And I’m one of them: sitting in a Band E 4-bed house worth £600k.
Yet all we get at York this week is another “hand wringing” motion on local government finance (F19), same as we got two years ago. It’s pathetic. It’s not “making policy”, which is what I always thought Conference was for. Sure enough what was then called a crisis in local government funding is now an emergency. We seem no closer to publicly declaring we have a solution.
Yet the Party has a solution waiting in the wings. In 2013, our policy paper “Fairer Taxes” included a promise to “Launch a consultation to determine how to implement Land Value Taxation”(LVT), which would be completed in the next Parliament. Not “whether” but “how”.
Subsequently, Andrew Dixon, ALTER member and founder of the Party’s Business Forum, steered our policy to reform Business Rates onto a land value base through conference in 2018. The next year, his similar proposal to replace council tax failed to pass FPC/FCC scrutiny. Businesses don’t vote. Home-owners do.
We fought the 2024 General Election on a manifesto that promised a “fair deal where everyone can afford a decent home”. Tell that to the younger voters, now streaming towards the Greens – especially those in London & Home Counties.
Dixon has since 2019 focused on building a cross-party coalition to support a wide agenda of Land Value Capture (LVC), promoting a Proportional Property Tax (PPT) through the campaign group FairerShare. He supported ALTER and the cross-party Coalition for Economic Justice (CEJ) through the Party’s electoral trough-years in establishing an APPG on LVC, whose first Chair was our Leader Sir Vince Cable, succeeded in 2019 by John McDonnell. CEJ (in effect, ALTER) provided the APPG Secretariat.
PPT has many of the key features of LVT: the landlord is liable to pay it, not the occupier; there would be regular revaluations; payment could be deferred if an owner-occupier was income-poor, until death, sale or re-mortgage; annual increases in tax paid would be capped. PPT would replace not only council tax but also Stamp Duty Land Tax (SDLT) and the so-called Bedroom Tax. ALTER has been repeatedly knocked back in efforts to put PPT up for Conference debate.
The housing crisis is almost entirely the product of land market failure, which LVT would play a major part in fixing. When we “capture” land value for public revenue, we merely restore what was stolen from us. Land value doesn’t arise through anything that a landowner does but through the actions of businesses, governments, wage earners and the physical and community infrastructure that a well-governed democratic society creates for all to share. And of course Nature plays a part!
The land and housing markets as they exist amount to inter-generational legalised theft and left uncorrected will lead to societal collapse. Research by the Intergenerational Foundation (IF), among others, gives us a stark warning. Therefore it should be a very high priority within our economic reforms for Liberal Democrats to accelerate the research we were promised in 2013. We must not be complicit in allowing this to continue.
Tax is not just about “plucking the goose without making it squeal” (Turgot 1766?). Rather, as I heard Lord Jim O’Neill, former Treasury Minister say recently on the BBC: “If Government is serious, it should change the way property is taxed.” Tax is a policy instrument: it can and should help steer an economy in a healthy, sustainable direction.
Another famous (Nobel Prizewinning) economist, William Vickrey, pointed out that the property tax is really a combination of a very bad tax (on buildings) and one of the best (on land). ALTER would develop PPT to tax land.
Taxing land is “welfare negative”, meaning it comes with no negative “deadweight effects” on economic activity. The madness of many taxes we suffer now is obvious. Value Added Tax! Seriously, why tax added value?! National Insurance Tax and other taxes on earned income and enterprise are easily evaded – especially by those who can afford legal and tax advice.
Land taxes cannot be avoided. ALTER would have us look at using LVT at all levels of government to alleviate, simplify or abolish existing taxes. This would help those of working age and their families. However we believe LVT need not cause hardship to older, income-poor asset-rich homeowners: we would eventually merge the earned income and “homestead” (property tax) allowances.
Meanwhile “deadweight losses” caused directly or indirectly by the current tax system are variously estimated at between 5% and 30% of so-called GDP. So people like me, in my 80th year, are indeed a deadweight burden. Are we that serious Party of Government O’Neill calls for?
Come to our fringe at York on Saturday 14th March 7:45 Hilton Micklegate. Find out how we could be serious with property tax reform and help secure a prosperous future for our children and grandchildren.
* 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
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16 Comments
Thanks for this. I did not vote for the motion at Autumn conference setting out policy priorities because it omitted any developments on tax and also radical proposals on education and training.
In the 2024 GE we joined other parties in assuming tax generally was too high, when we should have been clearer about the need for a fairer tax system both local and national. Currently more people are saying they support Reform UK because they want to reduce tax for low income people. Likewise some are noticing Reform’s emphasis on vocational education rather than academic and university education. Both these issues may not become number one in election campaigns, but they are rising in people’s priorities and we need to be using these as part of our Fairer Deal mantra.
Wife and I worked just about every hour we could to buy our own place. Every penny we worked for was taxed. We had 1 child we worked our socks off to get her through Uni. Every penny we spent on her and us we paid tax on. When we die we expected to pass our house to her, the one we own, the one we already paid for, the one. We already paid tax on. When we die we will be taxed again. Yes Government taxes the dead. I feel I would rather burn the place down than be taxed again as we passed it on to my child than give
more of our hard earned money to unless incompetent corrupt politicians.
Socialism started taxing the productive to pay for the unproductive. Productivity collapsed because productivity was not rewarded. Taxes rose again chasing wealth that no longer existed. When the money runs out reality becomes the enemy. When a system can not face the reality hides the truth.
Perhaps my memory is fading with age but I seem to recall taxes being much heavier when I was younger, 60s. 70s, 80s, base rate was 33per cent, top rate dragged in lot more folk than at present. Add mortgage rates at 10-15 per cent, child benefits being less than now and most car owning households having one not two or more , etc, etc. It was tougher then believe me.
@ Meby,
We’ve all got our sob stories. Mine was when Mrs Thatcher jacked up the interest rates to 15% p.a. shortly after my wife and I bought our first house. We’d budgeted for 9% ! And we had three kids! Just me working. They reckon that each one costs the same as a high end sports car like a Lamborghini over the course of a lifetime. 🙁
Mine all went to Uni and it wasn’t cheap and I’ve never had a new car never mind a Lamborghini. But try to do what I did, count your blessings and get over it! 🙂 There’s no reason you can’t leave your house to your daughter. It would have to be a pretty big house for you to worry about death duties.
It will probably cost her more to rebuild the house than you’d save so there’s no reason to think about arson. It is a criminal offence BTW!
We all have to pay our taxes. Many Lib Dems argue we don’t pay as much as some of the EU countries and we should pay more.
Just spotted an error here: –
“Taxing land is welfare negative” should be “…. neutral”.
Almost all other taxes are “welfare negative” and impose “deadweight losses” on the wider economy. Either that or their purpose is purely to change behaviour (taxes on tobacco, sugar, etc).
@Meby @theakes. We have an ageing population, absorbing more of the total tax revenue that is paid by an ever smaller proportion of the adult population who are of working age. We have also greatly increased our need to invest in basic infrastructure (roads, utilities, affordable housing) and we now have new challenges of growing urgency (tackling climate change, defence). So-called “welfare” (which right-wing blame “scroungers” for) is overwhelmingly now going on old age pensions and non-means-tested benefits for over-60s.
And we have taxes that are morally indefensible and economically daft. If we could raise revenue sustainably in these circumstances and allow working people to keep more of what they earn by taxing unearned income – especially closing loopholes like tax havens – why wouldn’t a Liberal Democrat Government do so?!
Inheritance tax ought to be replaced by an accessions tax. Not wanting to introduce a “death tax” any more than a tax on living.
@Meby
“Wife and I worked just about every hour we could to buy our own place. Every penny we worked for was taxed.”
What about your personal tax-free allowances?
@Tony Vickers
“We have an ageing population, absorbing more of the total tax revenue that is paid by an ever smaller proportion of the adult population who are of working age.”
I’m well past working age and I’m definitely still contributing from pension income from (mine plus some from my late hubby’s pension) towards the country’s tax take.
I’m not complaining.
@ Tony Vickers “We have an ageing population, absorbing more of the total tax revenue that is paid by an ever smaller proportion of the adult population who are of working age”,
Sorry Mr Vickers, but I paid income tax and full national insurance until my retirement some years ago – and also contributed towards my occupational pension. My employed working life totalled 54 years.
After retirement I still pay income tax on my pensions (occupational and state), fuel tax on my car, and VAT on many of my purchases, so please, let’s have a bit less of the ageist stuff on what is supposed to be a liberal site.
PS I chaired a Foodbank (unpaid) and chaired educational appeals (unpaid) for a local authority in retirement.
Melby is talking nonsense. For once, I find myself in agreement with Theakes. (A rare occurrence). When I first went to work basic rate of income tax was 33%, there were minimal tax allowances and the top rate of tax (so-called super tax) was 98%. We also had schools that were not for ever short of money, an NHS that didn’t have people on trolleys in corridors, ambulances that arrived on time and councils that actually delivered a wide range of services. We also had a welfare system that more or less worked and grants for university students rather than loans. We also has utilities (Gas, electricity, water, sewerage, mail, rail and buses) run by the state and not enriching shareholders at the expense of customers.
Like nonconformist radical, I pay tax on my pension and I’m not complaining either.
The move to indirect taxation has meant the poor pay more tax and the rich less and we have all been conned into believing that all tax is bad and that leaving more in people’s pockets will mean a better life for all, when is fact it means a better life for a small section of the population who increasingly own all the wealth and try to avoid paying any tax at all.
The new Green MP is right about one thing. People ARE fed up with working hard to make other people rich.
It’s not simple to compare the situation today with times past. A big complication is that we expect the Government to do so much more today. Yes, when I was growing up income tax was 33%. But as I recall even then schools were perpetually short of money. And in those days, schools weren’t expected to provide for SEND, pastoral support, mental health support, there were no Ofsted inspections. It’s a similar story in the NHS: Back in the 1970s the NHS wasn’t expected to provide mental health services on todays’ scale, or any of a huge range of diagnostic and screening services we have today. And a lower proportion of elderly people meant less demand. On water, we didn’t really care about sewage in those days.
Put all those things together and it’s hardly surprising that, if services are supported by a similar tax base but expected to do so much more, they are going to be much more stretched today.
Hi Tony. Thank you for this fantastic article. I’m 24 years old and joined the party at the start of this year. Amongst many reasons for joining the Liberal Democrats, one of them is the vocal online advocacy for land taxation reform. I will be attending my first party conference this week and will certainly be going to the ALTER fringe event. This is a topic I have been passionate about for a few years now. The deadweight losses and negative externalities caused by our failure to properly tax land values are holding back the entire economy, and we have completely decimated the social contract over the past few decades as a result. We should be holding Labour to account for their broken housing promises.
I look forward to hearing you speak more on this, and hopefully to talking with you directly at conference. I’d love to get involved with ALTER wherever I can.
Rees
Thanks Tony, talking sense as ever. I blame the doctors for all of this! Keeping us alive too long on multiple meds. Ha ha ( this is a joke BTW)
While there may be some merit in including a land tax in the various ways in which government revenues are collected, land ownership ceased to be the most important measure of wealth and power when the industrial revolution took hold. Owning a single factory could generate more personal wealth than inheriting a country estate. Our democracy is under direct attack now by incredibly wealthy businesses and individuals who barely need any land at all to operate globally. They include the private capital funds, social media owners, investment banks, cryptocurrency manipulators and inherited dynasties. Their wealth is utterly dependent upon their being functioning societies around the globe, but they prefer to buy governments rather than pay the taxes that make their wealth possible. Here in the UK we can see this process at work with Reform and the current debased Tory Party, both of whom represent the interests of a handful of wealthy ‘donors’ over that of their own citizens.
I have confidence that the party will not decide to promote the collapse of our society by inciting inter-generational conflict and pretending that avoiding paying National Insurance and Income Tax is normal. We certainly should be addressing the profound corruption of our system of government and ensuring that those who make profits from our nations pay their share of taxes.
Murad Qureshi argues the case for LVT on Labour list To fix Britain’s broken property taxes – Labour must back a Land Value Tax writing ” Economists from across the spectrum — from the IPPR to the IFS, from Adam Smith to modern progressives — agree that taxing land is one of the least damaging forms of taxation. The IMF and OECD have long urged Britain to move in this direction. As Labour looks for ways to fund better housing, infrastructure and public services without squeezing workers further, LVT offers a fair, evidence-based route. ”
Samuel Watling’s cautionary note The failure of the land value tax revisits the mistakes of the Edwardian Liberal Party and the lessons to be learned.
Today’s younger generation are being squeezed by the highest combined proportion of direct and indirect taxes since WW2 on one hand and rents and mortgage interest on inflated housing prices on the other hand. Tackling these gross social inequalities is what the Liberal Democrats exist for.
Tax reform needs to be carefully thought through and lessons leaned from past mistakes as Watling argues in his essay. In particular the tax base needs to be refocused on economic and monopoly rents derived from mortgage interest, income from land rentals, intellectual property rights and capital gains. The levels of income and inter-generational wealth inequality we are seeing in the UK are unsustainable in a modern society. If this party does not take these issues on, other more progressive movements will.
@John Reed I’d question your assessment that land ownership has not been a significant factor in the accumulation of wealth, Guy Shrubsole found through public maps and foi requests that half of England’s land is owned by only 25,000 people, less than 1% of the population, with 30% of these being traditional gentry, 18% being corporations and 17% being city bankers. The evidence here plainly suggests that a Land Value Tax would be effective at tackling entrenched wealth.
@Joe Bourke, Watling’s article appears to stretch facts to sell a narrative, firstly we never had a National LVT; this was part of the compromise made with the Lords (who owned a lot of land!) as part of removing their powers. While records were collected on Land Value as the article correctly states, this didn’t amount to anything as the Liberal Government was not in a strong enough position to ever implement it.
The idea that there has never been a successful tax is also demostrably false, the German Colony of Tsingtao was almost entirely funded by LVT because speculation had been such a widespread issue elsewhere in the colonial world, Lars Doucet did a good article on this.
Rose, I think LibDem history does a better job of recounting the challenges faced by Lloyd George in implementing significant land taxationThe Lloyd George Land Taxes
There was an early form of Land tax in Britain at the turn of the seventeenth century that endured until 1963 but the tax became gradually overshadowed by other taxes Early History.
In developing a modern Land Value Tax, I believe it is important to focus the tax base on the source of economic and monopoly rents that are prevalent in modern society; not least interest derived from mortgages on land in addition to land rents, the utilisation of the radio spectrum for wireless communications by various telecommunications and internet service providers and other such commercialised natural resources.