finally by the occupier." (Gonner's edition, p. 182.) This latter theory, after having for a time fallen into disfavour, was revived and elaborated by me in the "Economic Review" for October, 1891. It shortly afterwards received the powerful support of Professor Seligman and, recently, that of Dr. N. G. Pierson.

The grounds upon which these conclusions are based are set out in Chap. V of the work quoted.

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