TAP tells MP’s inquiry into land value tax; land cannot be sent overseas so taxing it in the UK might even recover a little of the trillions shipped out to tax havens by the City of London. 

3 May 2018

Written evidence submitted to the Housing, Communities, and Local Government Committee of MPs 

1)     We are sending the committee hard copies of DEBT DEATH & DEADWEIGHT which was also the last of our four submissions to the Mayor’s consultation on the London Plan. The Editor is Fred Harrison who the director of the Land Research Trust and also a director of Taxpayers Against Poverty. We ask you to take it into account in your enquiry.

2)     There are three things a London Plan cannot do. If they are not identified and published then the Mayor will be blamed over the years until 2041 for not delivering a sustainable plan which improves the health and wellbeing of all Londoners, when the blame ought to be pinned on national policy or lack of it. 

  • He cannot ban the purchase of London land by national and international speculators. Without such a ban the mistakes of the 1979 UK government will carry on raising housing prices and rents of out of the reach of many Londoners, creating debt, hunger, homelessness and ill health. The 1979 government deregulated lending, abolished rent controls and allowed the free flow of cash in and out of the UK.  Money has poured into a UK housing market in short supply. That was let rip by the 1997 UK government and has not been curbed since 2010. Billions have been poured into land which would have been better spent creating homes and jobs.
  • He cannot require the Treasury or the OBR to publish the deadweight loses in the UK from the present lack of a sustainable national housing policy. But he ought to do it for London so the public can understand how we are cheated of the wealth buried in London land by the present lack of a sustainable national housing policy. The APPG inquiry into land value capture ought to insist on it for the UK
  • He cannot improve the health of the poorest Londoners. Their incomes are subjected to the punitive national regime of the present government so the impact of low incomes on their mental and physical health, life expectancy, infant deaths, low birthweight, hunger, homelessness and rough sleeping is out of his control. Please see Paul Nicolson and   TAP health equality campaign of 9 Blogs about low income, debt, hunger, mental and physical health by Dr Angela Donkin, Professors Kate Pickett and Richard Wilkinson, Carl Walker and Madeleine Power.

The case for land value capture/land value tax/annual ground rent is as follows.

6)   Fred Harrison, of the Land Research Trust has done valuable work on dead weight losses which is available in DEBT DEATH & DEADWEIGHT. We believe dead weight losses are something of which the public ought to be aware and the Treasury ought to publish. In addition to the failure of the Treasury to measure or publish the dead weight losses of the present system of taxation we are emphasising, by all means available, the following points support land value tax.

a)   Land Value Tax is a secure progressive source of revenue.

b)   A small percentage tax on the value of all land could gradually replace inefficient and regressive taxes like council tax, business rates and stamp duty

c)    It is paid by the landlord not the tenant. ​It relieves low income tenants of the council tax ​ and its draconian enforcement. 

d)   Exemptions can be arranged for high asset low income households.

e)   It has been found to bring empty homes and unused land into use in Harrisburg Pennsylvania and other US cities. It works in Denmark, Australia and Hong Kong,

f)     It would encourage the four big UK builders to release their bank of 600,000 plots of unused land.  

g)   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

h)   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 the landless tenants and themselves of the need for high income taxes. 

7)   An LVT 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" 

February 2018

Annex

Hong Kong has shown the way how the people of the UK and our great cities can be better governed.

http://www.scmp.com/news/hong-kong/politics/article/2135011/money-money-money-hong-kongs-finance-chief-paul-chan Wednesday 28th February 2018

Hong Kong provides the best model in the world for clues on how to redesign the fiscal system in ways that would both empower government to fulfil its obligations, and to liberate people from the constraints that induce poverty and homelessness. The key feature of HK’s financial system was the innovation by the original British administration in the 1840s. Under instruction from the Foreign Office, the rents of the colony were to be reserved and invested in the infrastructure and social services. The Hong Kong administration could not sell land that was leased from China so they rented it to all users. This policy of stewardship of the land has been preserved since HK reverted to China.

(1)    The Hong Kong budget. The link provides the evidence that a city jurisdiction with no natural endowments apart from a deep-water harbour can both

a.   produce HK$138bn (£12bn) surplus, reduce taxes and

b.   fund some of the best infrastructure in the world, thanks to the fact that it continues to base its revenue system on location rents

(2)    Their mass transit system This is is acclaimed as the best in the world. It was funded out of location rents collected from commercial enterprises that located themselves within      the catchment areas of the stations.

(3)    Their Social services. The astonishing fiscal and physical accomplishments of the HK Administration need to be assessed in the historical context, as highlighted by the demographic record.

a.   Beginning soon after 1945, HK became subject to an unremitting flow of migrants fleeing the Communist regime. They climbed the “bamboo curtain” and placed enormous pressure on the British authorities who were obliged to provide housing and social services. As the population rose relentlessly to the present level of 7.4m people, the authorities managed to keep pace because the enterprises of the migrants raised location values (rents) which fed through to the public purse to fund the construction of social housing.

b.    London’s record was one of attrition. This is shown in the table, which reveals a mass exodus from London l from 1950s to 1990s:

 

1951

8,164,416

+0.22%

1961

7,781,342

−0.48%

1971

7,449,184

−0.44%

1981

6,608,513

−1.19%

1991

6,887,280

+0.41%

2001

7,172,036

+0.41%

By rights, the condition of the London population ought to have improved exponentially. Furthermore London, unlike Hong Kong, does not suffer from topographical disadvantages (much of the HK territory is composed of inhospitable hills). And yet, despite London’s declining population, both social services and the physical infrastructure were not able to keep pace with human needs from the 1950s to the 1990s, and have not since.

When there is not even enough housing and social services to meet the needs of UK citizens it is not surprising that migrants, who also need housing and social services, are sometimes regarded with suspicion.   

We document the human costs in Debt, Death & Deadweight. https://landresearchtrust.org/ The financial outcomes are revealed by the huge budget deficits and London’s contribution to the accumulation of an enormous UK sovereign debt.

Hong Kong has shown the way how the people of the UK and our great cities can be better governed.

A recent survey of Hong Kong’s fiscal history and current outcomes is provide in Andrew Purves (2015), No Debt, High Growth, Low Tax (London: Shepheard-Walwyn, ISBN: 9780856835070). But we recommend that, in redesigning London’s fiscal and social systems, Parliament and the Mayor ought to commission their own reports on how Hong Kong flourished despite the enormous topographical and demographic challenges, and publish the deadweight losses of the present UK system, so that Londoners can benefit from their lessons.

Today, the historical deficit will be compounded by the challenges that will emerge in London post-Brexit. These include the implications of a growing London population (now numbering 8.6m). Only by adopting the location-based funding system – known in the literature as “land value taxation” or “land value capture” – can the UK and British capital hope to match some of the world-class fiscal achievements on display in Hong Kong.

 

TAXPAYERS AGAINST POVERTY - No citizen without an affordable home and an adequate income in work or unemployment. 

 

TAP DEPENDS ON SUPPORTERS - PLEASE CONSIDER A

MONTHLY CONTRIBUTION - THANKS

from the Rev Paul Nicolson

 


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