A progressive alliance round Land Value Taxation?

The Grenfell Tower fire has focused attention on the extent of the crisis in the UK social housing system.

Reverend Paul Nicolson of Taxpayers Against Poverty comments:

There are rows of empty “investments” in London, and the four big builders have 600,000 unused plots in their land banks.

The Liberal Democrat 2017 Manifesto included genuinely progressive housing proposals

  • a new national Housing and Infrastructure Development Bank,
  • increasing housebuilding to 300,000 homes a year
  • allowing councils to end the right to buy, lifting the borrowing cap and targeting “buy to leave” empty homes with a 200% council tax.
  • penalising land-banking with with a penalty on failure to build after three years of winning planning permission.
  •  a “community right of appeal” in cases where planning decisions go against the approved local plan.
  • a “rent to buy” model, where rental payments give tenants an increasing stake in the property, leading to outright ownership after 30 years.

However, the manifesto incorporated only a single sentence with respect to LVT. “We will also consider the implementation of Land Value Taxation.”

Labour’s manifesto went a little further with respect to describing its LVT intentions promising:

 We will initiate a review into reforming council tax and business rates and consider new options such as a land value tax, to ensure local government has sustainable funding for the long term.

The Greens promised “Action on empty homes to bring them back into use and a trial of a Land Value Tax to encourage the use of vacant land and reduce speculation.

The SNP have previously included LVT proposals in their manifesto and at their spring conference this year adopted a resolution “must include exploring all fiscal options including ways of taxing the value of undeveloped land” in its gradual land reform programme.  Other parties like Plaid and the Alliance Party have incorporated LVT proposals in the past.

LVT appears to be an area of common ground for all UK parties standing on a progressive platform and could potentially form the basis for developing a cross-party consensus on effective measures aimed at tackling the housing crisis.

At circa £25 billion, housing benefit is the 2nd largest element of welfare spending behind pension costs. Housing rents and mortgage payments are estimated to be absorbing 40% to 50% of younger taxpayers take home pay.

Simply building more homes that fewer and fewer people can afford will not solve the housing problem for younger taxpayers and social housing tenants by itself. Easing of green belt planning restrictions, development of publicly owned land, devolving of tax and borrowing powers to local regional authorities and Land Value Taxation should all be part of the mix.

ALTER (the Lib Dem land-value-tax campaign group) will be hosting a fringe on Sunday 17th September at the Bournemouth conference this year.

With LVT rising up the agenda, speakers from across the political spectrum have been invited to address and debate the issue with Liberal Democrat members.

* Joe Bourke is an accountant and university lecturer, Chair of ALTER, Chair of Hounslow Liberal Democrats and PPC for the Brentford and Isleworth constituency.

Read more by or more about or .
This entry was posted in Op-eds.
Advert

67 Comments

  • Simon McGrath 5th Jul '17 - 8:59am

    Completely meaningless to say the big builders have enough land to build 600k homes when that includes land without planning permission

  • It should be noted most people think housing benefit goes to largely private landlords, when the reverse is true only £9 billion of the £25 goes to private, and they will in turn be paying corporation/income tax on it. Where as social are not required to pay a single penny and get £16 billion of it. There is an argument it ensures rents go higher because they know it will be subsidized but that is another point entirely. Plus politians seem to have only think about london regarding rent levels when even Corbyn (hardly a supporter of private landlords) said 3 years ago ‘ I recognize that, in most of the UK, private rents are not excessively high. In many parts of the country, they are lower than council rents ‘

  • Think much of the political attacks on house builders is overblown, there never seems to be any consideration of the situation regarding having a pipeline of work as large developments need to be built in tranches. Logistics and the way demand functions will always cause a staggered approach.

    That said LVT is a potentially really positive tax, causing the least deadweight cost and changing the incentives around land usage to make them more efficient.

    That said it needs to be well thought through and have a carefully considered and lengthy implementation timeframe. Any plan needs to have many questions pre-answered and simple clear ways of explaining them to the average person. Just saying “yeah LVT” will come unstuck under scrutiny.

    Also: progressive? Why are people still using this term?

  • Maybe somebody could explain what the actual proposals are and how that would impact the market in the right direction.
    The housing market in the UK is totally broken as it has been left to speculative building whose sole objective is to maximise profit. We are left with producing over prices poor quality, high density housing. Some of the best housing stock in the UK is ex council houses built in the 30’s and 40’s and 50’s. Solidly built houses with good proportions and good sized gardens. The rental market follows the general sales market in terms of linkage of rents to market value. It is a complicated subject but the answer is not LVT, it is to NATIONALISE THE LAND. Post second world war the 1947 town and country planning act effectively did just this (we’ve obviously learned some lessons not to be repeated). Councils benefited from the planning uplift in land value and had the power to self build. Successive Tory governments watered down the provision of the 47 act to where we are today (well they would wouldn’t they). T&C planning was done at local authority level and included a vision of development for the built and green environment. The solution is there and it is economically sound. If the LibDems want a radical flagship policy that many on this site have been screaming for recently this is one of them. I will assemble some links and post them later so anybody interested can dig a little deeper.

  • Geoff English 5th Jul '17 - 9:58am

    I worry a bit that going down this road will mean that LVT, which I support, will get bogged down in the inter party strife associated with ” progressive alliances” whatever that means. Every party will have a different interpretation of LVT and the extent it is prepared to trial it / adopt it. If we struggle to get an agreed position on it inside the party, you can magnify that a hundredfold if you try for a multiparty agreement. If you are merely saying that this is an idea whose time has come and we should work up our own proposals in detail, I wholeheartedly agree.

  • Richard Underhill 5th Jul '17 - 10:02am

    Think about the egos of the developers and adopt a policy on the maximum height of buildings. Architects will take on design work for anyone willing to pay and take on any challenge. Building a quarter of a mile high? Yes. Half a mile high? Yes. One mile high? Yes. A little bit higher than the tallest building a neighbour has? Yes. It may be necessary to pump water up to the top of the building for use in washrooms. There may need to be several lifts. Washing the outside of the windows can be avoided with special glass in areas where it rains occasionally. Adequate fire escapes are necessary of course, but the taller the building the more time a pedestrian takes to walk down, so all lifts should be fire-proof? Yes.
    The value of the site depends on the height of the building allowed, there is really no upper limit.
    “Buy land, they are not making it any more” was wrong. Every extra floor in a building is land. An oil rig in the sea is land. Terms must be defined rigorously. Site Value Rating is also in conflict with legislation for planning permission. The more enthusiastic supporters believe that Land Value Taxation provides an alternative to all other taxes. They are known as “Single Taxers”. The concept is attractive to people with high incomes and not much land.

  • Joseph Bourke 5th Jul '17 - 4:25pm

    Simon McGrath, – the quoted figures come from this Guardian report https://www.theguardian.com/society/2015/dec/30/revealed-housebuilders-sitting-on-450000-plots-of-undeveloped-land. The issue highlighted is that the housebuilders holding this land are building a little over 10% of their capacity (in terms of owned) land). Ways of speeding up the conversion of residential land to homes available for occupancy need to be explored – including reviewing why it can typically take up to 3 years to secure planning permission.

  • Joseph Bourke 5th Jul '17 - 4:37pm

    Michael Kilpatrick,

    I take your point that “It’s the whole tax system in the UK that needs tearing up and starting again from scratch”, but we have to win one battle at a time including within our own party.

  • Joseph Bourke 5th Jul '17 - 4:41pm

    PJ,

    there were no detailed proposals in the manifesto’s. The Libdem (or Green Party) manifesto proposals for LVT attracted little attention, but
    the Labour party proposals were sufficient to attract attacks from the Conservatives (not wholly dissimilar to the kind of attacks previously made on Mansion tax proposals)
    https://fullfact.org/economy/labours-land-value-tax-will-you-have-sell-your-garden/

    The links you have provided above are interesting ones, particularly the Shelter report.. The BBC Evan Davies discussion “Land – the mother of all monopolies” includes a discussion of LVT in the last five minutes by a developer, an economist and CEO of a housing association.

  • Joseph Bourke 5th Jul '17 - 5:06pm

    Alter published a report by Dr. Tony Vickers in 2016 titled “The real hope for home ownership”https://libdemsalter.org.uk/en/article/2016/1152887/the-real-hope-for-home-ownership.

    The conclusion to the report reads:
    “By greatly reducing the proportion of national wealth tied up in mortgage debt on under-occupied or over-priced and privately rented housing, and by incentivising better use of land for desperately needed housing, ALTER believes that LVT with the features described here would result in a much more efficient land and housing market. This must make the whole national economy more efficient and remove one of the greatest risks to social cohesion.
    ALTER believes that LVT could be made quite acceptable to a majority of voters. There is little point in having a policy that has so many benefits and then not campaigning for it. The sensitivity with which LVT for residential land has long been treated is understandable but I hope this paper has shown that it need not be so.
    I have not covered the actual implementation process, only its main features.
    Any implementation should be carried out gradually. There is no reason for existing property taxes to be abandoned on ‘day one’: council tax could be frozen at current levels and then reduced progressively as LVT is brought in to replace it. This would have the benefit of allowing the details of almost every aspect of its implementation plan to be adjusted with experience, not least the land value assessments themselves which could even begin through self-assessment.
    If the Party is serious about supporting LVT – then it needs to start to get serious about how to present the policy to voters in and about their own homes. As the age when young people can first join baby-boomers like me as happy homeowners get ever higher – it approaches 40 now – there are more and more votes in a policy that benefits, the young, working, renting but aspiring-to-own voter. If we turn these ideas into campaigning material, their votes will be ours.

  • A very useful report here (NB – it predates the crash, written in 2008, but much of the allegations have been repeated since):

    http://webarchive.nationalarchives.gov.uk/20140402142426/http:/www.oft.gov.uk/shared_oft/reports/comp_policy/oft1020.pdf

    Key quotes (and apologies in advance for the length, but the report itself is massive and it’s worth pulling out these):

    1.7 We found no evidence that individual homebuilders have persistent or widespread market power or that they are able to restrict supply or inflate prices. On rare occasions an individual homebuilder may find that it is temporarily the sole provider of a particular type of housing in a local market, but these examples appear to be scarce and account for a small fraction of the total supply of new homes.

    1.8 Having a stock of land helps a homebuilder cope with fluctuations in the housing market and also helps to reduce its exposure to risk resulting from the planning system. We have not found any evidence that homebuilders have the ability to anti-competitively hoard land or own a large amount of land with planning permission on which they have not started to build. Apart from the homebuilding firms, the available information suggests that the largest ‘landbank’ may be that held by the public sector. Homebuilders are, to some extent, constrained by the availability of suitable land. If the Government and devolved administrations wish to ease this constraint going forward then one potential way of doing this would be to make more public sector land, which is suitable for development, more readily available to homebuilders.
    ….
    5.71 The OFT data above shows that the vast majority (82 per cent) of the land in homebuilders’ landbank is strategic land which may be some years away from gaining planning permission. Estimates produced using data submitted to the OFT as part of this study shows the average landbank for land directly under a homebuilder’s control is a little over three years, which is broadly in line with the findings in other reports.The size of landbanks therefore appears to be consistent with the time taken to achieve detailed planning consent and agree reserved matters.

    5.85 Landbanks and the time taken for planning approval to be granted have risen at a similar rate. This does not necessarily mean that homebuilders have increased their landbanks as a result of the longer planning process but this does remain a possible explanation.

  • And further to that, and drawing upon it, there’s a later IPPR report (here: http://www.ippr.org/assets/media/images/media/files/publication/2011/12/we-must-fix-it_Dec2011_8421.pdf ), which picks up on these and notes some other issues raised during the crash – specifically that land acquired pre-crash has become financially impossible to develop at low prices as it was bought under the assumption of high prices and using it up requires a downwriting of asset value.

    Their final recommendations are:

    – Encouraging diversification in the building industry and break open development to new entrants

    – The Government to act as a clearing house for land-banks that were captured at too high a rate

    – Release more land

    – De-risk the development process

    They’ve got some innovative ideas on how to do this, as well, but I’ve banged on for quite long enough already!

  • Just realised I simply dived in to the land bank issue without mentioning that I completely agree with the LVT suggestion as a crucial component of resolving housing scarcity.
    I also fully agree with the thrust of the cross-party consensus on it.

  • Eddie Sammon 5th Jul '17 - 6:28pm

    I don’t agree with a Land Value Tax. If you want to tax wealth then create a net-asset tax. I don’t see why land owners should be taxed more than tech billionaires or footballers etc. It’s the assets that matter, other problems specific to land can be resolved with regulation.

  • David Cooper 5th Jul '17 - 9:17pm

    @Eddie Sammon
    “I don’t see why land owners should be taxed more than tech billionaires or footballers etc. It’s the assets that matter, other problems specific to land can be resolved with regulation”

    Easy. Tech Billionaires (e.g. Facebook) create a new service. If you tax them they will progressively stop being productive or move abroad, eroding the tax base. Footballers/ singers etc. provide entertainment, and again increased tax erodes the tax base by discouraging work. Land owners create nothing and the tax base can’t be eroded since even if the landowner sells out, the land is still there and (provided the tax is at a sensible level) some other owner will buy.

  • Eddie Sammon 5th Jul '17 - 9:41pm

    David Cooper, landowners might “create nothing”, but many build on the land and provide a service. Landlords deserve to make money too. A lot of people’s pensions are tied up in property, if you get rid of that then people are only left with the stockmarket and state pension (nothing against the stock market as a former financial adviser).

  • Eddie Sammon – LVT is typically charged on the unimproved value of the land. Landowners who develop land and/or provide a service with it therefore make significantly more money; landowners just letting it sit there and do nothing make far less, but both pay similarly. It’s therefore an incentive to actually do something valuable with the land.
    Further, if they sell up and get out of the market, the land is still there – so the new owner faces the same incentives.
    It’s virtually unique among taxes in creating a negative “tax wedge” – that is, this tax actually increases output and economic activity rather than being a drag on it.

  • Lorenzo Cherin 5th Jul '17 - 10:15pm

    This subject makes some take leave of their senses. The idea , that because, in the words of contributors above, land , sits, there , whereas , wealth made by so called tech billionaires, can vanish, and footballers can move, so they should not contributor more , but some family man who made his money honourably, and invested in a nice piece of land, planted trees, ceases to be a nice man, he is a villain, a horder , someone to capture, like the so called value of his land, for the so called local community who supposedly added so much to the value of his land with all their wonderful supermarkets and highways !

    Some people know the price of everything and the value of nothing.

    Call it land price tax, you are judging land as a purely monetary commodity, which it is not.

    The further left you go on land as a social liberal, interesting how much some have in common with the attitudes of the most economic liberals imaginable.

    If we are talking about huge amounts of land , fine.

    What are we talking about.

    No land tax captures the Duke of Westminster. Everything he owns, like properties of people like Tony Benn, apparently, is in a trust of some sort.

    It is Eddie Sammon , who, as with me, is in the centre mainly, who as with me , needs convincing .

  • Lorenzo Cherin – why are you saying that LVT regards landowners as villains and hoarders? It doesn’t, any more than income tax regards earners as villains, or corporation tax regards profit-making companies as hoarders.

    If a family man invests in land he owns and makes it more valuable, he will be better off than anyone who owns land and does nothing. Given that we can reduce other taxes to make it revenue neutral, said family man will probably be better off – rewarding him for his hard work. LVT is invoked on the UNIMPROVED value of the land. Someone who simply acquires or inherits land and hoards it is comparatively worse off than someone who does work with it and improves its value.

    Meanwhile, it doesn’t matter if the Duke of Westminster’s land is in trust or not, it remains land on which LVT is to be paid. Whether by the trust (in which case, the Duke will have less income from his trust), himself, or his tenants (in which case it will be effectively passed on to the Duke (unless we assume that the Duke is currently renting things out at below market value out of the goodness of his heart!))

  • Lorenzo Cherin 5th Jul '17 - 10:52pm

    Andy Cooke

    Well that was a better explanation, than many, thanks.

    The tone and attitude is why, and that is what is said , often.

    You refer to my example , but enjoying land is the private business, or rather , precisely the opposite, a pleasure , but not a profit making one , and if as you say the Dukes are included, hey presto. That is great.

    My concern is for the amateur gardener and farmer , nobody else.

  • benjamin weenen 5th Jul '17 - 11:45pm

    As they are supplied for free by nature/God, no one has a moral property right over natural resources. Therefore, if we want exclusive rights to use such resources we should compensate those we exclude.

    If we do not, then inequality and dysfunction are baked into our societies and our economies.

    Those that are against the LVT employ exactly the same arguments as those who opposed the abolition of slavery.

  • @ Lorenzo I’m surprised – and please correct me if I’m mistaken about this – that Mr Cherin is appearing to show signs of unhappiness about Land Value Taxation.

    I’m surprised because it was Mr Cherin’s great hero (they even share a birthday !!), Sir Henry Campbell-Bannerman, whose government introduced the Land Values (Scotland) Bill in 1907, and C.B. frequently made speeches campaigning on this issue.

    In addition, it was Mr Cherin’s super hero, J.S, Mill, who said, ” The tax upon land values is, therefore, the most just and equal of all taxes” – John Stuart Mill – Political Economy (1848), Book V, Chap. 2, Sec. 5..

    Time for a bit more cogitating, Lorenzo ?

  • Eddie Sammon 6th Jul '17 - 12:35am

    Hi Andy Cooke, I could support a LVT if there are exemptions for people who do something with the land, whether that be build on it, farm it, make it look nice and give access to the public etc.

    However I am concerned that some, such as Tony Vickers, are calling “ALL” landlords “parasites on the economy” and Benjamin Weenen saying arguments against a LVT are the same as those against slavery, as if land has feelings and is human.

    Farmers, small scale property owners, productive builders, public space owners, need to be protected from this policy.

  • Matthew Huntbach 6th Jul '17 - 12:51am

    The issue with LVT is that you can be sure if it were seriously proposed, the right-wing press would bring out the little old lady living off a small pension in a big house and say “how dare you force this poor old lady out of her house?”.

    The line that should be used is that the little old lady can pay for it from house value, which will not be claimed until her death.

    Well, it would have been wise, therefore, not to have denounced the similar idea suggested in the general election as “dementia tax”.

    If her heirs need the house, then it is in their interest to pay the tax. If they do not, then why should they be able to sell it tax free, whereas someone getting that amount of money through work must pay tax on it? Isn’t that the traditional old right-wing line, that money earnt through work is dirty and inferior compared to money gained by being a superior type of person who gets it just because of who they are? So we tax those dirty workers, while letting the more noble money get passed on untaxed.

    Lorenzo Cherin – it really would help you clear what you claim is my misassumption about you if you did not so readily jump to using far-right propaganda language as you have done here.

  • This Guardian article critiquing the recent housing white paper is worth a read http://www.landvaluetax.org/latest/housing-crises-waffles-on.html. It notes the changes since the 1960’s that have been the underlying causes of the current housing crisis.

    Tony Vickers paper https://libdemsalter.org.uk/en/article/2016/1152887/the-real-hope-for-home-ownership points to the way forward. Although the paper does not go into detail on implementation it makes the point that prior to 1963, imputed rent from home ownership was taxed at normal income tax rates.

    With a land rent allowance or tax credit (perhaps based on the land element of Local area housing allowance) approximately 1/3rd of homeowners would not pay LVT. The rest of us would pay income tax on the imputed rental value of land we hold for residential purposes or on 2nd homes (rented out or not). The Interest element of mortgages attributable to the land value would need to be deductible from imputed rents.

    To address the issue of inter-generational housing inequality, tenants might be allowed a rent deduction (or equivalent tax credit) against their taxable income. In this approach to implementation, LVT is a redistributive measure aimed directly at the private rental sector.

    Market rents would continue to be determined by the laws of supply and demand (as they were pre-1963) but part of the tax paid by Landlords and homeowners would be redistributed to tenants, negating the need for a draconian and distortionary program of rent controls.

  • I couldn’t support a LVT on residential homes and can’t see it being popular with the public.

  • Eddie,

    I think you make a good point about the language used around LVT. I would point out though that one of our great orators was prone to such language on the subject http://www.landvaluetax.org/current-affairs-comment/winston-churchill-said-it-all-better-then-we-can.html

    This video is a good exposition of the economic arguments underpinning Land Value Tax

  • Andrew T,

    I don’t think any taxes are particularly popular (except where someone else is paying them). However, as to public attitudes, the most recent British social attitudes survey http://natcen.ac.uk/our-research/research/british-social-attitudes/ gives a steer as to how this might be perceived:

    ” after 7 years of government austerity, public opinion shows signs of moving back in
    favour of wanting more tax and spend and greater redistribution of income.”

  • Matthew Huntbach,

    the poor widow argument has been undermined by the conservative proposals for a deferred charge in respect of domiciliary social care to be paid from the estate at death. This is the exact same proposal as has been made in the past, in Tony Vickers paper and in your comments i.e. deferral of LVT until land is sold when downsizing, bequeathed or otherwise transferred.

    The issue of a cap on such deferred charges needs to be addressed and I think your comment points the way. If the heirs need the house, then it is in their interest to pay the tax. If the heirs do not own residential land themselves, then their transferable tax allowance or tax credit for renters can be used by the heir(s) to meet the tax obligation.

  • Lorenzo Cherin 6th Jul '17 - 1:48am

    David Raw

    You make your points well. I do not disagree with LVT per se . I , from a very environmentally concerned view, do not like the push to develop , or build , for the sake of it, to satisfy the demands of councils, the state or anybody who it is not the land of !

    For goodness sake I am advocating for those who use their own money to buy and enjoy their own bit of land.

    The point Andy makes and others in reply to my very left wing point about the Duke of Westminster and the machinations of such, is by no means met by LVT if the trust is off shore that owns it. As is with said types, satisfy that and I am happy, David. In the days of yore of my , yes , very long ago heroes, few noe alas, they did not have globalised power and offshore tax to dael with.

    Mathew Huntbach

    Too many times you insult no, mock, or pillory, then disappear for the response.

    I do not use far right language ever anywhere because I am in the centre and centre left.

    Only those very far to the left would see a criticism of a liberalism that encourages seeing land only for its price , that value, rather than its intrinsic human appeal to those who love it, the family , yes, the gardener, the farmer, would see my comments as such here.

    I am not sorry that I ask questions and make criticisms of policy ideas. I do indeed cogitate. But nowhere am I far right.

    I am to the right of you. But I have many friends to the right of me and left of me in the party.

    I am keen to engage with you but not if you do not stop insulting me or my motivation or views.

    The land, is , from my way of looking at things, not the states, or the council, or governments.

    It is everybody’s or it is the individual’s.

    The state has no right to tell, encourage, or force people to do every thing it wants those individuals to do with their land or other property.

    I own nothing. I lost my house and garden which I re located to Nottingham to buy with a modest income.

    Aspiration is not a right wing concept. Even in middle age. I live in hope .

  • Andrew T,

    this is an example of a popular tax (i.e. paid by someone else) https://libdemsalter.org.uk/en/article/2017/1210643/property-uplift-recovery-tax-in-libdem-voice

  • @Joebourke

    I watched the video you posted. I still think it’s important to rule out the use of LVT on occupied residential property. I know some people think it’s a great idea but honestly it would probably make me consider voting Conservative.

    I think limited targeted use of LVT could be a useful revenue raiser and popular.

  • Matthew Huntbach 6th Jul '17 - 9:01am

    Lorenzo Cherin

    The far-right line is to make out that any tax is a vindictive attack on the tax-payer, done only out of envy, an attack on aspiration, an accusation that they are a “villain”.

    That is precisely what you jumped to doing.

    Taxation is necessary to provide government services. If you believe taxation should be minimal so that no government are provided, then you are on the far right. The issue then is that those who do not have wealth are in effect forced into slavery, completely dependent on those who do have wealth. That is what we are seeing with home ownership. People who do not own housing have no chance of ever owning housing. Their freedom is destroyed because those who do own housing can squeeze whatever they like out of them, forcing them to subsistence level. That is the sort of society that the language you are using suggest you want.

    We desperately need to break out of this. That means we must distribute property ownership more equally so that everyone has a chance. Taxation on land that you have pooh-poohed is a way of doing this.

    As has been pointed out, there has been a long liberal tradition of supporting that idea. It is not about forcing people to do things. It is about recognising that people who own land and who profit from it from those who do not are getting something for doing nothing, at the expense of those they get it from. If you have to pay all your income in rent, then your freedom is being denied.

  • Matthew Huntbach 6th Jul '17 - 9:22am

    Joebourke

    the poor widow argument has been undermined by the conservative proposals for a deferred charge in respect of domiciliary social care to be paid from the estate at death.

    The problem, of course, is that it hasn’t. It was this proposal that turned the election, suddenly, from one where the Conservatives were way ahead to one where they were struggling.

    In my view it was deeply hypocritical of the Liberal Democrat leadership to denounce this as “dementia tax”, because what was proposed is how residential care for the elderly is already paid. I know that because my wife and I had to deal with it for my mother-in-law. The Liberal Democrats never proposed to stop that and make residential care paid for from general taxation.

    By denouncing attempt to deal with how to pay for things like this realistically, it means they won’t be dealt with realistically. So, instead, we will get cuts after cuts after cuts. And that is what happening. In reality, cuts on domestic help for the elderly have been so much, that if you want decent help now, you do have to pay for it out of your own money. So, if you own a house you can do it privately by just the way that was denounced as “dementia tax”. And if you don’t own a house, and so can’t borrow money based on it, to be paid back when you die, you won’t get sufficient care at all.

    Jeremy Corbyn’s Labour have benefited from this way in which realistic talk about how to finance things get shut down without having to do anything in the way of realistic talk. Corbyn has waved his hands to suggest that somehow the cost of universities is so high that it is a life-time wrecker to have to pay for them by student loans, yet so low that it can be paid for out of taxation in a way that most people won’t even notice. Well, ok higher corporation tax and higher income tax on the 15% most wealthy people will pay for it? And then will it also pay for the growing demand that there will be for elderly care, inevitable as lifespans grow?

    Money is being sucked into house prices, which really means land prices, and so squeezed out of everything else. In effect it means our society is no longer one where rewards are for hard work, it is one where rewards are entirely for having the right sort of parents you can inherit from.

    Corbyn has benefitted because he had said nothing to counter that. The Conservatives lost because they did make a start on it.

  • David Murray 6th Jul '17 - 10:42am

    The West Midlands Land Commission produced its Final Report for the West Midlands Combined Authority in February this year. It identified the need for greater industrial, commercial and residential development to meet the WMCA’s Strategic Economic Plan, and recommended the creation of a Spatial Framework for the Region. The Commission noted recent increases in land values, which in the case of Birmingham & Solihull have almost doubled in three years, demonstrating the shortage of available land at a regional and sub-regional level.

    At the Mayoral hustings in Kings Heath, I asked the candidates why they did not consider Land Value Taxation on land banks and brownfield sites, in order to encourage more land to be freed up for future development. Andy Street, who was subsequently elected as Mayor, said it was one of things he was considering. In 2015 the Government (Gavin Barwell at the time) required Local Authorities to build local registers of brownfield sites, and it would be helpful if the Land Registry were also required to register the ownership of these for future LVT purposes. Work needs to be done on the staged implementation of LVT, before further increases in land values make affordable housing a thing of the past. Meanwhile Council Tax bands should be extended to cover a range of higher value properties, so that those owners make a fairer contribution to the funding of local government.

  • It just looks like communism to me. You would in effect be removing the right to own private property and converting every single house into a council house. I can’t think of any way of administering the system either.

  • Joe boiurke 6th Jul '17 - 12:10pm

    Andrew T,

    communism advocates the appropriation of private property. Land and Property taxes are widely used across the developed world including the USA, Australia and were introduced by many of the Baltic states when they were freed from the clutches of the Soviet Union.

    There is no privately owned land in Hong Kong or Singapore. British governors leased it out to residents as a means of raising taxes while keeping income and business taxes low.

  • Joseph Bourke 6th Jul '17 - 1:30pm

    David Murray,

    “it would be helpful if the Land Registry were also required to register the ownership of these for future LVT purposes.” The Conservative Party manifesto seems to include plans to do just this http://www.telegraph.co.uk/property/house-prices/tory-manifesto-proposes-mapping-owns-land-uk-first-time/

  • Lorenzo Cherin 6th Jul '17 - 2:15pm

    Mathew Huntbach

    I do not use the language you mention and when I am criticising views or comments , it is not against those advocating taxation in general , it is some who argue for Land Value Tax.

    Here most of the contributors are sensible , Joseph Bourke is always that , even if his emphasis is not mine , he is reasonable in his attitude.

    I have heard others and read commentary, where people are so patronising towards people or about those who might not want to build incessently on their plot . They may like to just sit back and enjoy the lovely view.

    They are not hoarding.

    Many are. Is it against the liberal internationalist anti-nationalist free movement and free markets tendency , to call for limited foreign ownership by companies not based here, of our nations land ? I d not know the solutions , but I do think the debate is too partisan and one sided.

    I am an advocate for a tax system that puts need first. The needs of individual people, families, communities.

    I favour higher income tax on higher earners. And on profits too, some of what , above in a posting, David Raw shows on corporation tax is useful here.

    I am in favour of higher council tax for huge land ownership, call it a land tax or a property tax.

    I am in favour of reduced inheritence tax on one family home, only the one , even up to a substantial amount, because , not in spite of understanding , individuals, families, communities.

    I do not believe it is wrong , like you and some, that a home stays in the family .

    It is wrong when many properties and their owners, have scant interest in them and they get away with little tax, like said Duke.

    I favour taxing that which does the most harm.

    Oligarchs that own much of London and the south is what this is.

  • benjamin weenen 6th Jul '17 - 2:32pm

    “However I am concerned that some, such as Tony Vickers, are calling “ALL” landlords “parasites on the economy” and Benjamin Weenen saying arguments against a LVT are the same as those against slavery, as if land has feelings and is human.”

    LVT isn’t collected to be given to “land” is it? It’s given to those excluded from its use, who do have rights and feelings.

    Apologies to Eddie Sammon if he does have genuine learning difficulties, but even so I find it difficult to comprehend such stupidity.

  • Joseph Bourke 6th Jul '17 - 2:38pm

    Michael Kilpatrick,

    ” this party can’t get off its hind quarters and develop a full proposal for it (LVT).”

    The Welsh government is canvassing the public’s opinions for ideas for potential new Welsh taxes, and says it will publish a list of possible options which have been put forward in the autumn

    Finance Secretary Mark Drakeford says he wants to start a national debate about how to use new devolved powers.

    The Bevan Foundation have put forward ideas around a tourism levy, takeaway packaging tax and funding social care and suggested looking at a workforce development levy, sugar tax, sunbed tax, land value tax and a water tax.

    This debate follows the passage of two tax bills by the national assembly for Wales, which pave the way for the introduction of two devolved taxes in April 2018 – land transaction tax, which replaces stamp duty land tax and landfill disposals tax, which replaces landfill tax.

    Drakeford said “we could use these powers to change behaviour or decrease negative practices, such as targeting land-banking through a levy on unused land.‘I am keen to consider all ideas and want to start a conversation around new taxes – with all political parties; with the public; businesses and organisations across Wales. I urge everyone to get involved, share their ideas with us and help us shape future Welsh taxes.”
    Ideas should be emailed to [email protected]

    The Wales Act 2014 provides the Welsh Government with powers to put forward proposals for the development of new taxes in areas of devolved responsibility. These proposals must be agreed by the national assembly, UK government and both the House of Commons and the House of Lords.

  • I think I agree with Lorenzo on this issue. Tax is a complicated subject, especially for Liberals. I used to think of this as potentially a good idea but the more I read about it the worse it sounds and some of the comments here don’t really help. Thank you to Joseph Bourke for putting in the effort to argue the case.

  • Eddie Sammon 6th Jul '17 - 3:56pm

    Benjamin Weenen, accusing me of having learning difficulties because I don’t think the arguments against a land value tax are the same as those in favour of slavery is ridiculous and shows you to be an unpleasant person.

    Bye.

  • Joseph Bourke 6th Jul '17 - 4:22pm

    As a country, we are facing a number of worsening problems among which some of the more serious include:

    1. A worsening crisis of inter-generational housing inequality.
    2. An expanding problem with social housing shortages and homelessness.
    3. A fast growing funding shortfall for ever expanding social care provision.
    4. An NHS at breaking point with increasing recruitment problems.
    5. A school system suffering a chronic shortage of funding and shortage of teaching staff.
    6. University students facing a £50K+ debt burden upon graduation.
    7. A stagnant wage economy.
    8. A potential post-brexit recession.

    The Libdem manifesto proposed a 1% increase in income tax to mitigate NHS funding shortfalls and maintaining a 20% corporation tax rate to shore-up school funding.

    We raise taxes in a number of ways from individuals and business. There are good arguments for having a broad base of direct and indirect taxation and not being over reliant on anyone source to fund public services.

    The debate here is focused on how LVT can help address the housing crisis. The key issues with respect to this issue are:
    1. Changing behaviours so that land with planning consent is developed in a timely manner.
    2. Discouraging speculative land investment (while incentivising property development which is recognised as a public good).
    3. Using the tax system to redistribute equity in land. This is currently achieved through inheritance tax. Moving to a system of LVT would require tax payments to made during lifetime or on transfer of an estate where landowners deferred payments until death.

    Two things we should be clear about:

    1. There is nothing wrong with a vibrant and professionalised rental sector where individual or corporate investors engage in the business of property development and.or home rentals. Such services are an important element of the economy in developed countries throughout the world.
    2. Individuals should be able to pass on family homes to their heirs without undue burden from taxes as they can now under the inheritance tax provisions. This may be achieved by placing a cap of the level of deferred LVT that can be charged against land. I would suggest this level be set at the imputed value of land in the local area housing allowance. The cap would vary by region being higher in London and the Southeast than other areas of the country and leaving a greater portion of home equity in the estate.

  • I still don’t know how LVT is going to capture the planning uplift in land value. Typical uplifts on land value in the UK are between 32800% and 100000% from agricultural to residential. At the moment this is split between the developer and the land owner. I can’t see how LVT is going encourage high quality developments with green space and community planning. I do not see how it is going to address the broken housing system. I will explore ALTER’s work in more detail but my initial reaction does not fill me hope.
    The housing market and the supporting tax/financial framework is dysfunctional.
    Am I really any better off if my house price doubles? I would suggest not, till you die and it’s not much use then. If you want an extra bedroom then the differential will just be that much higher. High house prices over and above the cost of production are in nobody’s interest and successive governments have failed to act in this market to manage it.
    On the supply side we we have struggled to supply sufficient housing stock because we have relied on a speculative building model. We don’t plan our schools and hospitals like this.
    We have fueled demand by allowed tax free capital gains on the primary home (don’t get me going on capital gains tax). We have allowed interest rates of 1.5 – 2.5% on mortgages and only just started to tighten lending criterion and we have allowed speculative money to flood into the market.
    There are levers that can be applied if the will is there but the solution will have to be broad based, carefully applied and some withdrawal symptoms are unavoidable. We could start by introducing a target for house prices as a multiple of earnings.

  • Eddie

    “If you want to tax wealth then create a net-asset tax”

    Wealth taxes have very high dead weight costs, LVT by comparison have very low ones. Also think about collection, avoidance of a wealth tax would be easy and would cause massive capital flight. LVT taxes something that can’t be moved.

    In addition most land is being put to some use generating a constant flow of benefit. A wealth tax would hit people for taking responsible decisions. Most of us would chose to have our peak value of assets and savings just before we retire as we would then draw on that until we died. A wealth tax would impose the highest burden from that tax in your life just as you retire and for the early years of retirement.

    An LVT encourages the old lady in the big house close to where the jobs are to down size to a more appropriate location freeing up housing stock for those who need more space and have greater need for fast access to work places. Preferably it encourages those reaching their twilight years to think about planning to downsize and move to more appropriate locations in advance and not to do so in a time of crisis when circumstances force it upon them.

  • Lorenzo & Eddie

    To clarify what a LVT does do is differentiate between types of land by focusing on value. A hectare of land in the City of London with planning permission for skyscrapers on it or expensive land in the West End pays much more than a hectare of farm land in Linconshire. The same goes (to a lesser extent) between the garden at the back of your house, the park in town, the allotment. The values of these peices of land is very low (and as with all land lower under an LVT) so any LVT on them would be very low.

  • Eddie Sammon 6th Jul '17 - 6:21pm

    Hi PSI, but I don’t see the moral or practical argument for any kind of additional tax on people like farmers compared to the rest of the population. It doesn’t matter if the tax would only be small, I don’t see the argument for it.

    The only argument I see is for taxing unused land.

  • Eddie Sammon 6th Jul '17 - 6:22pm

    Also, shifting assets abroad is not how most tax avoidance works. UK residents are taxed on their global assets, unless they are non-domiciled. The ownership of land can also be shifted, even if the land isn’t. I accept it is harder to money launder land, but you don’t avoid tax simply by moving assets abroad.

    Regards

  • Eddie

    “additional tax on people like farmers compared to the rest of the population”

    But it doesn’t.

  • Eddie

    “shifting assets abroad is not how most tax avoidance works”

    You are assuming a static world. If a net asset tax was applied you change the incentives and therefore the methods of tax avoidance.

  • Lorenzo Cherin 6th Jul '17 - 7:06pm

    Andrew , Benjamin, psi

    Some prefer to accuse or insult. Why , I do not know. There is nothing wrong with saying something is nonsense, but words directed at a person, are awful.

    I can assure one poster who has done this here , Benjamin, that Eddie Sammon is far from stupid, and is one of the friendliest here too. PSi sets a better tone , how to explain and inform. Take note Benjamin, we need to get friendlier here as we are mostly.

    I can understand Andrew thinking what he does about this tax. The great, and I am an admirer, Henry George, as with Campbell Bannerman, John Stuart Mill, liberals , social , yes, classical too, claimed even by those oriented towards liberal or libertarian socialism, and certainly social democracy , as is seen, advocated such a tax in different eras.

    In the days when classical Liberalism was growing into social Liberalism and social democracy part of a developing progressive movement for change, taxation was not as now, nor was social mobility. We think we are unequal now , with poor mobility of a social , and income level. Think how bad it was then. The concerns of these and other great thinkers and campaigners, built gains for humankind, we are retreating from in decades not so long ago and yet.

    But in the nineteenth century , income tax was not a liked proposition. Tariffs were the talking point . Land tax was correctly sought , because ownership was so limited, poverty so desperate.

    The American dream , of rural areas, through the wars with native tribes and further, yet maintained a feeling for the land. Homesteaders had far more in common with native Americans than either knew. They loved the land. The white settler saw it as something to claim and own, but not to trash or profit from , but to settler in peace and raise a family. The native American had little feeling for the concept of ownership, but of stewardship, they were the pioneers, even as the white settler used the word.

    George was seeing a different society. The poorest in the cities bled the hearts of those who cared. The unequal society we know is as of nothing , though significant. He did not favour tariffs , but real, fee trade. Socialists can admire much in him , but he was a radical social liberal, steeped in classical liberal love for liberty.

    We need to treat each other with the respect , and understanding we should show to our great thinkers too.

  • Joseph Bourke 6th Jul '17 - 8:26pm

    P.J.,

    at present the planning uplift is partially captured by the Community infrastructure Levy, S106 planning obligations and affordable housing provision. LVT acts as a perpetual ground rent that furnishes an ongoing revenue stream to the local authority/government and reduces the capital value of the land and hence the amount of uplift available to the landowner/developer. The gains accruing to the landowner/developer are subject to capital gains/business taxation in the normal way.

    I think you are right that LVT by itself is only part of the solution and there are other levers that can be applied. As noted in the article above:

    “Simply building more homes that fewer and fewer people can afford will not solve the housing problem for younger taxpayers and social housing tenants by itself. Easing of green belt planning restrictions, development of publicly owned land, devolving of tax and borrowing powers to local regional authorities and Land Value Taxation should all be part of the mix.”

  • Eddie Sammon 7th Jul '17 - 12:25am

    Hi PSI, unless agricultural land is exempt from the tax then I don’t see how it doesn’t disproportionately affect farmers along with other productive land owners.

    There is no way to legally avoid a global net-assets tax if you are domiciled in the UK. There is a way to avoid a land value tax, simply sell the land and invest into something else, possibly something controversial like weapons manufacturing, investment banks and big oil companies. My point is that taxing land won’t necessarily mean better outcomes.

    Again, I see the use of a tax if it is on unused land only, with exemptions for properly kept green spaces with public access.

  • Eddie,

    agricultural land and buildings are exempt from business rates. Farmers do pay business rates on other commercial buildings like B&Bs on their land. Agricultural land has a very low rental value so probably not worth assessing until a change of use application is made.

    The ability to enforce mandatory registration of land titles with the Land registry is a significant benefit in reducing tax avoidance/tax evasion.

    I think the key focus of proposals for LVT on residential housing should be enabling of redistribution to tenants by way of tax allowances on the land element of rents paid.

    Developing policies that can stabilise house prices and rents as well as provide practical support to the younger generation priced out of the housing market should be a key priority for the party.

  • Eddie Sammon 7th Jul '17 - 3:36am

    Thanks Joe. I’ll consider any specific proposals if I think they are well thought out and aren’t simply based on an ideological dislike for land ownership. Land ownership is here to stay, unless people have a problem with freehold housing tenancy and think that should be abolished too.

  • jayne Mansfield 7th Jul '17 - 5:03am

    @ Eddie Sammon,
    Eddie there s an independent charity that checks facts on various subjects. It is called, ‘Full Fact’.

    You may find the fact check on:-
    ‘Labour’s Land Value Tax: Will you have to sell your garden?’, interesting.

    The design of a LVT will need to be carefully thought through, but I don’t see how, in the interests of fairness, one can continue with the current system.

    Bye the way, well done on the way you handled what was intended as a nasty jibe.

  • Eddie Sammon 7th Jul '17 - 6:11am

    Thanks Jane. I’ll check it out. I look forward to hearing some more detailed proposals on a LVT, including specific tax rates.

  • Right to a few of the negative comments.

    Tony Vickers
    “So to call landlords “business people” is a misnomer. They are ALL parasites on the economy”

    Just no. I’m not one but have had to make use of their services many times. Some times good and some times bad. But ultimately the issue was they had put their saving in to the properties I rented they had dealt with the cost of repairs and maintenance to keep the property I rented functioning. They have good times and bad depending on the market. There has been a market that has been massively beneficial to a large number of land lords over a prolonged period recently but that does not make them parasites. The market is malfunctioning, and as liberals we should be looking for effective ways to correct that, calling people names is not that.

  • benjamin weenen

    I’m going to find it hard to take anything you say very seriously if you use insults or hyperbolic statements against your opponents. You may have something to add but it’s lost.

  • Matthew Huntbach

    I’m not sure why you have taken a scunner to Lorenzo Cherin? You and I have had reasonable discussions about LVT in the past on here and I think some of your observations are very important to come up with a workable systems, but I can’t see the undecided (or opposed) being persuaded of the merits of LVT by insults rather than being given a well presented case.

  • Joseph Bourke 7th Jul '17 - 6:01pm

    Jayne,

    “The design of a LVT will need to be carefully thought through, but I don’t see how, in the interests of fairness, one can continue with the current system.”

    this Irish author agrees with you:
    https://www.irishtimes.com/business/construction/john-fitzgerald-tax-on-hoarding-land-would-incentivise-building-1.3145728

    “Property taxes are, in principle, based on market values but valuations have been frozen, and this is a hugely politically sensitive area.
    Higher property taxes, with the extra proceeds diverted to fund housing, would incentivise better utilisation of existing property and raise cash to tackle the housing crisis. Thus those with homes would contribute to solving the problem for those who have none.”

  • J George SMID 26th Jul '17 - 3:12pm

    This has been a very fruitful exercise – I wish to add to the news of today about the property developers selling houses with ‘ground rent’ attached. (leaseholds)

    So whilst we are discussing the theoretical justification, the private developer already introduced the Land Value Tax – albeit to be collected by private enterprise. So the practical economic case has been done and tested. All it remains is to decide if the LVT should be appropriated by private capital (creating further distortion in the system) or if LVT should be treated as ‘public goods’ and go to the Inland Revenue.

Post a Comment

Lib Dem Voice welcomes comments from everyone but we ask you to be polite, to be on topic and to be who you say you are. You can read our comments policy in full here. Please respect it and all readers of the site.

If you are a member of the party, you can have the Lib Dem Logo appear next to your comments to show this. You must be registered for our forum and can then login on this public site with the same username and password.

To have your photo next to your comment please signup your email address with Gravatar.

Your email is never published. Required fields are marked *

*
*
Please complete the name of this site, Liberal Democrat ...?

Advert



Recent Comments

  • User AvatarPalehorse 23rd Nov - 8:57am
    Frankie and Johnny...., I was only teasing. I am 66 and have all my family here. If I were younger I would not hesitate to...
  • User AvatarPeter Martin 23rd Nov - 8:50am
    " £65bn hit to tax receipts" This indicates that the economy is going to be more sluggish than expected. Therefore, the government needs to spend...
  • User AvatarHolly Matthies 23rd Nov - 8:46am
    It's not North American: Canadians have Thanksgiving in October.
  • User AvatarPalehorse 23rd Nov - 8:38am
    Are those "native peoples" the same ones the "settlers" then slaughtered and drove the survivors into reservations?
  • User AvatarArnold Kiel 23rd Nov - 8:36am
    Sheila Gee, leave said: this black wall is white, an outright lie. Remain said: this light grey wall will turn black quickly, a forecast. The...
  • User Avatarexpats 23rd Nov - 8:23am
    Anyway.....The 'Ashes' are on...It'll make a change to read the headline, "England Facing Disaster", and realise that it's got nothing to do with 'Brexit'.