The Valuation Tangle

DOIhttp://doi.org/10.1111/j.1467-9299.1954.tb01311.x
Published date01 June 1954
Date01 June 1954
The
Valuation
Tangle
By
URSULA
K.
HICKS
This paper by the University Lecturer in Public Finance, University
of
Oxford, was delivered
on
the
10th February,
19%,
in
Oxford
before the
London
Students Society
of
the Institute
of
Municipal Treasurers
and
Accountants.
ALUATION
for rates is a very difficult and complicated problem. My own
V
interest in
it
was first aroused by becoming possessed of two houses,
one a substantial new house with all modern amenities, the other a small
eighteenth-century cottage close by
it,
and finding that the valuation of the
two houses differed by only a few pounds.
I
think
it
was natural to attempt
to find the cause of this small difference.
Before
I
start
ou
the complications of valuation
I
should first like to
emphasise that apart from any question of the measurement of the basis for
Exchequer Grants, the successful operation of the local rate does depend
very heavily on the discovery of a satisfactory solution of the valuation tangle,
Consequently, one’s views
on
the urgency of finding such a solution must be
greatly influenced by one’s view as to how far the rate as a tax is worth saving.
My own view is that the rate is a very fine tax-for local purposes.
I
depIore anything that weakens
it,
and
I
deplore the fact that
it
has declined
in
importance (in relation to the national income) very considerably since 1938.
Even now the rate is a very important tax, producing a revenue nearer
L400
million than
k300
million, and
so
substantially more than any other tax
on
outlay, except the tax on tobacco, and considerably more than Profits Tax.
Yet the rate achieves this at the cost of only quite a small proportion
of
family
expenditure-I estimate of the order of
2.0
per cent. on an income
of
k400
per annum on the average in the South-East of England today.
Thus
the
disturbance to family budgeting due to the rate is slight.
Moreover, a great advantage of the rate is that
it
is something that local
authorities can call their own. The basis is completely localised, the revenue
from
it
is steady, assessment (apart from the question of valuation) and
collection are cheap and
easy.
If not entirely in accordance
with
ability to
pay in the Income Tax sense, the rate is not violently regressive, since
expendim-;
on
house-room tends to increase more
or
less
par;
passu
with
incom: (in free market conditions).
I
am speaking here,
of
course, of domestic
rates, which bring in by far the larger share
of
the revenue
(on
the average
rather more than two-thirds), and hence for this and other reasons are the
most important part of the problem.
It
must also be realised that if
a
local tax is in strict accordance with
ability to pay, in the sense of being effectively progressive,
it
tends to be very
disequalising as between rich and poor areas, and this among other things
tends to inter-local migration, making the rich areas richer and the poor poorer.
After all,
it
is not the progression
or
regression
of
a single tax that is of
significance, but rather that
of
the entire tax structure. That, as we know,
is
very progressive, and moreover
it
impinges directly
on
local financial
conditions through grants paid out of the progressively nourished Central
Revenue pool.
229

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