Land Value Tax and the Education debate

Jock — Thu, 16 Mar 2006 01:41:05 +0000

The education bill debates present a very good opportunity to show how landowners are the ones to gain from public infrastructure investment for doing nothing and that taxing land values would be a good way of recouping public infrastructure investment more fairly through a market driven tax system...

Picture the scene. You've just moved into your quiet surburban semi ready for your retirement. And the uncaring council comes along and decides it's going to build a new school right across the road. You get out your placards and march on the Town Hall to fight the planning application. You find any reason you can why this "predominantly elderly population area" does not need such a development, that it will "blight your lives" and "adversely affect property value in the vicinity" and so on. You might even fight on beyond the "obviously biased" local councillors, to the High Court.

You are defeated. You settle down to a retirement of valium and earplugs, you might even want to electrify the front drive just in case any kids get too close. You can only just bear the construction traffic. And the following year, this brand spanking new school takes its first pupils, with everyone predicting great things from it. And someone pops up on your doorstep one day having dodged the teen-proofing on the driveway and offers you and extra £42,000 for your home.

You are a bit taken aback. After all, you had been confidently informed by your friendly local amateur surveyor that the new school would depress property values. Surely you just adding triple glazing to keep the intolerable noise of happy children out wasn't worth £42,000? Nothing you've done has added that sort of value. So you ask..."why pay £42,000 more than for that house down the road there?"

"Because you're in the catchment area of this brand spanking new school everyone's got high hopes for and I want my child to have the best education i can afford. So I'm prepared to pay you, who hold a monopoly on the only property for sale in the catchment area, whatever price you name within reason."

You accept, realising, somewhat smugly, that your only contribution to this little windfall was the prominence your anti-school campaign brought to the new school.

Tax Payer -> Government investment -> Landowner

And it happens with most things. That new railway line making your life hell? Just pity poor Don Riley, property developer around the Jubilee Line extension stations, who saw his portfolio value rise by over £3bn when the line opened (and now an advocate himself, by the way, for LVT).

You just need to read any estate agent's property particulars to see the sort of factors that affect land value, none of which the current owner has any great part in - "walking distance from local shopping", "20 minutes Northern Line to City", "easy access to motorway", "good local educational and medical services" and so on.

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Land Value Tax and the Education debate