need not be further referred to, or for deductions under the terms of Section 37, which are as follows:--

"And be it enacted, that in estimating the annual value of lands and heritages, the same shall be taken to be the "rent at which one year with another such lands and heritages might in their actual state be reasonably expected to let "from year to year, under deduction of the probable annual average cost of the repairs, insurance, and other expenses, "if any, necessary to maintain such lands and heritages in their actual state, and all rates, taxes, and public charges payable in respect of the same."

76. The working out of the matter has not been altogether satisfactory owing to the very varying deductions allowed in different parishes. We append a table showing the range of these differences. It will be seen when we come to treat the education rate, how unfairly the existence of these differences act. We think we may say that there is unanimity among all witnesses that, if deductions are to remain, the power of each parish to fix its own deductions should be taken away, and that deductions should be fixed on a uniform scale by a central authority. We entirely

endorse that opinion.

77. The more general question remains as to whether it is right to have any deduction at all, or in other words, whether all rating should not be on the gross. To put it on the gross would secure uniformity, county and burgh rating being at present on the gross. We think this change should be made. It seems quite illogical to support a deduction in respect of an occupier's rate. His ability to pay is in no sense affected by what it costs the owner to keep the property in repair. It is obvious that were the scale of deduction uniform for all classes of property (which in some parishes it is) this alteration would effect no actual change in the relation of ratepayers inter se. The persons affected by it would be those whose properties enjoy a higher rate of deduction than the average, e.g. railway companies. After all, for the purpose of rating a railway company is an ideal person, and as such, when subjected to the burden of an onerous rate, there seems no reason why the ideal person should be treated otherwise than the real. It is also to be kept in view that any change made by this manner is necessarily connected with the system of valuation. Further, it is connected with differential rating such as is found in the Burgh Police Acts and various other Acts, under which certain properties are assessed on 25 per cent. of their value. But the method of differential rating is, in our opinion, only admissible when the rates are of the beneficial order, the reason for it, to quote the words of the Commission of 1896, being that: "It was considered that these properties derive less benefit from the expenditure out of rates than did other properties and that they were, therefore, entitled to an abatement in respect

1 Appendix IV.

of them." Such a consideration is not relevant in the case of an onerous rate where the benefit received is not in question.

78. In coming to this conclusion as to gross value it is right to say that we differ from the Commission of 1896 who simply recommended the net value as being "in their opinion fairer to all classes of ratepayers." They, therefore, proposed to alter the county and burgh rates to a net basis; but as a necessary corollary to take away the power of fixing deductions from parish councils; to establish maxima by parliamentary authority and to leave the matter to the valuation authorities, who were to enter both gross and net in the valuation roll.

THE POOR RATE.

79. This rate has previously been dealt with in the general observations we have made, and no further special remark is needed with one exception. By the law of Scotland poor law relief is not payable to an able-bodied man. Owing to the situation engendered by the war and the prevalence of unemployment, parliament has recently passed an Act which has legalised the payment of relief to able-bodied persons. We assume the necessity as a measure of State for such relief being given; but it is certainly an enhancement of the grievance of the ratepayer, who has to pay for onerous service in respect of one class of property alone, that he has been forced to bear unassisted by the general taxpayer a burden which is only dictated by an imperial and not a local necessity. To the relief of the poor has been added the relief of the unemployed.

EDUCATION.

So. Previous to the recent Act the unit for educational purposes was the School Board area, which as a rule coincided with the parish, and the assessment was a parish assessment levied along with the poor rate. By the recent Act the county became the area. The total deficiency on the Education Fund of the county, i.e. the sum required for educational requirements after deducting the imperial contribution, is allocated against the various parishes in proportion to their gross valuation. The rate necessary to raise the particular sum in each parish is levied along with the poor rate, i.e. according to the net valuation.

81. The effect of this has been to create a most startling increase in the case of rural parishes. In the appendix we append a table showing the figures for most of the parishes. As an extreme case we may instance the parish of Drymen. It will be seen that in the year previous to the Act the total sum raised in the parish for education was £778. In 1920-21 this had risen to the enormous sum of £7236. It has been explained that the

1 Appendix V.

figures for the year 1920-21 are somewhat inflated by unpaid balances having been carried over. It may however be safely assumed that the Drymen contribution for 1921-22 will be in the neighbourhood of £5000.

82. It is true that the enormous increase is partly due to the increased cost of education, a matter which does not fall within our province. It may not be amiss, however, to point out that, so far as imperial contribution is concerned, it cannot be said that here it has failed to march with the times. The report of the Commission of 1896 indicated, as we have already mentioned, fifty per cent. as the limit of imperial contribution if local service. was not to lose its local character. Now to take the most recent figures available, the first Geddes report brings out that for every of total educational expenditure in 1913-14 the taxpayer contributed 9s. gd. and the ratepayer 10s. 3d., whereas in 1922-23 the ratios will be 11s. 6d. and 8s. 6d.

83. The great increase in a parish like Drymen is not, however, only due to the increase in expenses, but to the fact that instead of, so to speak, running its own educational establishment it has become a member of a larger community with a larger population and more schools. The grievance does not end there, for although it is convenient and even necessary to look at the parish as a unit in respect that the rate is parochially struck, yet the grievance which we have to enquire into is not the grievance of the parish but of the individual ratepayer, and the equities we are looking for are equities between individual ratepayers inter se.

84. Now the method prescribed by the recent Act is the method of all others which is calculated to accentuate such a grievance; for not only is the individual ratepayer in Drymen hurt by being made one of a much larger class, but if he is the occupier of, say, a house he is further hurt by the rule which allocates the deficiency according to gross rental but assesses it according to net.

85. Out of a gross total valuation of £39,000 odd the valuation of waterworks in Drymen is £21,000 odd, and railways £3000 odd. Now waterworks have a deduction of fifty per cent. and railways sixty per cent. Up to 1919-20 the deduction given to houses was only ten per cent. Thus, while the waterworks and railways swell the gross valuation and so increase the share of the deficiency allocated to the parish, when it comes to an assessment the burden falls with increased weight on those ratepayers who enjoy a smaller percentage of deduction.

86. In these circumstances most of the county witnesses suggested that the proper method would be to charge each parish with the cost of its own educational requirements, and then add a sum for central expenses. Such a proposal is strongly objected to by the Education Department and by the Association of Education Authorities. We cannot disguise our view that the proposal is in the teeth of the central idea of the recent Act, which

was to sweep away the parish area and make the whole educational system depend on the larger area. At the same time we consider that the present arrangement is equally illogical. The natural sequel to a larger area is an equal rate on all the contributors. within that larger area; or, in other words, a flat rate like other county assessments. This would give substantial relief to the ratepayer at present unduly pressed under the existing system, and would be in accordance with the unanimous resolution of the Association of Education Authorities at a special meeting convened to consider the question. In any view we think there is no justification for the present plan. If assessment is to be retained on the net valuation, then allocation of the deficiency ought to be in proportion to the net valuation. This would be. open to gross abuse if the parishes were still left masters of their own deductions, but, if the unanimous recommendation of all who have appeared before us was taken, namely, that failing all assessments being on the gross, deductions be fixed by a central authority, then this door of abuse would be shut.

AGRICULTURAL RATES ACT.

87. This Act which was passed in 1896 provided that rates so far as levied in respect of agricultural land should be levied on three-eighths of the valuation instead of on the total valuation. as in other cases. At the same time an imperial contribution to the local revenues was made of a sum equivalent to the sum lost by that concession. The imperial contribution has remained stationary; the rates as already shown have enormously increased. The consequence is that the deficiency caused by the lower rating of the agricultural land has to be made up by an increased rate on the total valuation, and, therefore, increases the burden of the non-agricultural ratepayer.

88. This is looked upon as a grievance, which has been voiced by many of the witnesses before us. The proposals for alteration

have varied. Some have recommended the total abolition of the exemption; others that the exemption should only apply so far as the imperial contribution was adequate to supply the deficiency, and others have been of the opinion that the imperial subvention should be increased to meet the increased deficiency. The last-named expedient is not within our province.

89. As regards the two former, it seems to us that the reasons on which the Act of 1896 was based, namely, that the ratio of the farmer's rent to his income is far higher than that of other persons, is equally true now. The imperial subvention was not based on any principle, but must be looked upon as a concession to parliamentary exigencies with a view to passing the Act. It is true that for a period during the war the farmers had a term of exceptional prosperity. That has now passed and the situation,

from this point of view, is in no way superior to the pre-war period. We are, therefore, of opinion that no change ought to be made.

EXEMPTIONS.

90. These at present are in favour of government property, churches, burial grounds, etc., and some other specially excepted subjects which need not be detailed, and which, resting as they do on the provisions of private Acts, we do not consider a proper subject for our attention. The government in practice have made a voluntary contribution in lieu of assessment. Many of the witnesses were in favour of a total repeal of exemptions, and a special grievance was instanced in the case of profit earning cemeteries, which at present are immune under the general description of burial grounds. The government contribution was said to be in many cases inadequate. On the other hand, the church authorities were anxious that the immunity of churches should be extended to church halls.

91. The exemption of government property is based on the legal doctrine that the King cannot be touched by the provisions of any statute unless he be specially mentioned therein. As a doctrine this is unimpeachable and salutary in practice, but as it is possible to deal with the particular point by statute, there does not seem to us any good reason for exemption in favour of government land and buildings. The effect of the government occupying such subjects is to extrude someone else who would be able to contribute to the rates, and so long as the rates are laid on real property alone, we think there is no justification for abridging the number of contributors. The placing of government property on the same footing as private property would also put an end to all suspicion of grievance on the head of inadequacy of contribution.

92. We think that the origin of the exemption of churches and churchyards is to be found in the position of the national churches and churchyards, where really there was no one to tax. It was natural when the idea of the exclusive rights of the established church was no longer paramount, to extend the exemption to the churches and churchyards of other denominations; but there was no justification for allowing other properties, because they answered to the description of a burial ground, to share in the exemption. We see no reason why cemeteries either conducted as profit making concerns or owned by public authorities should continue to be exempt from assessment. Both should be assessed on the same principles as other subjects, allowance being made in valuation for the exhaustible nature of their asset. We consider further that exemptions should not be extended.