The existing property tax, at the rate of one penny in the L on all property, subject to an exemption of L500, was replaced by a graduated tax on incomes and land values, the principle of graduation having already been recognised in the case of succession duty. The former impost was naturally upheld by {89} large owners of property and by all classes of professional men who had escaped taxation upon their incomes; while it was distasteful to shopkeepers, who might be taxed on unsaleable merchandise, and to cultivators of the soil, who found that their taxes rose in proportion to the improvements which they effected upon their estates. The Government had little difficulty in passing their measure, which, subject to slight modifications, is in force at the present time. Incomes below L300 are not taxed; between L300 and L1,300 they pay 6d. in the L, above L1,300 a shilling; but the sum of L300 is deducted from the total income in the assessment of the tax. For instance, an income of L2,000 pays L60, at the rate of L25 upon L1,000, and L35 upon L700. The ordinary land-tax is a penny in the L on all freehold properties of which the unimproved value exceeds L500; between L500 and L1,500 exemption is allowed on L500; between L1,500 and L2,500 the exemption decreases by L1 for every L2 of increased value, being extinguished at the latter amount. Should the value exceed L5,000, a graduated land-tax is also levied, which rises progressively from half a farthing, until it reaches twopence upon estates of the unimproved value of L210,000 and upwards. All improvements are excluded from the assessment of the taxable amount: they are defined to include "houses and buildings, fencing, planting, draining of land, clearing from timber, scrub or fern, laying down in grass or {90} pasture, and any other improvement whatsoever, the benefit of which is unexhausted at the time of valuation." Under this provision rural owners have every encouragement to improve their properties, as the more they do so, the smaller becomes the proportion of the total value of their estates on which they are liable for taxation. Owners are allowed, for the purposes of the ordinary, but not of the graduated land-tax, to deduct from the unimproved value of their land the amount of registered mortgages secured upon it; and mortgagees pay one penny in the L upon the sum total of their mortgages, but are not subject to the graduated tax. A return, published under the assessment of 1891, shows, however, that rural owners are obtaining less benefit from the exemption of improvements than the owners of urban lands. The figures are as follows:-- Actual Value, Value including of Unimproved improvements. improvements. value. Counties ... 85,818,167 27,922,735 57,880,233 Boroughs ... 36,406,862 18,442,562 17,907,662