People are asking what land value taxation is, which given the attention it's getting is a fair thing to do.
One explanation is here. I don't agree with it all, but it's a clear expression of the main issues.
Wikipedia has a spin on it as well, here.
And Jerry Jones from the Labour Land Campaign has a longer version here.
In all cases I have some reservations about the optimism and scope suggested - but equally think LVT has to be a component of a future just tax system.
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Hmm… I see one glaring ‘hole’ in this. Have you noticed how London has slowly squeezed poorer people out. This has been done by both sides of the house. Someone who owns a former council house in London will have difficulties in paying LVT if they have a normal paying job, ie not working as a trader for a financial institute.
Another point that I’ve just realised; what about a farmer who leaves a field fallow as part of the crop rotation process? Will the land be valued at zero for that year?
Is this another idea by the tories that seems fair, until you realise the full implications eg Poll Tax? Richard, what are your personal thoughts on this?
I think the tax fairer than council tax – which is horribly regressive now
I think there are problems with agriculture – but they’re not insurmountable
And I stress – the tax has to replace other taxes – not add to them
There really is no problem with LVT for agricultural land. See this article on farm subsidies http://www.scotsman.com/the-scotsman/business/andrew-arbuckle-something-for-nothing-culture-has-to-be-brought-to-end-1-2167021#.T13V6AKObL8.facebook. The CAP payments are based on acreage and feed directly into land values. So a full LVT would pull all the EU farm subsidy back to the UK coffers. We could then provide a much more sensible subsidy to our farmers.
Remember also that there are a fair proportion of tenant farmers and they have to pay their full LVT to the landowner – who does absolutely nothing to earn the rent.
The important basis for LVT is that all land is taxed at its true value. That way the market will function correctly and allocate to best use (within the planning constraints, of course.)
Under LVT land is assessed at its market value (preferably the rental value) on an annual basis. What a farmer does on his land has no effect on the rental value.
There is indeed a transitional problem with the full collection of land rent for public benefit for owners in overheated land markets. But these can be overcome.
Firstly, the revenue stream would be so huge that there would be plenty available to relieve hardship. Secondly, the inclusion of all land would ensure a shift in relative values from residential land (lightly taxed now – and with no commensurate revenue stream) to commercial land (highly taxed now – with its own revenue stream). Thirdly, the inclusion of all land would bring huge acreages onto the market, thus reducing values. However, the increased wealth which would result from this market correction would (with the right policies favouring workers over the owners of capital) generate more and better paid jobs – making LVT bills affordable.
i think a citizen dividend funded with land rents is an important component of a land value tax to guarantee there is free land. i also believe land rents should have a ceiling of the time the land was purchased with the stipulation that any increase in land value is collected at the time of sale which exceeds collected land rents.
there is a large amount of misunderstanding about the land value tax. the land value tax should tax the full rental rate and not just a percentage of it, and such would drive land values down to be virtually free if it is undesired land, meaning the poor would have access to free land to claim as their own to live upon and work for themselves upon.
the goal is to make sure there is land for everyone. the land value tax should simulate the 50-year land lease in the bible. everyone of capable means can bid on land and lease it from the government, which is essence a land value tax. the remaining land is considered undesired and can be distributed to the poor. the land value tax if set at a rate such as 95% would still allow such “free land” to be valued with the citizen dividend making the land virtually free since it would cover the cost of the minimum virtual free value.
i’m agnostic and have no bias in regards to the bible. i would have to agree the bible is very right on this issue, which causes me to have respect for the bible. and it is sad there are so many people who claim to have faith in the bible who do not have faith in what the bible teaches.
@keith gardner, the citizen’s income/dividend idea is projected by libertarians who are against ‘big’ government,;against the provision of public goods and services; individual liberty over co-operative values. The rest of us want all the revenues we can lay our hands on for free–for-everyone health, education, subsidised public transport, decent pensions, care of the elderly, etc, etc. This is is a social wage and what a civilised society should strive for IMO.
The free-land-for-the-poor idea sounds attractive, but it is highly unlikely to be achieved because of necessary, democratic (hopefully) constraints on land use and the ever sharp eyes of those out to turn a quick buck.
Carol
Thanks for that
I share your concerns
Richard
I am a fan of the citizen’s income/dividend idea. Not to replace public goods, but a supplement. It could be a replacement for a large part of our labrythine welfare system which doesn’t always reach those eligible, and has high marginal rates for those that go into work.
It is not a libertarian idea – James Meade, the Nobel-winning Labour-supporting economist supported it.
I like to think of it as the State redistributing the unearned income (usually accruing to landowners and inheritors) in the economy to everyone.
The rent paid to landowners is not the return for productive behaviour, but the price paid to someone who has appropriated what Nature has given for free. The landowner has no right to that rent. The rent should belong to the people, being paid to the State allowing for other taxes on ‘goods’ to be replaced.
It is fairer, and more economically efficient, than other forms of taxation.
I don’t hold out the utopian hope of a Henry George on this, but if it’s worth doing (and it will be disruptive), it’s worth doing boldly. Justice and Reason would be on our side.
The best LVT scheme i’ve seen is Andy Wightman’s/Scottish Green Party’s. Would replace council tax and Uniform Business rates with more than 80% of people paying less CT, small businesses paying less than now while raising £1bn more. A good scheme buy it’s self even if you’re unsure (like i am) of increasing LVT. (the scheme is designed for Scotland only)
http://scot.gr/w/LVTplans.pdf