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Ft Comment - Conservative Minister Call For Lvt

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http://www.ft.com/cms/s/0/29bf998e-e61c-11e0-960c-00144feabdc0.html#axzz1ZPiUU76g

The type that I said will work in the real world UK - exempting principle residence... though he didn't say LVT to be a replacement tax (not additional), which

is a prerequisite.

My apology to FT, but as this is a comment, and that is is rather important.. I have cut and paste it here:

Anyone who supports this government but shares its concerns about faltering growth and the effects this will have on the job prospects of young people and the finances of every British household faces a tricky conundrum. The overall level of indebtedness in the British economy – the borrowings of families and businesses as well as of government itself – is dizzyingly high. This means that nothing would be more ruinous to our chances of recovery than a rise in long-term interest rates. So we cannot afford to do anything that would undermine the bond markets’ confidence in our determination to stick to our deficit reduction plans. But, equally, with the engines of prosperity stalling in both the US and the eurozone, we cannot afford to sit on our hands either. What we need is to create a package of stimulative policies whose overall fiscal price tag is close to zero. Like most things in government, that is easier said than done.

The holy grail for every Treasury economist is a tax that costs little to collect and does not reduce people’s incentives to do the things that we want them to do. But, like every holy grail, this tax has proven elusive so our public finances rely on a range of taxes that penalise people for doing a whole range of things that, right now, we badly need them to do more of. In current circumstances, one of the most pernicious taxes is national insurance as it punishes employers for taking on new people and, because we have a fairly free market in labour, reduces people’s take-home pay just as surely, though a little more indirectly, than income tax. But if we want to cut this tax on jobs and wages, we need an alternative source of revenue that is reasonably easy to collect and which is less damaging in its effects on people’s incentives to invest, expand and hire new people.

Just as we tend to judge people by the company they keep, so politicians tend to judge policy ideas by those who advocate them. And that is a big reason why most people in politics run a mile when they hear the phrase Land Value Tax (a tax on the value of land excluding the value of any buildings or other improvements). An idea whose main cheerleaders are little known Marxists and members of Ukip should be labelled with one of those black and yellow symbols signifying hazardous waste. When I discovered that Land Value Tax is also a favourite topic in crackpot presidential candidate Ron Paul’s chat rooms and featured large in Andy Burnham’s campaign for the leadership of the Labour party, I did ask myself whether this really was a cause worth committing career suicide for.

But there is a version of the Land Value Tax that works – and it is in operation in New South Wales in Australia. Crucially, farmland and people’s main homes are wholly exempt so it does not strike at hard-pressed farmers or elderly people on low incomes living in houses that have become very valuable, which would be hit by the Liberal Democrats’ preferred mansion tax. Instead, the tax bears down on vacant land, holiday homes, investment properties and commercial properties. If we were to implement it in the UK, it would need to be deductible from business rates so that struggling retailers and other firms were not faced with a devastating double whammy – and it might in time replace business rates altogether. Thus targeted, the tax would deter speculative land banks and would encourage property owners to develop brownfield sites and put rundown areas of inner cities back to good use. Over the longer term, it would lower the price of development land and help us get off that quintessentially British rollercoaster of house price booms and busts.

Britain faces an economic environment as challenging as any in living memory. We are scaling a steeply overhanging cliff. If we weaken in our resolve to cut government borrowing we will lose our footing and fall into the ravine below. But, unless we persuade British businesses to invest and take on new people, we will never succeed in hauling ourselves up over the cliff edge and get to feel the sun on our faces once again. Using the proceeds of a targeted Land Value Tax to cut the national insurance tax on jobs might give the British economy the crucial leg-up it needs.

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http://www.ft.com/cms/s/0/29bf998e-e61c-11e0-960c-00144feabdc0.html#axzz1ZPiUU76g

The type that I said will work in the real world UK - exempting principle residence... though he didn't say LVT to be a replacement tax (not additional), which

is a prerequisite.

My apology to FT, but as this is a comment, and that is is rather important.. I have cut and paste it here:

Sounds very persuasive.

As an aside, I am not familiar with his work, but is Ron Paul really a crackpot? I thought he was regarded rather highly on this site. And before you ask, I know you are pasting from the FT and this is not necessarily your view, and that I don't want to derail the main topic. :)

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The type that I said will work in the real world UK - exempting principle residence... though he didn't say LVT to be a replacement tax (not additional), which

is a prerequisite.

What a muppet. Renters already get a rough deal if they have any savings (tax taken off the benefit of those, but it wouldn't be if they spent the money on a house). This would be helpful to people wanting to buy right now, but there is little fair about it. (And no, it won't just be paid by landlords).

If we want a LVT (reasonable idea IMHO) then it should apply to everyone. That would be i) fair, and ii) even more helpful to those wanting to buy. Even 0.5% of the market value or something similarly trivial might do it unless a new benefit was created to ensure that only people in work paid it.

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What a muppet. Renters already get a rough deal if they have any savings (tax taken off the benefit of those, but it wouldn't be if they spent the money on a house). This would be helpful to people wanting to buy right now, but there is little fair about it. (And no, it won't just be paid by landlords).

If we want a LVT (reasonable idea IMHO) then it should apply to everyone. That would be i) fair, and ii) even more helpful to those wanting to buy. Even 0.5% of the market value or something similarly trivial might do it unless a new benefit was created to ensure that only people in work paid it.

Just a reminder that we live in a democratic society where home owners are the group who are most likely to be voting... your way is certainly fairer, but politically impossible.

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Sounds very persuasive.

As an aside, I am not familiar with his work, but is Ron Paul really a crackpot? I thought he was regarded rather highly on this site. And before you ask, I know you are pasting from the FT and this is not necessarily your view, and that I don't want to derail the main topic. :)

No... I don't think Ron Paul is a crackpot, though the speed that he intends to get his stuffs done can be a problem. If he tries to undo the addictions created since WW2 in the space of a few years, the pain can be tremendous.

His policies here: http://en.wikipedia.org/wiki/Political_positions_of_Ron_Paul

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Well he has raised the issue. I dont see the problem of taxing large homes more just because it is your only home. Nor do I see a problem with taxing a single pensioner out of a mansion when that land could be put to better use housing a family.

Why doesnt he go for a progressive land value tax, with discounts for UK citizens, and a bigger discount for UK couples living together. That way, if you have a bit of residential land, you pay a very low rate of tax, but if you have a lot, and by inference that means you are hogging it and stopping other people from getting their share of land, you get hammered. Foreigners owning residential land here would also get hammered, but it isnt their country so they cant complain.

Such a policy needs a citizens database to work the discounts, but it seems to me a far better plan than what the MP is suggesting.

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Just a reminder that we live in a democratic society where home owners are the group who are most likely to be voting... your way is certainly fairer, but politically impossible.

As long as it replaces another tax and is progressive, then it shouldn't be a major problem.

As others have said, I've no idea why excluding your primary residence is considered essential - rather the opposite IMHO...

Question - as others have suggested, what is to stop a LL just dumping it on the tenants? My hope/theory for a working LVT is that, by doing so, they would increase the yield and therefore the value of the land, forcing them to into an upwards and ridiculous spiral. This should, presumably, force the LL to take the hit at some point?

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As long as it replaces another tax and is progressive, then it shouldn't be a major problem.

As others have said, I've no idea why excluding your primary residence is considered essential - rather the opposite IMHO...

Question - as others have suggested, what is to stop a LL just dumping it on the tenants? My hope/theory for a working LVT is that, by doing so, they would increase the yield and therefore the value of the land, forcing them to into an upwards and ridiculous spiral. This should, presumably, force the LL to take the hit at some point?

tomandlu,

with a progressive land value tax, it becomes harder and harder to pass on the cost to the tenants. People will move elsewhere if you charge too much money. A progressive land value tax also hammers those with large numbers of properties, making it in their economic interest to sell properties as well. I like that feature a lot.

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Question - as others have suggested, what is to stop a LL just dumping it on the tenants? My hope/theory for a working LVT is that, by doing so, they would increase the yield and therefore the value of the land, forcing them to into an upwards and ridiculous spiral. This should, presumably, force the LL to take the hit at some point?

Because if the tennants decide to move somewhere else, the landlord still has to pay the tax. Except he has no rental income to pay it.

The net result would be to push rents down, as landlords would need to compete for tennants to avoid leaving the place empty.

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He missed someone out from his list of 'crackpot' supporters of LVT, Winston Churchill.

The liberal party has been the home of LVT going back to the 1909 budget.

He should also have a look at the 'crackpot' members of ALTER.

Oh, and the IMF.

Oh, and Hong Kong.

Edited by jaspers

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He missed someone out from his list of 'crackpot' supporters of LVT, Winston Churchill.

The liberal party has been the home of LVT going back to the 1909 budget.

He should also have a look at the 'crackpot' members of ALTER.

Oh, and the IMF.

Oh, and Hong Kong.

Was Churchill crackers? He was known for having a drink or two.

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Was Churchill crackers? He was known for having a drink or two.

Champagne for breakfast, apparently

"Tory minister labels Churchill 'crackers' and denounces the economic success of Hong Kong as being a result of 'crackpot' economics."

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Business rates is a land tax.

This moron has proposed a tax but exempted everyone from paying it.

A LVT would work only if it were small in the region of 1% whereas business rates is in the region of 40%

Better would be for the gov to buy up & use its land. Give itself planning permission and sell that on. It could probably sell two million plots at 60k net profit before the next election. That's 120b

Edit. Sorry business rates is in the region of 3%

Edited by cells

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He missed someone out from his list of 'crackpot' supporters of LVT, Winston Churchill.

The liberal party has been the home of LVT going back to the 1909 budget.

He should also have a look at the 'crackpot' members of ALTER.

Oh, and the IMF.

Oh, and Hong Kong.

Plenty on this site, including myself, have been called communists for suggesting that LVT is a good thing.

Edited by shipbuilder

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I'm really surprised there isn't some kind of LVT.

But what's being suggested here is madness. That little old lady who's made £1m for doing nothing and lives in a massive house, still pays no tax, but someone working to pay the rent on a shoebox will get hit. Madness.

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Plenty on this site, including myself, have been called communists for suggesting that LVT is a good thing.

I suggest that you were labelled a communist for arguing that land cannot be owned outright by individuals just like any other physical object.

A form of LVT might prove to be a good thing, after all we have a number of taxes that vary with value already. However a positive outcome depends entirely on competent implementation. Naively assuming that the state will not mess the implementation bit up will also get you labelled as a communist. :)

Edited by the shaping machine

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I suggest that you were labelled a communist for arguing that land cannot be owned outright by individuals just like any other physical object.

A form of LVT might prove to be a good thing, after all we have a number of taxes that vary with value already. However a positive outcome depends entirely on competent implementation. Naively assuming that the state will not mess the implementation bit up will also get you labelled as a communist. :)

Actually I didn't even get to that bit. Bizarrely, simply quoting Locke's labour theory of property resulted in me being called a communist. But you're right, land can't be owned, because it isn't a physical object that you created, it's a location that you didn't. Not communism, just logic. :)

LVT isn't a panacea, but, with a citizen's income, is much better than we have at present. Actually, due to the state having already messed up the idea of property ownership, resulting in the false divide between capital and labour that is the root of most, if not all, economic woes, my favoured outcome is no state, unlike yours, if I recall? ;)

Edited by shipbuilder

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  • 336 Brexit, House prices and Summer 2020

    1. 1. Including the effects Brexit, where do you think average UK house prices will be relative to now in June 2020?


      • down 5% +
      • down 2.5%
      • Even
      • up 2.5%
      • up 5%



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