290 ECONOMIC PRINCIPLES

be compelled to accept a lower price for them. The
actual owners of houses already built will have a burden
placed on them, inasmuch as, for the moment, demand for
houses and supply of houses are unchanged, so that rents
cannot be at once raised, and thus the net revenue yielded by
the houses is reduced by the tax. Whether to hold or to
sell, the houses are worth less. The burden is capitalised,
and if owners sell, the new owner will only pay a price which
relieves him of burden, and makes his investment yield a net
return on a level with other investments involving corresponding
 risk and trouble.
If the above results are to be avoided, it must be possible
to raise rents somewhat without losing tenants. But many
tenants will rather accept a diminished accommodation than
pay higher rent, and thus the raising of rent may mean
driving tenants to less convenient houses, or, where that is
possible, to districts where the tax does not apply. If such
removal to other districts be easy, the landlord’s opportunity
to recoup himself by raising rents will be practically annulled,
In course of time, as the supply of houses in the taxed
district comes to be adjusted to the new conditions, rents
may rise and afford an opportunity to landlords to recoup
themselves for the taxes they are then paying. This effect
will be slight if removal to an untaxed, or more lightly taxed,
district be easy. Another point of importance is that, as
many houses are held on leases for a period of years, the
opportunity for readjusting the rent does not offer at once,
and thus the burden cannot be transferred to the occupier of
the premises till his lease falls to be renewed, at least.
Suppose, however, that the tax is levied directly on the
occupier. To transfer the burden to the owner of the house
a new agreement for rent must be made. Here we may
emphasise a point not mentioned above. A tenant may find
the inconvenience and expense of moving so great, that,
though equally satisfactory accommodation were available at
a price which would relieve him of the tax burden, he would
prefer to stay where he is and bear the tax. When other
circumstances lead him to move to another house, he will
select that other house with the tax in view, and may be