Jock's Place - Tories' Bow Group tax plans - Comments

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Praguetory — Tue, 25 Jul 2006 21:13:45 +0000

Cheers again. You're the kind of Lib I can do business with. Only teasing.

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Jock Coats — Tue, 25 Jul 2006 12:40:16 +0000

It's absolutely not commie". It is classic liberal. Supported by such liberals as Locke, Smith, Payne, Mill and so on.

It is "communitarian" I'd say, but then the recognition that we ought to pay tax at all acknowledges the communitarian nature of society.

Taxing land, especially as a single or predominant form of taxation, builds on that communitarianism if you like by taxing only the things we all have a common need for and a common birthright to (how can we be born and live if we cannot access land?) whilst leaving everything humans make, wealth, for them individually to do with as they wish.

It becomes a voluntary tax as well - if you don't like paying a zillion an acre in Kensington & Chelsea and feel like downsizing you maybe wouldn't pay any tax at all on the castle on Eigg...:)

Anyway - further reading...I probably can't do much better as a list than the one at the end of the Wikipedia article on Land Value Tax so I would start there.

But feel free to contact me further if there's anything specific. We are trying to build a non-party/cross-party grouping at the moment to campaign for it - based around a new body called the "Professionals for Land Reform Group" which has sponsored a couple of events - book launches and so on.

There is some stuuf at the IEA as well now - do a search for Fred Harrison or "Wheels of Fortune" at the iea.org.uk website. And Samuel Brittan at the Finincial Times also has a website he mentions LVT in fairly often."

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Jock Coats — Tue, 25 Jul 2006 12:24:29 +0000

Absolutely. In fact as I understand it when the Town and Country Planning Act was first passed it included some form of LVT as giving eeth" to the planning system but never implemented.

Of course the more you create artificial scarcity in such a way, which is perfectly reasonable, the more the land values there will rise under the current use - for the cachet if you like of exclusivity.

The planning framework around a site will influence its market value and marketability for different types of uses. A community would need to be careful, as it is with planning anyway in theory, to ensure that whatever they decided kept a vibrant local economy that people valued enough to want to be part of and pay to do so."

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Praguetory — Tue, 25 Jul 2006 11:56:42 +0000

Jock - I'm glad you got on board the various debates too. Can you suggest any wider reading for this big fan of land value tax as I would like to start a thread on this at some point in the non-too-distant? This topic sends (in my opinion unwarranted) shudders down the spines of many people. I've even been accused of being a Commie for supporting it. I think the main obstacle is that people can see the costs but not the benefits.

Another charge is unworkable and I agree that trying to keep tabs on land value for every site in the country is wasteful. I would suggest valuing land in by type and by county so as to keep things simple (e.g. agricultural, Green Belt, urban and urban prime) and have exceptions for sites of historical interest.

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Tabman — Mon, 24 Jul 2006 21:32:20 +0000

Jock - how do you get round the point that low building density might actually be desirable for non-economic reasons? Strict planning laws? Does this then affect the site value, due to the restrictions on development, thus reducing the tax charge?

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Mark Wadsworth — Mon, 24 Jul 2006 20:33:30 +0000

Dear Jock

Thank you for keeping the debate going today.

I am perfectly aware that LVT purists deride my proposal as a mere property value tax". I can see delightful academic economic arguments in favour of pure site value taxation. That is not the point here. Taxpayers should know WHAT they are paying tax on HOW it is calculated and ideally WHY the State has chosen this particular economic variable as the tax base.

Finally, thank you for mentioning some of our other key proposals on your blog."

Tories' Bow Group tax plans

Jock — Mon, 24 Jul 2006 17:30:41 +0000

There was a flutter of interest in the Guardian and Times today (interesting to see the difference in emphasis) about some ideas being put forward to the Tories' Tax Commission by the Bow Group. The report in PDF format is available alongside this discussion on ConservativeHome. Not surprisingly, since the press release promoted this aspect in particular, discussion has focussed on what the author describes as "land value tax". But the report as a whole has a whole load in it, from raising income tax thresholds to £11,000 and imposing a flat rate tax of 38% on all earnings above that, to restricting pensions contributions relief to 38% but on just £4,400 worth of pensions contributions a year, from what I can work out. Go read it - it's interesting, considering we Lib Dems are also in the process of making tax policy.

However, despite all the furore over the "land value tax" proposal, it should be noted that it is not, in fact, a Land Value Tax, and it is certainly not intended to be a step towards Henry George's "Single Tax". A hard-core Georgist like myself of course could simplify even Mr Wadworth's attempt to simplify the gargantuan tax system into just one point - replace all other taxes with taxes on land and resource use! You pay for what you take, not what you make.

But in particular the Bow Group proposals are for a straightforward flat property tax, as Tim Worstall points out. That is fundamentally different from a Land Value Tax, in which only the value of a site is taxed, and not the value of any buildings or any other improvements built on that site.

The arguments Mark Wadsworth makes for efficient use of land are far less evident in a straightforward property tax on the whole combined value of land and buildings. It does nothing to actually encourage efficient development - improving a property will result in a higher tax bill as the whole value is taxed. With a Land Value Tax you can make the most efficient permitted use of land without affecting the tax liability of the whole site. One house might pay £20,000 a year on the same site as ten flats each paying £1,000 a year for example.

But the document covers a whole lot more than this that would have been eminently worth reporting - the flat tax of 38%, the raising of thresholds to £11,000, changes to child benefit, pensions provision and many others. I welcome the fact that the Bow Group chose to promote the discussion on property taxes, I think, and if they want a proper LVT will help in whatever way I can, but it's not currently based on Henry George's/David Ricardo's ideas on economic rent and cannot properly be called a Land Value Tax.

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