RURAL PLANNING AND DEVELOPMENT 113 



a forced overflow of urban population into rural territory to suit 

 speculative schemes. In Britain, land is taxed at 50 per cent 

 of its net annual value for agricultural purposes as against a tax on 100 

 per cent of its net annual value if used for private residences. It 

 is held that the land used by the farmer is just as much a part of his 

 stock-in-trade as his cattle and implements and that he should not be 

 required to pay as heavy a tax on a farm worth say $500 per annum 

 when his income is probably no more than $500 as the man who oc- 

 cupies a house worth $500 per annum and whose income may therefore 

 be reckoned at ten times as much. One may reasonably ask why the 

 farmer, earning perhaps $500 per annum net income should pay as 

 much in property taxes as the suburban resident earning $5,000 a year 

 even though their properties are of the same value? Whatever the 

 merits or demerits of the British system, under a system of tenancy, 

 it shows an attempt to adjust taxation so as to help the producer. 



In valuing land in Canada more regard should be paid to the 

 revenue producing capacity of the land and less to its so called "pros- 

 pective" value, which, in the majority of cases, never materializes. 

 When money is worth six per cent, the average farm is only worth 

 16 J years' purchase of the annual rental value, e.g., if a farm is worth 

 $10 per acre per annum and if the current rate of interest for an in- 

 vestment with good security is six per cent, it would be safe to pay 

 16J years' purchase of the rental of $10, namely $165 per acre, for the 

 farm; just as when a farm is bought for, say, $165 an acre it should 

 be worth a net rental of about $10 per acre to a tenant. 



In the same way, when a house and lot is purchased, the price 

 paid should be based on the revenue-producing character of the invest- 

 ment, and, in an average case, when the land is put to full use, should 

 not exceed twenty years' purchase of the net rental; this rental being 

 arrived at after deducting the whole of the outgoings (taxes, etc.), 

 together with a sum for repairs equal to from ten to fifteen per cent 

 from the gross rental. 



Difficult as it may appear to be to reduce values in Canada to 

 a revenue-producing basis it is only wild speculation and wrong 

 theories of assessing land values that have caused it to become diffi- 

 cult. When assessments are made by competent valuers on a scien- 

 tific basis both vendors and purchasers of real estate will obtain much 

 needed guidance in their transactions. In places where land is as- 

 sessed with some definite relation to its revenue-producing value, 

 having regard to the purpose for which it is best adapted, arrears of 

 taxes are practically unknown, investments in real estate become as 

 secure as investments in city bonds, the chief sources of cheap capital 



