Tag Archives: ALTER

The Housing Crisis and Land Value Taxation

In submitting our amendment to the motion on Tackling the Housing Crisis (F31), ALTER is not wanting to change anything called for in the policy paper that will, we hope, be adopted nearly unanimously. Our purpose is to remind Conference that we can and must use our existing policy on tax reform, namely Land Value Taxation (LVT), to solve the underlying cause of the crisis.

We call for the commitment in the 2013 policy paper Fairer Taxes, endorsed by Conference that year, to be honoured. This was to conduct “early in the next Parliament …. a full-scale review to look at how (LVT) might best be implemented”. We do not suggest any new tax policies but merely call for FPC to do what Conference asked it to, which we feel is entirely appropriate given the motion’s subject.

The motion points out that “successive governments have pursued policies that benefit homeowners”. However there is no proposal to correct that imbalance between owning and renting. Our amendment emphasises that it is land value and not the value of “bricks and mortar” that is the cause of this fundamental unfairness. It is the major homebuilders and landowners who most benefit: obscenely and without economic or ethical justification.

Governments in England – both Conservative and Labour – have failed to review the grossly unfair Council Tax despite it being the main source of local and regional inequity in housing costs for occupiers. Whilst tax policy was outside the remit of the working party, it should have been able to point this out without us seeking to amend this motion.

The paper identifies the “main drivers of the housing crisis” as principally not overall supply but about:-

  • Provision of social housing
  • Economic prosperity of the area
  • The role of finance.
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Bulls, ostriches and national housing targets

Would-be Prime Minister Liz Truss agrees with the Homes & Planning Working Group (HPWG) about scrapping the top-down national housing target! “Cakeism”? Could a Sunak Government spend more while cutting taxes?

It depends what taxes are cut – and how. Perhaps there is a way, which today’s politicians and their advisors have ignored. From John McDonald to Milton Friedman (with David Ricardo, Adam Smith and Vince Cable as classical Liberals) some have supported: the “Tax Shifting” way.

Our traditional taxes are almost all “welfare negative”: causing a huge “deadweight loss” of real growth. Taxes on earnings, dividends, profits and most transactions such as house sales (“Stamp Duty Land Tax”), fall on those parts of the economy that create wealth and prosperity.

However, it is those who simply hold title to the passive element in human activity – what economists used to call “Land”, i.e. everything not made – who are the main beneficiaries. Land exists in finite quantity and without it Labour and Capital cannot operate. The growth in national wealth since the 2008 financial crash has, according to ONS figures, gone almost entirely into inflating land values.

It is this deadweight loss that keeps the poor in poverty and causes inequality to grow unless governments act: corrective action including ‘progressive’ taxation which is unproductive. This is unintelligent and wholly unfair.

We Lib Dems have traditionally understood this. Hence our policy of Land Value Taxation (LVT).

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Property Uplift Recovery Tax

The Liberal Democrats have proposed increasing income tax by 1 penny which would raise just £4.6 billion pounds annually. There is a better alternative, called the Property Uplift Recovery Tax which is being proposed by Liberal Democrat ALTER. The tax would be paid annually by all that own housing in the UK and are either:

  • British citizens who are have non-domiciled tax status
  • Foreign citizens (or British citizens non-resident for over 15 years) who are not taxed in the UK, or
  • Corporate entities registered offshore.

The tax would be levied annually on the property price uplift in the local area, and would aim to recover 50% of the long term increase. The tax would raise about £8.5 billion pounds per year (see fully referenced article ).

Taxes need a compelling story which resonates with the electorate, and this tax has one. We are rightly proud to live in a country with a strong economy, a stable government and respect for the rule of law. Housing in the UK is a safe haven for overseas investors, and 10% of housing is now owned by foreign investors. They often leave properties empty, indeed some residential developments in Britain have been likened to towers of safe-deposit boxes. In England 216,000 homes have been empty for over six months.

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Sharing the Rents: The Economic relationship Between Humanity and Nature

alter-logo-300Action for Land Taxation and Economic Reform (ALTER) seeks to build on support for Land Value Taxation amongst Liberal Democrats and to promote and campaign for this policy as part of a more sustainable and just resource based economic system.

The ALTER fringe meeting at Brighton this year was chaired by our MEP, Catherine Bearder. Jock Coats, a former Oxford city councillor, presented a paper aimed at infusing the Liberal Democrat mission statement as set out in the “preamble to the constitution” with explicitly “geoist” principles.  The paper argues that only publicly collecting the “economic rent” from land and natural resources enables a genuine market and democracy to work together to optimally distribute economic welfare and save the planet.

The premise of the paper is that neither markets nor democracy can function properly whilst a monopolistic class, rentiers, captures so much of economic productivity. It leads to a two caste society, one of which reaps the benefits of public need and public programs through land values, while the other pays for it. “Tenants pay twice so landowners don’t have to”.

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ALTER Questions the Leadership Candidates
 on the Land Value Tax and Economic Reform

ALTER is an Associated Organisation within the Liberal Democrats dedicated to advancing the causes of the Land Value Tax and other economic reforms. We chose to use the leadership contest as an opportunity.

We are aware that party policy is not determined by the leader, it is instead determined democratically by members at federal conferences. However, it is our experience that the leader has a large amount of influence in terms of which policies are given priority. So although motions and amendments on the Land Value Tax have been regularly passed at conference with near unanimity, the party has largely been quite shy about the policy, leaving it hidden within the small print of our manifesto rather than properly campaign on it.

For this reason we wished to challenge both leadership candidates as to whether they’d be willing to grasp the nettle and get seriously behind LVT, and also take their view on other areas of economic reform including workplace democracy and monetary policy.
We sent our questions and their responses are below.

Land Value Tax

Whenever the Land Value Tax has been debated at a Liberal Democrat conference, support for it is almost unanimous. While the party has consistently supported introducing the Land Value Tax, it has in recent years been highly shy about it. ALTER had to fight for it to even make the small print in our manifesto.

As leader, would you be willing to grasp the nettle and make it a front and centre policy?

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Opinion: Miliband, Piketty and the Liberal response

milibandThree weeks ago, Miliband crossed the Rubicon and entered the heartland of Tory ideology. His support for European-style longer and more secure tenancies — and by extension capping rent increases — runs roughshod over a hitherto post-Thatcherite consensus.

Grant Shapps led the Tory riposte with a quick and ludicrous barb: Labour were proposing “Venezuelan-style rent controls”. Most people won’t know the details of Venezuela’s housing policy, but will be sure it’s unlikely to be any worse than our own.

Times have changed. We can see this clearly in that most …

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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 …

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LDVideo: Introducing the Land Value Tax

The Liberal Democrat campaign for Action on Land Tax and Economic reform has recently released a new video to explain the virtues of a Land Value Tax — described by ALTER as ‘making taxation more progressive and addressing the injustice of economic rent, it would encourage development and boost the economy. It’s the kind of measure that our country is in desperate need of right now.’

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New book: The Case for a New People’s Budget

To many of us, notably Vince Cable, it has for long been blindingly obvious that the property boom would end – and end in pain for millions around the world.

The scale of the crash may have surprised even most who expected something like it at this time, as borrowing against unsecured ‘bubble’ land values was bound to lead to massive default.

However the Lib Dems’ campaign group on land value taxation (LVT) which I chair, ALTER, believes that the ‘Credit Crunch’ can be turned into a major opportunity for the Party, if it can press home its renewed conviction …

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