The amounts paid in 1910 by some of the leading companies under the two heads in question may be shown thus:—
| COMPANY. | RATES AND TAXES. | GOVT. PASSENGER DUTY. | TOTAL. |
| £ | £ | £ | |
| Great Central | 149,899 | 04,156 | 154,055 |
| Great Eastern | 322,894 | 14,296 | 337,190 |
| Great Northern | 223,254 | 13,099 | 236,353 |
| Great Western | 669,330 | 29,640 | 698,970 |
| Lancashire and Yorkshire | 261,734 | 18,141 | 279,875 |
| London and North-Western | 638,443 | 50,359 | 688,802 |
| London and South-Western | 268,130 | 34,356 | 302,486 |
| London, Brighton and South Coast | 209,491 | 31,617 | 241,108 |
| Midland | 455,759 | 16,423 | 472,182 |
| North-Eastern | 467,404 | 12,982 | 480,386 |
| South-Eastern and Chatham | 278,505 | 53,015 | 331,520 |
| Caledonian | 150,609 | 08,905 | 159,514 |
| North British | 129,486 | 08,721 | 138,207 |
The following table shows how the sum total of the payments both for rates and taxes and for Government duty in the years from 1900 to 1910 work out (a) per train mile and (b) per mile of open railway:—
| PER TRAIN MILE. | PER MILE OF RAILWAY. | |||
| YEAR. | Rates and Taxes. | Govt. Duty. | Rates and Taxes. | Govt. Duty. |
| d. | d. | £ | £ | |
| 1900 | 2.24 | .21 | 172 | 18 |
| 1901 | 2.39 | .22 | 180 | 19 |
| 1902 | 2.53 | .23 | 190 | 19 |
| 1903 | 2.73 | .23 | 200 | 19 |
| 1904 | 2.86 | .22 | 209 | 18 |
| 1905 | 2.95 | .22 | 216 | 18 |
| 1906 | 2.87 | .21 | 215 | 18 |
| 1907 | 2.72 | .20 | 210 | 18 |
| 1908 | 2.77 | .20 | 210 | 17 |
| 1909 | 2.86 | .20 | 215 | 17 |
| 1910 | 2.89 | .19 | 218 | 16 |
This question of the taxation of railways is a matter of material concern as regards (1) the direct results thereof on (a) rates and charges and (b) dividends paid—or not paid; and (2) the general policy of the State towards the whole problem of internal communication.
As in the case of cost of land, of expenditure on Parliamentary procedure, of capital outlay on construction, and of any undue increase in cost of operation, the payments in respect to rates, taxes and Government duty can be met by the railway companies only by one or other of two expedients: either by getting the money back through the rates, charges and fares levied on the railway users (an expedient necessarily curtailed both by legislative restriction and by the economic necessity of not charging more than the traffic will bear), or, alternatively, by leaving the railway investors with only an inadequate return—if not, in respect to a large proportion of the capital, with no return at all—on their investments.
The system of assessing railways for the purpose of local rating is one of extreme complexity. It grew out of the earlier system of the taxation of canals, and, had the railway companies fulfilled the original expectation of being simply owners of their lines and not themselves carriers, the principles on which the system was based might have applied equally well to rail as to canal transport. But, while rail transport underwent a complete change, there was no corresponding adaptation of local rating to the new conditions, and the system actually in force is the outcome far less of statutory authority than of custom, as sanctioned by the judges—who have themselves had to assume the role of legislators—while the machinery of railway valuation differs materially in England and Wales, in Scotland, and in Ireland.[[56]]
In England and Wales there is a separate assessment of a railway for each and every parish through which it passes. Such assessment is divided into two parts: (1) station and buildings, and (2) railway line. The former, arrived at by a per centage on the estimated capital value of buildings and site, is a comparatively simple matter. It is in regard to the latter that the complications arise. The main consideration in each case is the amount of rent which a tenant might reasonably be expected to pay for the property assessed; and such presumptive amount is arrived at in regard to the lines by calculating the amount of net earnings the railway is able to make through its occupation of the particular length of line that passes through the parish in question, and according to the actual value of such length of line as an integral part of one concern.
The extent of these net earnings is ascertained, in effect, by first taking the gross receipts on all the traffic that passes through the parish, and then making a variety of deductions therefrom. The cost of construction of the railway does not enter into consideration at all. The calculations are on what is called the "parochial earnings principle"—that is to say, the amount earned in the parish, and not the amount received from traffic arising in the parish. The railway company may have no station in the place, and the amount of traffic derived from the parish may be practically nil; but the assessment of the line, on the basis mentioned, is followed out, all the same.
The main principle is the same in Scotland and Ireland, but with this important difference in detail: that in each of those countries a railway is first valued as a whole, the total value being then apportioned among the several rating areas.