The UK Press, even Financial Times, For the Land Value Tax
|December 8, 2013||Posted by Staff under Uncategorized|
These 2013 excerpts on public revenue progress are from the UK press:
(1) The Guardian, Spt 13, on alternatives by Phillip Inman, economics correspondent;
(2) Express and Star or the Shropshire Star, Spt 14, and
(3) The Telegraph, Spt 15, on GB Business Secretary, by Tim Ross and Patrick Hennessy;
(4) Property Week, Spt 16, on LibDems by Rhiannon Bury;
(5) Financial Times, perhaps the world’s foremost business publication, Spt 27, on the perfect tax by Merryn Somerset Webb, editor-in-chief of MoneyWeek;
(6) Tax Research, Spt 30, on a joint letter by Richard Murphy;
(7) Financial Times, again, Nov 22, on the old can saving the young by Chris Cook; and
(8) ResPublica, undated but probably late Nov, on solving housing woes by David Fagleman.
Alternative to Council Tax Freeze is Out There
We are repeatedly suckered by the easy riches to be gained from joining the property pyramid scheme at an early stage. We need a brake on the investment bloodlust that overtakes buyers and sellers when house price inflation gets going. A property boom is about persuading the next generation of buyers to pay inflated prices in the expectation they will become super-creditworthy borrowers.
A tax on land, subsuming council tax, would force us all to pay a little of the inflationary gain each year from rising land prices in the form of a tax. In most land tax schemes, the money is used to reduce income tax and transaction taxes like stamp duty. This means the only losers would be those people who rely on rental income and rising prices for their standard of living.
A land tax promotes many good things. To limit property inflation we would all be in favour of new building. It would also encourage investment in more productive assets, like start-up companies, manufacturing businesses and export-led services firms.
Land Value Tax ‘Should be Examined’
Vince Cable, the UK Business Secretary, said the Government should look at plans for a land value tax.
Vince Cable said there were many potential problems with the idea, which taxes land itself rather than the property or people on it — but told a fringe event at the Liberal Democrat Party Conference the idea should be examined.
He said it was one of the options “floating around at quite a high level”.
The Liberal Democrats (above) have voted to begin the process of introducing a land value tax, which could ultimately replace business rates and property taxes.
How a Levy Based on Location Values could be the Perfect Tax
What gives a piece of land its value? Why is a 500 sq ft spot in London worth more than 500 acres of land in Angus? The value of a bit of land is not in the land itself but in the location of that land. And what gives the location value? That comes down to what is going on around it. Think good transport links, good schools (a house in the UK by a good school is worth anything from 5 to 20 per cent more than one near a bad school), hospitals, and the infrastructure to provide jobs.
If it is the state that gives land some of its value — clearly there is also value in non-state provided things, such as beauty and mineral rights — why is it that all of that value generally accrues to individual landowners, rather than to the state?
A land or location value tax (LVT) is levied not on the value of a property but on the value of the land that property sits on. It is not the bricks and mortar that make a flat in, for example, London’s One Hyde Park worth £6m-plus, it is the land on which it sits. So the LVT is just an attempt to collect the value of a property that has nothing to do with the actions of the owner and everything to do with the actions of the community.
In theory, it is not just an excellent tax but the best of all possible taxes. It discourages speculation and stops in its tracks the endless cycle of investment in land and property purely to rent it out. It promises no more property boom and bust. But, as it is not collected on any improvements made to land or to buildings on land, it does not discourage productive activity. Instead, it encourages people to bring idle land into use, to improve land they own and to be as productive as possible (when you have a pure LVT, earned income isn’t taxed at all).
Time for Land Value Taxation – in the Independent this morning
I am co-signatory of a letter in the Independent this morning that says:
The compulsory purchase of land banks proposed by Ed Miliband puts Labour’s housing policy in line with the supporters of land value tax (LVT). We believe that the present taxation system is flawed and unfair. When the value of UK land increases due to increased demand, the owners, including UK and international speculators, have done nothing to increase their personal wealth.
Renters gain nothing while their rents increase. The issue is how to make some of the increase in land value available to all. LVT taxes some of that increase in land value.
It should result in the abolition of the regressive council tax and business rates. It should cover all land, used and unused, so bringing land banks and empty homes into use, making investors look for income from renting, building and creating jobs to cover the tax. HMRC would spend less chasing tax-free money parked in overseas accounts; banks have yet to find a way of moving land into their vaults.
John Lipetz Coalition for Economic Justice
Richard Murphy Tax Research UK
Dr Stephen Battersby Pro-Housing Alliance
Rev Paul Nicolson Taxpayers Against Poverty, London N17
There is no doubt LVT has to be a part of any reasonable taxation policy in the future. That future should start now.
The Young are Doomed – and Only the Old can Save Them
If the only people who can afford to buy housing are the children of people who bought housing, it creates an unbridgeable divide between the haves and the have-nots. How about a land value tax levied on house prices? It would hit the older harder, the younger less, and cut dwelling costs by encouraging the cash-poor and asset-rich elderly to move into more modest accommodation.
Land Value Tax: The radical solution to the housing crisis
Land Value Tax, taking the form of an annual levy on the rental value of unimproved land, is the radical solution to the housing crisis. By taxing the value of land as opposed to the value of the property, land will be taxed whether it is built upon or not, which will encourage a more efficient use of land by making it economically efficient to develop where appropriate.
A surge of available land would lower the price, enabling smaller developers and housing associations (who in the face of declining government grants, are becoming increasingly dependent on income from construction), to join established house builders in providing a plentiful supply of affordable housing. Creating greater competition will see a reduction in rent and house prices, stabilising the housing market and creating a more equal relationship between landlords and tenants.
Either working simultaneously with reduced property taxes, or outright replacing the outdated and regressive Council Tax, Stamp Duty Levy, and Business Rates, a locally collected Land Value Tax would have to be phased in gradually and under the right blueprint.
Ed. Notes: OK, that’s eight articles out of GB which graced our screen this fall. Did you note any we may have missed? Or from elsewhere? Of so, please send them in. Thanks.