Opinion: Lo-Tax for the Lib Dems

landRaising the tax-free personal allowance is the Lib Dems’ headline contribution to this Government – so popular that the Tories are trying to claim it as theirs! But when Danny Alexander said that our next manifesto should include a promise to raise and peg the personal allowance to the National Minimum Wage (almost £13,000) he was setting his tax policy working group a challenge: to find £12bn a year from elsewhere.

According to the Institute for Fiscal Studies this isn’t progressive. Highest earners and others benefit, while the unwaged and very lowest paid don’t benefit at all. But the tax policy working group believes that’s for welfare – not tax – policy to solve: helping the lowest paid by shifting taxes from earnings and enterprise to “accrued wealth” is key to its remit.

Overwhelmingly, “wealth” lies in pension pots and immovable property: land and buildings. Other financial wealth and movable property only amounts to 20% of the total.

Property in the form of land generates an annual rental income – totally unearned – of some £250bn. Tapping into this, the Party’s campaign group ALTER  (Action for Land Taxation and Economic Reform) has proposed a radical shift exclusively onto land value tax, which makes the Mansion Tax (now stolen by Labour) pale into insignificance. Branded as ‘Lo-Tax’ (enabling lower taxes on work by taxing location value), it ticks all the points in the tax policy working group’s aspirational consultation paper (page 3):

  1. Help the lowest-paid” – as above.
  2. Be simpler” – as in Sweden, every taxpayer and business would receive a single tax bill, including “annual land rent value” as “notional income” – like Schedule A income tax (abolished in the ‘60s). It would also incorporate local taxes, each tier having its own Lo-Tax ‘precept’.
  3. Help small and new businesses to get going” – the current tax system is skewed against smaller and younger firms, who tend not to own land yet are burdened with intrusive and costly paperwork.
  4. Ensure the richest pay their fair share” – wealth inequality is even starker than income inequality, especially in land ownership.  A ‘Homestead Allowance’ would ensure a tax-free allowance for people’s one principal residence: poorest households would pay no Lo-Tax (the rich can’t avoid it) with most people paying less than current council tax.
  5.  “Ensure big businesses pay their fair share” – only big companies can afford the top lawyers and accountants who exploit the loopholes in taxation of movables. Land can’t be moved.
  6. Prevent problems which contributed to the 2008 financial crisis returning again”. Property speculation was the root of this crisis. The Party’s last tax review was in 2006-7, so this one ought to put Lo-Tax top because it tackles just such speculation. Formation of the cross-party Coalition for Economic Justice was triggered by the same crisis.
  7. Be much greener”. Lo-Tax (LVT) is widely recognised as ‘green’.

The key development with ALTER’s Lo-Tax is that land value tax would become a significant source of national tax, whilst replacing the main form of local taxation too – a much fairer ‘Local unearned Income Tax’!

* A party member for almost 50 years, Tony Vickers was Chair of ALTER from 1997 until last year.

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38 Comments

  • Where does the figure of £12bn come from? The IFS reckon the rise to £10k will only cost around £3.6bn/year by 2015 so I’m not sure how a smaller rise in the following Parliament could come to more than three times as much?

  • If the Party is looking at wealth that lies in wealth and buildings it would be good to look at changing the current residential long-leasehold system in England and Wales which is antiquated, feudal-based, very complicated, unfair and inefficient.

  • Thank you Tony, interesting article.

    I am increasingly concerned about the raising of the tax-free personal allowance, combined with harsh welfare cuts. The poorest people in our communities, such as jobseekers, have had their income cut by a third. It is such a small amount amount of money in pounds and pence, yet so essential for people who are living on less than £4 k a year. It also affects those on low incomes who are in work, particularly low earners. All children will be affected, but those whose parents earn least will be hardest hit. Its worth remembering that children do not earn a wage!

    The cuts combined with the raising of the tax allowance means the wealthiest third of the country will gain from the changes, and the least wealthy third of the country suffers falling incomes.

    Not progressive.

  • The lo-tax proposals sound very interesting and I look forward to hearing more.

    It would be good to have some figures of tax rates for different groups.

  • Ian Eiloart 5th Mar '13 - 4:00pm

    There’s a simple fix to “highest earners benefit”: just reduce the higher rate threshold accordingly. Since the lower rate is 20% and the higher rate is 40%, if you’re raising the allowance by £3000, then you can reduce the upper rate threshold by £3000, and then all the benefit goes to those earning below the upper rate threshold.

    That’s exactly what we’ve done over the past few years (the basic rate was payable on up to £37,400 in 2010, but that figure will be £32,010 from April) , so if the IFS think that higher rate tax payers have benefited from the increased allowance, then they need to think again.

  • A well written article as always Tony.

    There are a couple of points, I would make regarding the tax consultation paper:

    1. “the tax policy working group believes that’s for welfare – not tax – policy to solve: helping the lowest paid by shifting taxes from earnings and enterprise to “accrued wealth” is key to its remit.”

    The tax system cannot be sensibly viewed in isolation from a welfare system that is increasingly integrated with it. The remit of the tax policy working group should place much more emphasis in addressing the fundamental weaknessess identified in the Mirrlees review and the economic costs of continued failure to address the issues raised.

    2. The consultation paper is a good budget submission but does not succeed in laying out a path or vision for the kind of radical transformation that the lo-tax campaign aspires to. Although there are indications of aspirational intent, the overall impression taken from the consultation paper is closer to the tinkering that Mirrlees identifies as a source of the problem, rather than the radical restructure of the tax system that is required to bring about the stronger economy and fairer society that we Liberal Democrats speak of.

  • I think LVT is a good idea but it is a bit of a stretch to say:

    “6.“Prevent problems which contributed to the 2008 financial crisis returning again”. Property speculation was the root of this crisis.”

    Property Speculation was part of the problem but so was low interest rates with no consideration of the coresponding risk in asset values. Many home buyers who purchased were not looking at their house as speculation but had to buy at prices set afected by depressed interest rates.

    Then once ingrained it is hard to raise them without causeing havoc.

    Also ever increasing deficit financed public spending during a boom was the final amplifier.

    LTV will potentialy address a number of tax issues but to think it will address the recent bubble is a bit too far.

    It could amplify the tendency of governments to overspend / under tax during the boom, fiscal restraint law would be needed as well. LVT would bring in more during the upswing and then dive in teh crash as well, so we need to plan around that effect.

  • Tony I think the mansion tax ,which after all is a property tax, would be a good start to moving towards LO TAX.
    The value of a normal property takes account of land not just the house itself, so in away a proprtry tax is a land tax.So a property tax which stared as mansion tax could also be levied on the value of estates which include a large element of land value.

  • Liberal Eye 5th Mar '13 - 7:18pm

    A very welcome proposal that is one of the most significant policy initiative the Lib Dems have ever made. A few points:
    1) The proposal will be greeted with extreme hostility by some. Better be prepared.
    2) Many people have built part of their pension or other financial arrangements around property so some sort of transitional relief, although complicated, seems indicated.
    3) This has the potential to be a key building block for a substantial return of genuine autonomy to towns and cities by providing them with a local tax base not one dependent on Whitehall’s whims. Hezeltine was on Radio 4’s Today this morning making a lot of sense about how there has been a 100 year long centralisation of power.
    4) The Homestead Allowance will give homebuyers a critical edge in competition with buy-to-let investors.
    5) I assume that some sort of periodic revaluations will be required. If these are made at the sale of a property and, say, on every 10th anniversary of that sale (unless sold again in the meantime) then rate shock will be avoided.

  • A very simple (but very old) policy with so many benefits that also tackles the unethical system of ownership which we live in. A policy as this would be supported by Adam Smith, J S Mill, right through to J Stiglitz. Also, with the likes of China buying up natural resouces it would perhaps make your average citizen sit up and think more.

  • @ rogerheape

    A mansion tax would be a terrible move to a LVT. Cliff edge taxes like that do not make a good case. THey create all kinds of perverse incentives and complicate the tax system.

    Implementing a tax as “for the rich” then imposing it on the rest of the population will discredit the tax.

    Implementation of LVT should be over a gradual period (preferable as the country emerges from a recesion) and be matched by abolishing property transaction taxes (stamp duty etc). Also coresponding drops in Income Tax, NI, Corporation Tax, Capital Gains Tax etc.

    Badly designed attempts at populism will discredit LVT before it can be implemented.

  • Clive Sneddon 6th Mar '13 - 12:31am

    I agree with Liberal Eye that this proposal is very significant. To make the most of it would need not only reduction of other taxes as the new tax is phased in, but also a regular annual revaluation based on the year’s transactions in the Land Registry. This way the changes in value would be relatively small, certainly smaller than if revaluation only happens every ten years or even less often. If reducing other taxes as the new tax is phased in throws up inequities, then further transitional arrangements would need to be considered; although excessive disruption of pension plans nearing fruition would need to be avoided, I am not sure pension pots would necessarily need special measures if they are of such a size as to constitute the other major form of wealth Tony refers to.

  • Tom Richards 6th Mar '13 - 9:32am

    @Thomas Long – Not sure where 3.6bn came from either! At the risk of trading figures, Lib Dem manifesto put the cost of doing the rise to 10k instantly at about £17bn as did the IFS. Because we’re doing it over several years instead of instantly it’s cheaper than that – about £5.3bn in 2015-16 more expensive than just letting it increase with normal price indexation. So it all depends on how long we take to raise it, but it’s in the right sort of ball park…

    http://www.ifs.org.uk/publications/6045

  • I see confusion from ‘abbreviating’ “income tax” (IT) to “tax”. Also the swing voters tend to be low to middle income. So, it seems, “tax” (in headlines) neatly ignores NICs – both parts. NICs hit the low paid, as they start low; and finish at medium income. Confusingly (?deliberately?) IT goes up near – but not at – income where NICs stop. Broadly there are 5 taxes on income – on jobs: NI employee, NI employer, IT, VAT, Profits tax. Most people (but not some greens) want more jobs, but some two thirds of taxes are on jobs – on income. Also confusion, “Council Tax” (CT) (avoiding being a pure ‘poll tax’) is roughly a ‘square root law’ tax (regressive); with further confusions from its band structure and special names for bands, eg “mansion tax”. So, should CT be a linear (or even square law) tax? Also should CT be a land value only tax?
    As well as tax to be on land value, little on jobs; I look to tax on natural capital. GDP is, roughly, the rate of destruction of the planet; and conventional Economics assumes natural capital is free and freely available. Worse, the (small) taxes on capital, eg road fuel tax, are not applied to the “intensive users” – the heavy users are supported. Eg air transport fuel; “intensive users of electricity”; red fuel for farm tractors. Destruction of the climate systems (which are capital and important, if little understood) should be stopped – by taxes, laws, etc; rather than subsidised. Similarly the ‘stocks’ (“reserves”) of the 92 elements accessable near the surface of the planet are capital and should by conserved – the metals, phosphorous, etc. There is ‘growth of plants on land’ – from the one input to the planet – sunlight (and depending on the climate systems, eg soft refreshing rain). So ‘land value’ includes the sunlight and rain that can produce food and much more (if not paved over).

  • @ William Davidson
    I’ll come back in more detail later but…
    You misunderstand my point. I am not saying the property bubble was not the cause of the crash but that speculation was not the only driver of this it was a large driver but probably less than owner occupiers demand driven by low interest rates.
    I am talking about the cause in the UK, in which the Government pre crisis overspend was the amplifier, not Spain or Ireland.
    The position in Spain and Ireland were very different, where there were government surpluses (though not large enough for the top of the cycle). Their major mistakes came after the crash.
    To be clear LVT is a good idea and could act as a drag on certain aspects of property bubbles but it is not a magic bullet and should not be “sold” as such. It has enough positive aspects without claiming it will solve all our ills. As with any tax change there will be winners and losers we have to recognise that, though the net effect in the long term will be positive.

  • David Allen 6th Mar '13 - 1:36pm

    This article talks about what is wrong with the way we tax income, but then proposes that we compensate with a new tax on wealth. That seems muddled. What we need to do is to get the right balance between poor and rich in the way we tax incomes, and separately, the right balance between the tax we raise on income and the tax we raise on wealth.

    My worry is that we may take a valid idea, LVT, and then wreck it by loading too many of our hopes onto it. A problem is that land is only one form of wealth. It can be sold to buy other forms of wealth such as gold or stocks and shares. If we have a massive tax on wealth in the form of land, while in the name of competitiveness we cut corporation taxes and make stocks and shares more attractive, this will simply encourage land sales, drive down the price of land, and enable rich people to avoid tax by moving into stocks and shares.

    Meanwhile, people such as farmers, who are stuck with land assets and see their values forced downwards, will protest mightily to get LVT scrapped. So, if we don’t want to be the promoters of a major tax reform that lasts a few years and then gets withdrawn, we need to think about putting limits on how much money we dare expect LVT to raise.

  • Just a couple of points. Firstly, while the rental value of land is around 250bn per year, this isn’t all income. A lot of it is, in the form of rent and mortgage payments, but the majority is unpaid benefit (imputed rent) enjoyed by owner.occupiers.

    Secondly, exemptions of any kind are a bad idea. Our current system is distorted by favoured groups, lets just have a level playing field for everyone. The poorest certainly wouldn’t have anything to fear from this. Council Tax band A is a 2.2% property tax. A full on LVT would be the equivalent of 3%. At that level, we could for example, scrap VAT and NIC’s. This would be more than enough to compensate for the increase, as both taxes fall most heavily on the poorest. Indeed, even the richest Income Tax payers would still find themselves better off under such a change.

    Thirdly, conflating LVT with wealth taxes, or any taxes is not helpful. LVT is really an on going user charge. While Lo-Tax is better, Location Benefit Fee is more accurate. A tax is a deduction on something you have earned or own. A fee is a charge for the use of something you don’t. As in green fees for golf. This may seem petty, but it is not. Unless we are 100% clear on the true nature of where the value from land is derived, there will be hostility and misinformation. It’s better to nip this in the bud straight away.

  • @ Liberal Eye. In regard to point 2. Although you are correct, morally “wealth” based on “property” is unearned. 500% real terms increase in house (land) values since the early ’70s. This “capital” gain is unearned by the owner. Slave owners used exactly the same argument to oppose abolition. Slaves were their “wealth”, “property” and “capital”. They also demanded compensation. Like slavery one man’s unearned income comes for another’s unearned labour.

    @ David Allen. With respect it only seems muddled because you’ve made some understandable knee jerk assumptions.
    “the rich” or business still have to live and trade from somewhere. Under LVT that wouldn’t change. What would change is, they would pay the full going rate, which would be unavoidable. Given taxes on production would fall, business would want to invest in the UK, not flee from it. The rich who contribute nothing to the UK, but see London property as a tax haven are free to go. Good. More room/ lower house prices from those who work and do business here, which can only benefit UK Plc.

    Rural land is virtually worthless from a LVT point of view, so wouldn’t be taxed, unless we are talking about vast estates.

    All your, and everyone else’s questions and objection are given a through going over by the excellent Mark Wadsworth here.

    http://kaalvtn.blogspot.co.uk/p/index.html

    I highly recommend everyone takes time to have a read.

  • Daniel Henry 6th Mar '13 - 3:07pm

    I came on this page to support the article, but haven’t anything to say that’s not already been said.

    Very good points being made in the comments.

  • @ Tony Vickers

    Just had a very quick scan of your consultation paper. The ONS figures quoted are highly misleading. For total UK wealth they state property only makes up one third at 3 bn. Every other estimate puts it at a least double that. I think this is because this was a household questionnaire rather than a detailed analysis of available data. This could lead to some people arriving at the wrong conclusions about the viability of LVT and the true nature of wealth distribution in the UK. For example the ONS survey makes no mention of how much bank assets are secured on property (80-90%) or how much pension funds are invested in property.

    The paper also conflates wealth taxes and property taxes with LVT. This is lazy and in the end will do more harm than if the LibDems didn’t support LVT at all. Quite rightly, people don’t like their property or wealth being taxed. Even if we describe LVT as a tax (which it isn’t) it isn’t one on property or wealth. It is on unearned income/benefit. It is clearer and more accurate to call it a user charge. Yes, this will take some explaining, but unless we get over this hurdle, LVT is just not going to happen. Best confront this head on, rather than putting it off, as it just leads to more confusion and misinformation later.

  • Can we have some principles please? We cannot ignore benefits when many of the principles such as “work should pay” need to take account of both taxes and means-tested benefits. We need an integrated approach! For example:

    1. Taxes should be progressive ie based on ability to pay (implication is that marginal rates should rise with increasing income or resources) unlike what currently happens with means-testing.
    2. Taxes should be proportionate to the economic benefit gained by the taxpayer and/or the cost to society of the taxpayer’s activities (implication is that there should be a limit on the maximum marginal rate).
    3. Work should pay: no taxpayer should face a marginal tax rate or reduction in benefits of more than 50% of income, and marginal rates should ideally be lower at lower incomes. (It may be for benefits to help deliver this policy, but tax policy should at least be capable of delivering the principle.)
    4. Enterprise, saving and investment should pay: applies to pensions (eg our citizens pension to replace means-tested pensions), investment income and investments themselves. Wealth and inheritance taxes invite avoidance when they are set at confiscatory levels such as 40% on death or 1% pa for the rest of our life (when bank interest is only 0.5%).
    5. Taxes should be predictable/No retrospective taxation: a problem with LVT if set at such a high rate that those who are caught holding property when the rules change find the value of their asset is significantly reduced. The mansion tax could do this as 1% pa represents half its rental yield, implying that if people believed there was a serious chance of us actually introducing it, the value of the excess over £2m would halve. Similar issues arise for those who are caught holding property when stamp duty is increased to 5%.

  • @ peter.tyzack The market rate for land is set by the current permitted planning permission. That’s a given with LVT. I only used the 3% figure to illustrate the current potential of LVT to raise revenues. BTW, it worth pointing out that with LVT rental values would rise and property prices fall, so that figure would go up quite substantially.

    @ Paul K. Why should taxes be progressive? How about we rectify the deeply regressive Council Tax first and take it from there? The poorest, who already shoulder the biggest tax burden % income pay 2.2% Band A. . A 2 million pound property owner 0.12%. How is this fair? A flat 2.2% property would mean we could afford a flat 8% income tax. Would the poorest not benefit from that? Yes they would.

    Means testing is costly and counter productive. Why don’t the LibDems back a Citizens Income? It would address most of the points you raise.

    LVT is predictable, it only changes with growth in the economy. Thus affordability.

    You could argue that any changes to our tax system are retrospective, which is a very damaging conservative way of approaching governance. We only need to implement LVT once. Any changes people face will be a one off transition.
    To hold back the long term future of our Country because of transitional changes would be morally questionable IMO.

  • Liberal Eye 6th Mar '13 - 6:09pm

    benj – In principle I agree with you about the moral case but I was thinking of the political practicality rather more.

    The group who will have benefitted most from the vast increase in prices since the early 1970s are, of course, the baby boomers who started work about then or shortly earlier and who will have recently retired or will do so soon. It’s a racing certainty that the most successful and influential of them – currently the great majority of the most powerful in the land – will have accumulated portfolios including a fair bit of property and any party that proposes a new tax that bears particularly hard on it is going to run into a buzzsaw. A deferment/roll-up option (per Mark Wadsworth) is theoretically fine but I suspect not likely to be well received!

    The comparison with slavery is a good one. When it was eventually abolised in 1833 it was only after a payment of £20 million (a stupendous sum in those days) had been agreed. Not very edifying, I agree – but presumably judged by the abolitionists as a necessary compromise to get the legislation through.

    http://www.ucl.ac.uk/lbs/project/

    As they say, with both the law and sausages it is best to avoid examining too closely how they are made.

  • @ Liberal Eye.

    If we are happy to exempt millionaire pensioners in order to protect their vast unearned capital gains, for political reasons, then yes why not? But, lets call a spade a spade and tell it like it really is.

    Because we want to bribe millionaire pensioners with other peoples money(because that is what their unearned capital gain is), the tax burden will have to fall even harder on the poorest.

    I think if you don’t pussy around and just tell the truth, most people will just shut up and listen. The trouble is most politicians haven’t the knowledge / confidence or courage to do so.

  • @benj – by progressive I mean that the marginal rate of tax/benefit reduction faced by the better-off ought to be no less than that faced by the worse-off. A combination of universal benefits and flat rate taxes on income/assets would meet that test (and indeed would be a lot more progressive than what we have at the moment). So I would support the Citizens Income approach, but I accept that we may need to repackage it (as a combination of mean-tested benefits and tax allowances) in order to pass the Daily Mail argument about millionaires getting free-bus passes etc. I agree this argument is tosh, but it seems to have been bought by Nick and Vince!

    However, for employees I would support a much higher rate of tax on excessive salaries (including bonuses and quasi-salaries to pseudo-contractors including excessive daily rates paid to accountants and lawyers) which cannot be justified in terms of the business. It would be akin to saying that salaries above a certain level are not a deductible expense of the employer’s business. The aim would be to encourage employers to employ two managers instead of one, and it would not penalise genuine entrepreneurs who are risking their own capital and/or using their own ideas. After all the Swiss have banned high salaries altogether. I would also put a limit on the damages that can be claimed for loss of earnings (the limit would not apply for the costs of care for say personal injuries) so as to limit payoffs.

    I also agree that the first stage of LVT could be introducing an extra band on Council Tax (and perhaps adjusting the overall council band scale – without the need for revaluations – to make them more proportionate).

    On the transition to LVT, my main point was that it should not be set so high that it leaves a particular cohort of property-owners significantly worse off, or should be introduced gradually. I hear all the arguments about people who have made fortunes out of property but there will also be those who have just bought and are mortgaged up to the eyeballs and are thrown into negative equity, so you might need a sliding scale of relief for recent buyers. For example a rule that LVT would be deferred until 5 years after the current purchaser had bought the property. The transition could also be softened by a one-off cut in stamp duty (at least for properties held on the date the tax is introduced and/or for people who only bought in the last 5 years).

  • I’ve voted for all three major parties and having given up on them and thinking the country has a right to a referendum on membership of the EU , UKIP .
    UKIP have most things right but are wrong in opposing a land value tax which is a big deal for me .

    I’ve always supported a land value tax as a “fee for exclusive use of the commons” but not as a wealth tax .

    As a private investor in my SIPP in UK onshore oil and gas exploration including unconventional and shale I believe the principal of communal ownership of mineral rights should be extended to surface rights .

    Land is not man-made . The dividends of the land should accrue to everyone .

    Lib Dems would benefit by depoliticising the LVT proposals (hard for a politician to do) . Specifically :-
    – drop the allusion to a LVT tax being “greener” . This damages credibility and turns people off .
    – charge it on the location rather than the improvements to it i.e. an empty lot should incur the same charge as one next door which is built on .
    – If someone wants to put a mansion on theirs plot and another person wants to put a 3 bed detached on their similar sized plot next door they should attract the same LVT . Get away from the politics of jealousy .

    Legislation and taxation policy are not enough ; need to work with market forces :-
    – Still need to build more houses . Need to create a surplus to fix housing problems as otherwise people will find ways of manipulating a shortage
    – Introduce legislation to reserve ownership of houses of average price for British Citizen’s . Malaysia did this for their own citizens and it works .
    – Build social housing . If people can’t sell it they can’t have it taken away from them .
    – This might not be popular around here but have a proper immigration policy that only allows the brightest to settle here , whether from the EU or outside . Open door policy’s don’t work and only drive away the Britons we need(ed) to keep .
    – Encourage MP’s to reform their property porfolio habits . It’s undeniable that MP’s property owning interests , and defined benefit pensions influence their policy decisions and prevent them reforming the wider market .

  • Mr Bradwell 7th Mar '13 - 2:09pm

    I voted Tory at the last election. Your Lo-tax proposal is a definite vote winner for me; 30 something with a young family, good job, but nowhere near affording housing at current prices. You must recognise that house prices where they currently are, are not sustainable. If the price of a chicken had risen at the same speed as housing, one would cost you £51 at the supermarket. Wages have not kept up with house prices, increased bank lending is what has alowed house prices to continue unchecked. Baby boomers have been able to pay off housing which cost them a fraction of what it does now. This has left them able to consume other goods and services, driving the UK economy. As more and more of my generation either gets more than 50% of income taken in rent or mortgage repayments it becomes clear that an intergenerational transfer of wealth has taken place. Our generation will not be able to consume at the same level as baby boomers. Inflation isn’t going to help since increased competition for labour in the EU and against a growing Asian economy means that inflation will outstrip wages for a long time. In fact that is necessary for UK labour to be competitive. However it also means that housing costs will become an ever more unsustainable burden for households. It will become debt slavery. Please recognise this, and that falling housing costs mean that people’s living standards can be protected even as their nominal wages fall.

  • Andrew Colman 9th Mar '13 - 12:57pm

    Land Value Tax should be in the Lib Dems 2015 manifesto. It is essential tol fixing our stalling economy and will deal with our flawed property market which was a root cause of the 2008 crash. It will enable income tax and VAT to be cut substantially as well and thus should be a vote winner

  • Andrew Colman 9th Mar '13 - 1:21pm

    Disagree with PSI over point 6

    The fact that the UK property market is badly distorted and was a major contributor to the 2008 crash is not in doubt. This does not mean that everyone who has bought a house in the last 10 years is guilty of speculation. Only that speculators have had enough influence to seriously distort the market and generate annual price increases of the average house greater than the average earned income. House prices tend tend to have a large influence overe the economy because of the amount spent. People typically spend 1/3 of the lifetimes income on houses but this is all spent at one time and is highly sucepptable to the state of the market at the time.

    A policy which encouraged long term stablity in property prices would be hugely beneficial to the UK and make us more likje Germany (who are doing quite well at the moment). I also propose in addition to LVT that all mortgages should have to be nob-recourse by law (ie the lender has rights to the property only in case of default). This again will discinsentivise lending and overvaluations in a bull market.

  • LVT has been a good idea for over 100 years. It’s about time this was implemented and tax reform is the policy that will most influence my vote. Linking this in some way to planning would be welcome. This would reduce land banks and promote best use of land. Any

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