From Samuel Brittan in the FT this morning:
“Roads are made, streets are made . . electric light turns night into day. . . To not one of those improvements does the land monopolist. . . contribute, and yet by every one of them the value of his land is enhanced. . . ”
Who do you think said this? Karl Marx? Paul Krugman? Ed Miliband? Myself in a bad mood? The correct answer is Winston Churchill as a minister in the pre-first world war Liberal cabinet. He was speaking in support of the controversial Lloyd George Budget of 1909 — the one that was thrown out by the House of Lords and led to the Parliament Act that permanently clipped the powers of that House.
The most disputed part of that Budget was not the income tax or social security measures, which captured historians' attention, but the proposal for a land tax which is being bruited again, in particular in British political circles.
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Yes, just read it. Was hoping to see my letter but this was better. (Oh that rhymes!).
Those who have made most and lost least from 15 years of irresponsible government have accumulated their ill-gotten gains in property.
It would make sense to start to put things right by taxing UK dwellings, with a higher rate for non-occupiers and a top-rate for non-doms.
A way would need to be found to tax property beneficially owned abroad by any person resident (in the simple sense) in the UK.
Taxing UK and UK owned dwellings valued at £1M+ at 0.5%-1.5% would raise about £15B-£25B a year.
First though, we have to determine who owns all the land, do we not? Currently it’s officially unkown who actually owns much of the country, I understand.
So we make a legal requirement that ownership be registered by a date or it becomes property of the state
It’s not hard to get compliance if you put your mind to it
Since a lot of these estates were stolen by force centuries ago I’ve got no quarrel about using a little force to get them back!
Definitely not true for tax on property. Even for a tax on property owners, a high starting point would make it cheap and easy to located the population of interest and recover any unpaid tax.
The Land Registry has actually increased registration to 75% – it was less than 50% 10 years ago. The remaining unregistered sites are probably mainly the big ancestral landholdings which have either not changed hands since the Registry was created (specifically to enable LVT) or were put into trusts to obscure ownership. It would be extremely interesting to get the ball rolling on this. It would cause a major shift in UK landownership because all these big estates will no longer be affordable since they generate little income for the owners and just provide a huge aesthetic benefit – which would have to be paid for. The fact that they will be bought up by foreign millionaires will be of no consequence to us ordinary mortals who will continue just to gaze at the walls which keep us on the outside of our common heritage. At least we’d get the revenue for our public goods and services. Of course some of the estates do generate income in the form of £10Ks for individual hunting shooting and fishing activities. It would be interesting to see how these sites are valued.
All taxes must be evaluated according to their likely side effects. The well-known effect of the windows tax was bricked-up windows. But the reasoning behind this tax was the assumption that the number of windows in a property was an indication of the owner’s ability to pay.
Those of us who in favour of LVT would not seriously argue that the so-called “sin taxes” should be got rid of. And many existing taxes are in reality land taxes eg parking and congestion charges, mineral extraction dues, receipts from leases of radio spectrum.
However, it is important to recognise, first, that all taxes have fixed administration and compliance costs, so the fewer the better, and second, that all taxes have an impact on land values and cut into a potential land value tax base. Alcohol duty, for instance, makes pubs less profitable and reduces the rental value of land occupied by licensed premises.
Sweden operates a land value tax at a rate of around 1% of selling prices, which corresponds to about 20% of the rental value, but land values are heavily depressed by all the other taxes. The country spends lavishly on the provision and operation of infrastructure eg car ferries are provided for use free of charge on routes comparable to the mainland to the Isle of Wight, for which the charge is about £25 single! At such a low rate of LVT, the effect of this is to sustain land values at the expense of the poor inhabitants of the estates round the big cities.
It’s not just the FT. The New Statesman is a supporter too. It has published several good articles on land value tax during the last couple of years. When an idea has support across the political spectrum (and to be fair opposition across the political spectrum), it deserves closer study to discover what is so special about it that it can command that breadth of support.
Agreed
This needs to come out of the closet now and the realities have to be explored