Dear Andy,
Like you, I’m an advocate of taxing differently, so as to stimulate economic growth in a fair and sustainable way. We shouldn’t be taxing workers and businesses more.
Every Lib Dem Conference I’m there with colleagues promoting “Action on Land-value Tax and Economic Reform (ALTER ).
Along with the late Dave Wetzel, chair of Labour Land Campaign, ALTER helped found the Coalition for Economic Justice (CEJ ) in 2004. CEJ was Secretariat to the APPG on Land Value Capture , chaired by Vince Cable from 2017 and then by John McDonnell.
The mantra: “Let us keep what we make but pay for what we take”. You can’t do it overnight but I’m so pleased you are keen to start that shifting of the tax burden. I know my party will work with you on this and we have some ideas about smoothing the political journey we’d like to share, such as a Homestead Allowance for the asset-rich but income poor.
We have some of the worst designed and least fair taxes. All current taxes suppress the thing they are taxing.That’s OK is we want to deter something like smoking but we shouldn’t rely on ‘sin taxes’ to raise serious revenue.
When we tax things we actually want to encourage, like work, trade and house building, they harm the economy.
This “deadweight loss” is estimated at between 8% and 30% of the gross annual tax revenue: a figure in the hundred billions. It is as though we just burned that proportion of the hard-earned income, profits, sales and transactions of the British people and businesses that we take.
Meanwhile those who have accrued wealth by doing nothing but hold title to land get richer! That cannot be just – or sensible. It makes no sense to leave those accumulating unearned wealth from something they can’t hide while at the same time taxing growth in things we need more of!
As you know, there is one tax that uniquely has no negative effect on the economy or public welfare. The ‘recovery’ of that Common Wealth that arises purely from the actions of working people and entrepreneurs on our finite stock of land does the opposite and stimulates further economic activity. Let’s not call it a tax but a levy.
Some aspects of our tax system are uniquely dysfunctional and barriers to growth. We are the only developed country that levies annual property taxes on occupiers rather than owners, because we still don’t have a complete register of land ownership, which is unheard of.
* Dr Tony Vickers is a retired chartered surveyor who worked first for a national housing developer, then as a Military Geographer before entering Lib Dem politics in 1995. He is co-founder of ALTER and has served as a councillor in Berkshire for 20 out of the past 30 years while also lecturing in green economics at Kingston University until 2016. www.libdemsalter.org.uk
Follow @libdemvoice.org on Bluesky
Like us on Facebook
Subscribe to our feed
Sign-up for our daily email digest
Alexander Mackendrick and Sweet Smell of Success
Clear the gallery!
The first serving PM to receive the Legion of Honour?
Can Burnham win the endorsement of Number Ten's most important occupant?
Chloe
George Thomas
Matt (Bristol)
David S
Andrew Tampion
5 Comments
This has got to be done right: gross annual site values assuming current consent/permitted use), probably values per square metre by postcode area to keep the data set manageable – there are 2 million postcode areas.
We need good mitigation for people suddenly hit by big bills eg roll-up for pensioners.
Perhaps borrowers should be allowed to reduce mortgage interest payments so banks must write off some of the debt?
Some sweeteners should be offered eg scrap Council Tax, Business Rates, Stamp Duty, IHT and planning charges. NI and IT thresholds substantially increased, VAT cut.
Rather than tax land , allow local councils to compulsory purchase land without planning permission – typically agricultural – with only a smal “hope value” premium. Build council houses ineligible for Right- to -buy ( or maybe only after 25 years with a small discount). Result: Lots of relatively cheap council housing to help end homelessness & rough sleeping, reduced rents in the private sector, benefits to cost of living
@Jenny Barnes
“allow local councils to compulsory purchase land without planning permission – typically agricultural ”
So are you saying that when the UK already doesn’t provide itself with enough food it’s OK to use agricultural land for some non-agricultural purpose such as building houses?
The mitigations and transitional relief measures for “income-poor, asset-rich” are the same as for FairerShare’s PPT https://fairershare.org.uk/proportional-property-tax/
1. Limit on increase in payment in an one year.
2. Pay what remains due when sale, death or re-mortgage occur.
The change must always be made on a revenue neutral basis. So Location Benefit Levy would replace Council Tax and Stamp Duty Land Tax. It could also allow “Bedroom Tax” to be abolished.
ALTER proposes that the levy is collected through income and corporation tax systems, as happens in Sweden (or did when I visited in 2005 – I’ve learned that there have been changes since). It should eventually enable raising of earned income tax-free threshold and start to fund national infrastructure investment, because these often affect land values.
Crucial first step: the Burnham Government must announce its intention to use annual rental value of all classes of land as a source of public revenue. That will trigger completion of all land information datasets and make their custodians work out how to administer the tax. Only a consistent national method of valuation, data management, etc. will ensure fairness and efficiency. Each level of government can decide what rate to levy the for its own needs and ‘precept’ into national tax collection systems.
We apparently grow 52% of our required food on 6.1 million hectares of agricultural land. At a density of 50 houses per hectare, we could build 5 million houses on 0.1 m hectares.
By my calculation that would reduce the food produced in the UK, everything equal, by less than 1%. If the new occupants of the houses used their gardens to grow food, that would probably more than compensate.
The Labour manifesto promised to build 1.5 M houses over a 5 year parliament, which was and is seen as ambitious – the 0.1Mhectares provides 15 years supply at that rate.
Other sorts of land are ofc available.