holder of a perpetual lease gets it for a rental of four per cent upon
the original price fixed by government on the land, subject still,
however, to the conditions as to residence and improvements on the
land during the first ten years.

Having abandoned this promising and theoretically perfect plan for
securing to the state all state-produced increase in the value of the
public lands, the New Zealand parliament was still anxious to secure
for the country the other advantages held out by the author of the
single-tax doctrine. These advantages may be briefly summed up in the
words, the discouragement of large holdings and the prevention of
speculation in future land values. To obtain these results without
laying the community open to the charge of practical confiscation,
which has been, and probably will always be, the strongest argument
against the practical application of the doctrine of the single tax,
as propounded by its author, was felt to be no easy matter. Even in
New Zealand there were already some large freehold estates, and these
naturally included some of the most desirable and valuable of the
land. It was eventually decided to impose a land tax, the incidence of
which would tend at least to discourage speculation, while it supplied
revenue for the public expenditure.

A uniform tax of one penny in the pound sterling, equivalent to one
two-hundred-and-fortieth part of the capital value of all land in the
country held in freehold by Europeans, was imposed, the value of
improvements being in all cases deducted from such valuation. Each
owner of land is, however, allowed an exemption of land to the value
of two thousand five hundred dollars, on which no tax is payable, as
well as of all mortgage money secured on the freehold. Thus all
freehold lands held by any individual are liable to be taxed above the
value of $2,500, so far as he is really interested in them; while all
money lent on mortgage of land is subject to a tax of five per cent on
the annual interest reserved by the terms of the mortgage. New Zealand
is mainly a country of small holdings, and the result of this system
has been that, out of about 90,000 holders of land in freehold, only
about 13,000 actually pay the tax on land. In other words, the
settlers of the colony who own land which, apart from improvements and
mortgage debts, is worth more than $2,500, are found to be only about
one-seventh of the whole number.

To provide for the discoura