Lib Dems To Suggest Introducing "a Land Tax Levy"

[Oliver Sutton]

The average farm is worth just under £1m in land value terms. The average farmer earns around than £20,000. A tax of 1% has been suggested, that's half the farmer's incomd gone at a stroke.

Isn't LTV based on rental value?

[Traktion]

The average farm is worth just under £1m in land value terms. The average farmer earns around than £20,000. A tax of 1% has been suggested, that's half the farmer's incomd gone at a stroke.

If the land is worth so much, yet yields so little, why not sell it? Logically, either the land should be worth less or the produce should be worth more. Either would be better for farmers (and consumers) in the long run, as the former would have fewer overheads and the latter would yield more profit.

I suspect farming subsidies are distorting the value of farm land.

P.S. I wonder... would farming subsidies be supported by those with lots of land, specifically to keep the value of land (as a whole) high? This would certainly play into the hands of the landed gentry...

EDIT: P.S. That 1% figure was suggested by one member here, but that doesn't mean it's the best LVT. A sliding scale would seem far more appropriate to me, based on the potential rental value of the land.

Edited September 13, 2010 by Traktion

[PopGun]

I know LVT is popular on HPC, but its fans seem to be on the vague side when it comes to implementation. Just saying "taxing the value of land" (wave hands around) "=obviously a good thing" isn't that convincing. How would it work in practise? Who benefits, who loses?

Some possible areas to think about :-

1) Who values the land, on what basis, and how often ?

2) How much will the system cost to run ?

3) Do you / can you allow appeals (I have a uglier garden than my neighbour so I should pay less ) ?

4) Will this make nimbyism much worse (development => higher land values) ?

5) Given that land values are highly variable, how do you cope with a matching variability in tax revenue ?

6) How do you deal with disparities between different businesses in their requirement for land (e.g. farming, golf, and airports versus banks and stock brokers) ?

LVT strikes me as an idea designed to appeal to Guardian readers i.e. simple, trendy, and sounds vaguely "progressive". As ever It doesn't seem to stand up well to deeper examination.

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I agree with much of this. However I also believe LVT it's a step in the right direction and an Idea which may give birth to something more workable, fair with less unintended consequences.

But yes, in it's current primative status, it's completely unworkable.

[Hector]

Hmm, apart from the fact that you've just made those numbers up (or do you have references to back them up?):

- £1 million is the value if it had planning permission for residential development. It doesn't, so it's not worth £1 million.

- What's to say you couldn't have different % rates for farmland / commercial / residential land?

Please think about it a bit more before you dismiss LVT.

I have not made them up.

Average farm size in England is 50 hectares, or 124 acres: My link

Average farm land value in England, without planning permission for residential development, is £5,800 My link

This makes average farm worth £719,200 in land value alone. This ignores residential and other farm buildings, under existing use this land is worth a lot more per acre - say £800,000 in total. OK maybe £1m was a bit too high.

Average farmer's income is £20,600: My link

1% on £800,000 = £8,000 - 40% of the farmer's pre-tax income.

Sure you could have a lower %age rate for farmland. You don't think the "landed gentry" might see a loophole here?

[Tired of Waiting]

You're displaying your ignorance. Pastures are an example of underutilised land, are they?

Why? What do you think about pastures? Please enlighten me.

[PopGun]

If people decide that they don't want Hyde Park anymore why should they be prevented from paving over it?

Because people have a nasty habbit of changing their minds, especially with hindsight.

[Hector]

Why? What do you think about pastures? Please enlighten me.

Have you ever eaten beef or lamb?

[Traktion]

I know LVT is popular on HPC, but its fans seem to be on the vague side when it comes to implementation. Just saying "taxing the value of land" (wave hands around) "=obviously a good thing" isn't that convincing. How would it work in practise? Who benefits, who loses?

Some possible areas to think about :-

1) Who values the land, on what basis, and how often ?

For many areas, people sell houses in a similar area. Minus the rebuild cost, you have the cost of the land. The cost of the land within a radius would be similar.

2) How much will the system cost to run ?

Hard to say, but we already have an army of estate agents and insurance companies giving us constant updates on the values or total costs (rebuild + land) and rebuild costs, respectively. The former minus the latter, gives us the land value.

3) Do you / can you allow appeals (I have a uglier garden than my neighbour so I should pay less ) ?

Do we have appeals for council tax, rent or building insurance valuations? This would give us a guideline.

Also, modifications of the stuff on top of the land make no difference to the land valuation. You just want the value of the dirt under it all, which takes its value from its location, not the fluff on top.

4) Will this make nimbyism much worse (development => higher land values) ?

I'm not sure if it will change. People will pay more tax if their land value goes up. Does this mean people will want their land to go up in price or fall? What would encourage either? I'm not sure.

5) Given that land values are highly variable, how do you cope with a matching variability in tax revenue ?

You could start with a target taxation figure, then adjust down the line as a percentage of this. Some areas may then fluctuate in value compared to others, but the overall tax take would remain the same.

6) How do you deal with disparities between different businesses in their requirement for land (e.g. farming, golf, and airports versus banks and stock brokers) ?

Usually, you wouldn't, unless you're trying to subsidise certain sectors. What to subsidise becomes a political issue, but generally, you would want businesses to seek a compromise between land tax and convenience to do business (ie. close to major roads, rail, ports etc) as the free market dictates.

LVT strikes me as an idea designed to appeal to Guardian readers i.e. simple, trendy, and sounds vaguely "progressive". As ever It doesn't seem to stand up well to deeper examination.

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It seems to stand up well IMO, after researching the options.

[Tired of Waiting]

But it would be worth far more per acre if you could build a house on it....so the landowners would get even richer if they sold, unless you want to buy it cheap for yourself and make yourself some free money if you were granted PP.

There are lots of woodland for sale at reasonable prices if it is land you want.

The ideal would be a strong liberalisation of planning permits, multiplying the availability of building plots, driving their prices down massively, allowing people/families to buy cheap plots and build HOMES in them.

The fact that in Britain planning permits increase the value of land so absurdly is a sign of this perverted, stupid, criminal system, It is an artificial scarcity, created politically by NIMBY b@stards.

I want a need house home. Not a profit.

[Hector]

Have you ever eaten beef or lamb?

Or indeed butter, or cheese, or cream, or drunk milk?

[Traktion]

1% on £800,000 = £8,000 - 40% of the farmer's pre-tax income.

Sure you could have a lower %age rate for farmland. You don't think the "landed gentry" might see a loophole here?

Why do you keep suggesting it will be 1%? It could be half of that in the majority of cases, for instance, which would be about the same as the basic rate of income tax.

[live in hope]

What a moronic (and coward, "anonimous") Tory Minister: "Don’t they realise the people who generate wealth in this country are the rich? It’s not the people on ­benefits"

Nor the rentier class you stupid b@stard!

Working people - both rich and poor - generate wealth.

And iddle people - both rich and poor - do not. This includes people on benefits and also the iddle rich! They are both social parasites.

And the idle rich is the worst, as their "parasitising per capita" is much, much higher!

Anyway, I still doubt a land tax would be politically viable though. But it is very good that, at least, it is being talked about. And the LibDem strategy of asking for a research on it is excellent, as the findings will obviously be positive, and impossible to counter.

A preview: "Tory MP John Redwood condemned the idea of a land-value tax as a 'dagger at the heart of property values' " There. Good. Case closed. (Another moron and/or b@stard, didn't even realised yet that the case for high HP has already been lost.)

Not so, how can the idle rich be worse? They still probably pay their taxes to support the idle poor. Just that they dont want to bother to work to support even more idle poor. You need to get your priorities right. Read the thread on here about bothering to work harder.

[Tired of Waiting]

Have you ever eaten beef or lamb?

We were talking about comparative productivity. You need to do better than that to be taken seriously.

[Hector]

We were talking about comparative productivity. You need to do better than that to be taken seriously.

You really know nothing about farming, do you? So all the beef, lamb and dairy farmers in Britain are willfully choosing to put their land to unproductive use, because they could be more productive growing tomatoes instead?

[Tired of Waiting]

If the land is worth so much, yet yields so little, why not sell it? Logically, either the land should be worth less or the produce should be worth more. Either would be better for farmers (and consumers) in the long run, as the former would have fewer overheads and the latter would yield more profit.

I suspect farming subsidies are distorting the value of farm land.

You are absolutely right. There is some mistake, or some "misinformation", or a big distortion there, as assets' yields determine its values. It makes no economic sense that an asset that generates only £20k/year would have a market value of £1m.

Perhaps he is talking tenant farmer profits?

P.S. I wonder... would farming subsidies be supported by those with lots of land, specifically to keep the value of land (as a whole) high? This would certainly play into the hands of the landed gentry...

EDIT: P.S. That 1% figure was suggested by one member here, but that doesn't mean it's the best LVT. A sliding scale would seem far more appropriate to me, based on the potential rental value of the land.

Don't crumble so fast on that 1% rate. Cheap flats pay that rate on Council Taxes. There is no fair or logical reason for a property tax to be regressive.

[PopGun]

You're displaying your ignorance. Pastures are an example of underutilised land, are they?

[efdemin]

I have not made them up.

Average farm size in England is 50 hectares, or 124 acres: My link

Average farm land value in England, without planning permission for residential development, is £5,800 My link

This makes average farm worth £719,200 in land value alone. This ignores residential and other farm buildings, under existing use this land is worth a lot more per acre - say £800,000 in total. OK maybe £1m was a bit too high.

Average farmer's income is £20,600: My link

1% on £800,000 = £8,000 - 40% of the farmer's pre-tax income.

Sure you could have a lower %age rate for farmland. You don't think the "landed gentry" might see a loophole here?

Ok, sorry I snapped a bit. I thought you were just throwing up a straw man argument against LVT by using farming as an example.

I don't know what taxes farmers pay for their land at the moment? I guess they pay council tax for their homes but anything else? It does seem unfair to suddenly say agricultural land is now taxable. Perhaps agricultural land should be exempt from LVT, as it is at the moment, effectively, but the farmer should pay the residential rates for their homes?

Presumably the area of the home is already recorded by the local council or land registry in order to keep track of un-planned developments?

I don't think any of this is a show-stopper for LVT.

[Hector]

It makes no economic sense that an asset that generates only £20k/year would have a market value of £1m.

It makes no economic sense if you assume that all farmers are "rational" profit maximising actors. They are not, for the reasons given above.

[Tired of Waiting]

You really know nothing about farming, do you? So all the beef, lamb and dairy farmers in Britain are willfully choosing to put their land to unproductive use, because they could be more productive growing tomatoes instead?

Now I am afraid to tell you that it is you who is demonstrating your ignorance. You don't know many landed gentry, do you?

My turn to enlighten you: Surprisingly, they act logically, given the current tax system. If you have enough land, you have a very easy option to get a lot of money - just rent it for pastures. Easy. Simple. Why bother with more work, if this income is more than enough for a very comfortable - and idle - lifestyle?

Tax free assets can be underutilised, hoarded. This is not a very difficult concept to grasp - if you didn't have some opposing vested interest that is.

Why land should be tax-free??

[Hector]

Ok, sorry I snapped a bit. I thought you were just throwing up a straw man argument against LVT by using farming as an example.

I don't know what taxes farmers pay for their land at the moment? I guess they pay council tax for their homes but anything else? It does seem unfair to suddenly say agricultural land is now taxable. Perhaps agricultural land should be exempt from LVT, as it is at the moment, effectively, but the farmer should pay the residential rates for their homes?

Presumably the area of the home is already recorded by the local council or land registry in order to keep track of un-planned developments?

I don't think any of this is a show-stopper for LVT.

It isn't a show stopper, no. But it creates a giant loophole that will be extensively exploited by many of its supposed targets.

[Traktion]

Don't crumble so fast on that 1% rate. Cheap flats pay that rate on Council Taxes. There is no fair or logical reason for a property tax to be regressive.

I doubt the rental value of said farms is 1% from looking at the data provided by our resident farmer.

The point isn't to penalise any industry, it's just to tax relative to the rental value. A flat rate doesn't do this - it will help some and hinder others. This isn't what most people view as the intention of the LVT; it is supposed to be a neutral tax to prevent people profiting from natural land monopolies.

[efdemin]

It isn't a show stopper, no. But it creates a giant loophole that will be extensively exploited by many of its supposed targets.

I take it you mean the handful of people who own the majority of UK land? I don't really know what to do about that. But here's my take:

On one extreme you have the big land owners, on the other people who depend on welfare to live. Using either as an argument for or against LVT (or any other land-based tax) is disingenuous at best. They will always have loopholes or special arrangements which take them out of the tax.

If you want to shake up the landed gentry, fine. But don't use LVT as a vehicle to push your agenda.

Instead, we should be discussing LVT on the merits of how it would affect the majority of the UK population. I find council tax is unfair, given that the top rate is only £3000 or so and the bottom is around £900, yet the houses they are attached to can differ in price by millions.

[Alan B'Stard MP]

If you can show me evidence of all the numerous ownership-trades right back to the time of Abraham when the original land was crafted by humans hands: I can show you the legitimate owner.

Edited September 13, 2010 by Alan B'Stard MP

[the shaping machine]

For many areas, people sell houses in a similar area. Minus the rebuild cost, you have the cost of the land. The cost of the land within a radius would be similar.

Also, modifications of the stuff on top of the land make no difference to the land valuation. You just want the value of the dirt under it all, which takes its value from its location, not the fluff on top.

But the cost of the land would be difficult to separate from its current use. House prices are at least tested irregularly, but most here would agree that estimates of values can vary widely from the reality. The land itself is one step removed from this. For example, you quote rebuild cost; is that of an identical property, one of the same square footage, or any property allowed by planning rules? What if a drop-in centre for ex-offenders opens next door, do you re-value all nearby properties?

...unless you're trying to subsidise certain sectors. What to subsidise becomes a political issue, but generally, you would want businesses to seek a compromise between land tax and convenience to do business (ie. close to major roads, rail, ports etc) as the free market dictates.

So now we have a large state bureaucracy deciding which businesses it likes and dislikes and distorting the tax system to match short-term political fashions.

It's all getting a bit messy isn't it?

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Edited September 13, 2010 by the shaping machine

[the shaping machine]

If you can show me evidence of all the numerous ownership-trades right back to the time of Abraham when the original land was crafted by humans hands: I can show you the legitimate owner.

If that is your concern why not just argue for a Mugabe style land grab. No need to create a monster of a tax system that may or may not do your bidding (and hurting others in the process).

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