Land Value Tax will abolish council tax and business rates. TAP’s priority is low income renters & mortgagees, small businesses & self employed.

20 July 2018

An All-Party Parliamentary Group (APPG) and the Housing, Communities and Local Government (HCLG) Select Committee are both undertaking an inquiry into land-value capture. 


They will report in the autumn. We have submitted written evidence to them both and have given oral evidence to the APPG. Both have been sent a hard copy of DEBT DEATH & DEADWEIGHT, edited by Fred Harrison, who is the director of the Land Research Trust and also a director of Taxpayers Against Poverty (TAP).

Low-income tenants & mortgagees, small businesses & the low-income self-employed – the priority of Taxpayers Against Poverty

From the point of view of the very many small businesses and many ​low-income ​self-employed, who rent the space they work in, business rates and land-value tax are not the same. Business rates use up their profit, diminish the income available to pay staff and reduce the amount they have to invest in the business. That creates the deadweight losses. Land-value tax would abolish business rates and be paid by the landlord out of the unearned increase in the value of the land on which the business is located. Small businesses are campaigning for land-value tax and the abolition of business rates. 
 
It is the same with council tax. The income of tenants and low income mortgagees, and so their spending power in the local economy, is diminished by council tax and by the extraction from their income of the high costs of the draconian enforcement of arrears. That creates deadweight losses. Land-value tax would abolish council tax. Land-value tax would replace council tax and be paid by the landlord out of the unearned increase in the value of the land on which the tenants live.  
 
As an example, there are 15,400 council tenants and leaseholders of the London Borough of Haringey. Assuming they all pay the lowest level of £1050.53pa council tax out of their income, there is £16,178,162pa less spent in the local economy. The same arguments apply to income tax, which could be reduced for the lower levels of incomes.  
 
For low- to middle-income homeowners, the land-value tax, if properly implemented, ought not to cost more than the present council tax. Land-value tax would replace council tax with a truly progressive capture of the unearned increase in the value of land. Landlords and homeowners would remain asset-wealthy and land-value tax puts nothing in the way of them becoming ever more asset-wealthy. 
 
Council Tax: London Borough of Haringey
Band A      Greater London Authority     Adult Social Care Precept      Haringey        Full Council Tax Charge  . 
£40,000                   £196.15                                 £64.83                              £789.55                     £1,050.53 
or less. 


TAP has invited Professor Ted Gwartney to visit the UK in the autumn,

He is the only man in the world to have valued the land of an entire state: British Columbia. He, and a colloquium at the Royal Institute of Chartered Sureveyors, prove land-value tax is entirely feasible in the UK.  

Prof Gwartney has served as Professor of Real-Estate Appraisal at Baruch College, New York. Among his public offices, he was Assessment Commissioner in British Columbia and Assessor in Southfield (Michigan) and Hartford, Bridgeport and Greenwich (Connecticut). In the private sector, he worked as Commercial Appraiser at Bank of America and City National Bank in Los Angeles.
 
His contribution to DEBT DEATH & DEADWEIGHT, a copy of which I sent to each member of the APPG and the HCLG Committee, is here: "The dog that must bark: the design of a problem-solving revenue system".
 
He arrives in London on Monday 29th October and is available from Tuesday 30th October to Friday 9th November inclusive. He returns to Los Angeles on Saturday 10th November. We are hoping the HCLG Committee will meet him during that time. He is in the Resolution Foundation's forward planning, but we don't yet have a date. 

TAP is paying for his flight and London hotel because we want MPs policy makers to understand that land value tax is not only fair but entirely feasible in the UK;
 
His confirmed programme thus far:
 
Thursday 1st November: "The moral case for adequate minimum incomes and truly affordable housing" – TAP Seminar, chaired by Debbie Abrahams MP, 6-9pm, Attlee Suite, Portcullis House 
 
Friday 2nd November: Meeting of the Coalition for Economic Justice, 7-9 pm
 
Monday 5th November: Meeting of the APPG on Land-Value Capture, chaired by Vince Cable MP, 2-4 pm,
 
Tuesday 6th November: Public meeting of not-for-profit organisation Promoting Economic Pluralism – Ten Years After the Crash, 7-9 pm

We are hoping the HCLG Committee will meet him. 
He is in the Resolution Foundation's forward planning but we don't yet have a date. 
 
The following paragraphs about our priorities were drafted because ​some MPs do not seem to understand deadweight losses and think they already have land taxes. Below that is our summary of the case for land-value tax in the UK. 
 
Best wishes, 
 
Paul
   

DEADWEIGHT LOSSES AND A SUMMARY OF THE BENEFITS OF LAND-VALUE TAX

In response to the failure of the Treasury to measure or publish the deadweight losses of the present system of taxation, we are emphasising, by all means available, the following points supporting land-value tax. 
  1. Land-value tax is a secure, progressive source of revenue.
  2. A small percentage tax on the value of all land could gradually replace inefficient and regressive taxes such as council tax, business rates and stamp duty.
  3. ​It is paid by the landlord not the tenant. ​It relieves low-income tenants of the council tax ​and its draconian enforcement. 
  4. Exemptions can be arranged for high-asset low-income households.
  5. It has been found to have brought empty homes and unused land into use in Harrisburg, Pennsylvania and other US cities. It works in Denmark, Australia and Hong Kong.
  6. It would encourage the ​ release of 475,000  plots of unused land, ​ about which the House of Lords' Economic Affairs Committee has commented​. 
  7. Land cannot be transferred tax-free via the internet to an overseas bank, so taxing it in the UK might even recover a little of the trillions shipped out to tax havens by the City of London. 
  8. ​It enables land owners to contribute to the common good from the unearned increase in the value of their land due to the market, so relieving both their landless tenants and themselves of the need for high-income taxes. 
  9. A land-value tax colloquium at the Royal Institute of Chartered Surveyors in September 2015 concluded that, "... the technical issues often quoted as providing reasons not to switch to assessing land rather than property, namely valuation methodology and data, are capable of solution within the UK context."
 

 

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