Sir,

As a former and in a few days hopefully future local councillor my heart leapt as I read Danny Kruger today (Telegraph | Opinion | If councils had real power, people wouldn't dream of voting BNP) accurately diagnose the problem with local government and accountability. But I'm afraid it sank again when he listed his tax options. He recognized Local Income Tax as a tax on an economic good - work, but his preferred option, Local Sales Tax is similarly a tax on an economic good - trade. Being fair, he does propose LST should replace an existing bad tax on trade - VAT, but it doesn't improve it just because it is local. But he neglected a most obvious possibility, a tax not on homes or buildings, but on land values.

Land Value Tax (usually known as Site Value Rating when in a local context) taxes an economic bad - the underuse of our most precious resource, land, within the planning framework. In 1909 Churchill spoke about those who hold land at below its best permitted use knowing that one day the social and commercial interactions around it would increase its value with no effort at all on their part.

SVR recaptures and recycles the value of investment, both public and private sector, that goes into making a site valuable. It would help stabilize land values and take the speculative hype out of the market that excludes so many from basics such as home ownership. The Institute of Economic Affairs has recently promoted LVT for transport infrastructure funding in "Wheels of Fortune" by Fred Harrison, and Conservative MP David Curry is a supporter. It taxes a monopoly - every site is a monopoly of different factors affecting its value - from being in a good school's catchment area to being next to the new Jubilee Line extension station or Olympic investment.

If Mr Cameron wants verdant sustainability, LVT/SVR is the obvious choice, and indeed is a must in an era of "eco-taxation" to provide people with real choices and control their tax liabilities. Whether local or national, it would automatically create a movement of economic activity from overheated areas, with high land values and therefore high taxes, to underperforming areas of low value and tax, allowing significant cuts in government redistribution mechanisms as the "market" in tax takes over those functions.

Sincerely,

Jock Coats