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Lib-Dems Developing A Land Value Tax

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The Lib-Dems are developing a land value tax. Would a Lab-Lib coalition adopt it?

http://www.politicshome.com/uk/story/19813/

Telegraph's headline hysterical spin:

" Vince Cable backs land tax for home owners

Homeowners could be hit with an annual tax on the value of the land on which their houses are built, under radical plans being promoted by the Liberal Democrats."

http://www.telegraph.co.uk/news/politics/liberaldemocrats/10309809/Vince-Cable-backs-land-tax-for-home-owners.html

Others: https://www.google.co.uk/search?q=lib-dems+land+tax&ie=UTF-8

Though inside the Telegraph's article there are a few interesting quotes from Cable:

Mr Cable’s move to back a land tax is likely to prove the most controversial. Supporters of a land tax, who outlined their case at a fringe event at the conference, say that an annual tax on the rental value of land would be fairer than levying charges on the sale of homes or on the purchase of goods through VAT.

Land, they argue, “is a basic community asset” and individuals should be taxed when they claim “exclusive use” of particular plots.

The most important factor in the value of land is likely to be its location, with proximity to a city centre and local amenities all expected to increase the taxable value of a site.

Mr Cable admitted that farmers and others with larger plots of land in the countryside could face some of the highest bills under the scheme. Exemptions may need to be available to for agriculture, he told a fringe meeting.

He argued that existing charges such as council tax and stamp duty may not be “sustainable” politically because they are inefficient and unpopular with voters. Politicians are so “terrified” of council tax that they have frozen it and refuse to contemplate a revaluation of property values, Mr Cable said, so the option of a land value tax should be fully explored.

“The next step is for government to have a look at the practicalities,” he said.

“I don’t think detailed work has been done on it but it is one of the options that is floating around at quite a high level.”

The minister predicted that the need to reform business rates would be an ideal opportunity for supporters of a land value tax to promote their case to the government.

“This whole issue is very much coming to the fore,” Mr Cable said. There is a “growing sense” that existing tax revenues are not “nailed down” because of problems with tax avoidance and revenue from a land value tax may be more reliable, he suggested.

At the same time, Mr Cable said he was concerned about the “inequities” in the current tax regime, “particularly the accumulation of wealth in property and land”.

The reform, backers claim, could deliver a boost to the construction industry by removing the incentive for property firms to “bank” large swathes of land while the value rises instead of building on it.

But critics said the scheme was costly to set up and a tax which would not reflect the income of the people with the property. As well as farmers, older people on low income in high-value homes would be badly hit, a criticism which has also been levelled at Mr Cable’s “mansion tax” project, which has the backing of the Lib Dems.

Edited by Tired of Waiting

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Very little info about it, but we already have a strong reaction against it: http://www.express.co.uk/news/uk/429786/Anger-at-Liberal-Democrats-for-land-tax-on-middle-class

Strangely, in the last couple of hours only a German website was added to the Google search (limited to news, last 24h) http://www.ad-hoc-news.de/homeowners-could-be-hit-with-an-annual-tax-on-the-value-of--/de/News/31878532

So it's sponsored by Vince Cable. And I heard Nick Clegg mentioning "land tax" this morning. If both are supporting it, then it should have a good chance of becoming Lib-Dem policy and be included in their manifesto. Next question is if a Lab-Lib coalition would implement it.

.

Edited by Tired of Waiting

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Very little info about it, but we already have a strong reaction against it: http://www.express.co.uk/news/uk/429786/Anger-at-Liberal-Democrats-for-land-tax-on-middle-class

Strangely, in the last couple of hours only a German website was added to the Google search I had done above (news, last 24h) http://www.ad-hoc-news.de/homeowners-could-be-hit-with-an-annual-tax-on-the-value-of--/de/News/31878532

So it's sponsored by Vince Cable. And I heard Nick Clegg mentioning "land tax" this morning. If both are supporting it, then it should have a good chance of becoming Lib-Dem policy.

.

Tories will never support it as their mouthpieces above report, Labour might. Let's hope so.

I think the problem is Europe. Would taxes like VAT need to be broadly similar across the EU member states?

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Tories will never support it as their mouthpieces above report, Labour might. Let's hope so.

I think the problem is Europe. Would taxes like VAT need to be broadly similar across the EU member states?

Oh yes, the Tories would NEVER go for a LTV! I think even Labour would be afraid of most voters' irrational panicky reaction against it. Pity, as I am sure the policy could be revenue neutral and progressive, therefore benefiting the majority of taxpayers. It could even replace Council Tax and Stamp Duty.

.

Edited by Tired of Waiting

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To a nation of homeowners the yearly bill is tangible while the economic benefits to the nation of a land tax are not. You need some degree of economic understanding to see why a land tax is good, and given that we are only just starting to see people question whether high house prices are a good thing, I'm not that hopeful.

Edited by opt_out

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Set it at a level that means you can also scrap welfare and bring in a citizens income.For most people the affect would be revenue neutral.It would however make a huge difference to GDP growth.

The other option is to use it to get rid of VAT.That also would provide a huge boost to employment and GDP.

The only real losers from a LVT are the owners of lots of land.Vince mentioned farmers.They would have to pay,but at a much reduced cost than other land.

LVT is one of the best answers to the long term health of the UK economy.

Would Labour go for it?.A lot of them no.Miliband?,,I think he would.

It would also give the Libs a walk away from the Tories excuse if they were the biggest party.

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To a nation of homeowners the yearly bill is tangible while the economic benefits to the nation of a land tax are not. You need some degree of economic understanding to see why a land tax is good, and given that we are only just starting to see people question whether high house prices are a good thing, I'm not that hopeful.

I agree, it's a very difficult sell.

The best way to implement it would be replacing Council Tax, and in a way that most home owners would pay less. I guess it would be easy to set it in a way that at least two thirds of home owners would pay less tax.

But even then I think some (most?) voters could doubt these promises, and be afraid of ending up with both taxes.

Politicians would have to somehow inform each individual home owner how much they would pay after the change.

And even then the losers would make much more noise than the winners, and campaign much more forcefully.

.

Edited by Tired of Waiting

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It won't happen, although it should.

LibDems have already committed electoral suicide, putting forward a policy that the banksters would hate will bury them so deep they'll never come back.

The media would unite against LVT in a fury of VI journalism under the orders of their owners.

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And even then the losers would make much more noise than the winners, and campaign much more forcefully,

Of course they would, the biggest landowners are the ones who own the papers/TV stations/websites, or their friends do. They would mount a ruthless campaign against it, it won't get off the ground.

There is no way you can get anything done in the UK that is against the interests of (in no particular order) :

1. The Royals.

2. The CofE.

3. The Oxbridge colleges(huge landowners).

4. The banks and banksters.

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Set it at a level that means you can also scrap welfare and bring in a citizens income.For most people the affect would be revenue neutral.It would however make a huge difference to GDP growth.

The other option is to use it to get rid of VAT.That also would provide a huge boost to employment and GDP.

The only real losers from a LVT are the owners of lots of land.Vince mentioned farmers.They would have to pay,but at a much reduced cost than other land.

LVT is one of the best answers to the long term health of the UK economy.

Would Labour go for it?.A lot of them no.Miliband?,,I think he would.

It would also give the Libs a walk away from the Tories excuse if they were the biggest party.

Wow, just imagine if we had both LTV and Citizens Income... It would be brilliant! These 2 things combined would rationalize our economy much more, removing lots of perverse incentives, and reducing a major resource/capital (land) misallocation.

Not sure we could afford to scrap VAT though. Besides, VAT has the benefit of reducing internal demand, when we do need to consume less and export more. It shouldn't be charged on basic needs though. And it isn't on unprocessed food.

.

Edited by Tired of Waiting

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It won't happen, although it should.

LibDems have already committed electoral suicide, putting forward a policy that the banksters would hate will bury them so deep they'll never come back.

The media would unite against LVT in a fury of VI journalism under the orders of their owners.

Of course they would, the biggest landowners are the ones who own the papers/TV stations/websites, or their friends do. They would mount a ruthless campaign against it, it won't get off the ground.

There is no way you can get anything done in the UK that is against the interests of (in no particular order) :

1. The Royals.

2. The CofE.

3. The Oxbridge colleges(huge landowners).

4. The banks and banksters.

Sadly, I share your scepticism.

Even in this forum the Lib-Dems are not well perceived - despite having by far the best housing policies.

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It could even replace Council Tax and Stamp Duty.

I hope it does, then if successful move on to VAT and a reduction of income tax. The outrage on that express article is down to the expectation it will be an additional tax, which I would also be angry about.

Although I've said it before I am more in favour of a flat rate tiered land tax, LVT is still better than the status quo.

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I hope it does, then if successful move on to VAT and a reduction of income tax. The outrage on that express article is down to the expectation it will be an additional tax, which I would also be angry about.

Although I've said it before I am more in favour of a flat rate tiered land tax, LVT is still better than the status quo.

Yes, the VI media will spin against it as much as possible, of course. It's not even an official policy proposal, not even for this parliament, and from the LibDems!, and the Telegraph and Express are already reacting v strongly against it!

What do you mean by a "flat rate tiered land tax"?

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Absolutely.

(we could also use the creation of new base money to fund the citizens' income too as the economy grows - rather than gifting it to bankers)

That would be the ideal.The creation of base money to fund the CI alongside a LVT.Imagine Hong Kong in the boom years timed by 100.

The VIs aren't interested in a booming economy though,only in keeping rentiers fed and watered.

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I hope it does, then if successful move on to VAT and a reduction of income tax. The outrage on that express article is down to the expectation it will be an additional tax, which I would also be angry about.

Although I've said it before I am more in favour of a flat rate tiered land tax, LVT is still better than the status quo.

A reduction in tax?! :lol: I can't see that happening!

The CI and LVT pair is the least worst tax/benefits system, IMO. Unfortunately, I just can't see it every being implemented in a useful way. I could imagine LVT and all the other taxes, along with a CI and a complex means tested system, though... which would erode much of the benefit in the first place.

TBH though, we need to think beyond LVT and CI anyway. Instead of relying on vague hand waving from politicians, breaking promises as it pleases them, how about some form of voluntary, contractual system?

How about land monopoly rights are licensed out by communities (or rather, a chosen representative/manager), with breaches leading to breach of contract cases? Clear, well defined, limits on who can monopolise land and when, which can be challenged in court.

In turn, the license money could then be given out to members of those communities who need it most. Again, there could be clear contractual terms of who gets what and when, along with a long term/hardship fund for those unable to work? Again, breaches of contract (of either party) could be resolved in court.

Going from a centralised, forced system to a localised, voluntary system seems like a much better idea to me.

Edited by Traktion

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What do you mean by a "flat rate tiered land tax"?

By flat rate I mean take the valuation part away and have the rate set centrally or perhaps better regionally.

By tiered (or banded) I mean the rate is different based on the land use - residential, business, etc.

My thinking is based on the issues of trust and competence. Whilst an LVT has a lot of theoretical merit there is also plenty of room to create an overcomplicated mess of a system if put into the wrong hands. There's even room for corruption and other revenue boosting tactics - how often are council tax valuations? I would rather eliminate that risk from the outset as I have no faith in any govt of the last 30 years (and no indication of change in future) to implement LVT without creating a highly bureaucratic system full of arbitrary exemptions and unexpected consequences. Having flat rates makes their decisions directly answerable to the electorate.

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Going from a centralised, forced system to a localised, voluntary system seems like a much better idea to me.

I would much rather be moving towards this but sadly I'm losing hope we can even create a fairer forced system. I wish I knew what the most likely to succeed route would be.

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By flat rate I mean take the valuation part away and have the rate set centrally or perhaps better regionally.

By tiered (or banded) I mean the rate is different based on the land use - residential, business, etc.

My thinking is based on the issues of trust and competence. Whilst an LVT has a lot of theoretical merit there is also plenty of room to create an overcomplicated mess of a system if put into the wrong hands. There's even room for corruption and other revenue boosting tactics - how often are council tax valuations? I would rather eliminate that risk from the outset as I have no faith in any govt of the last 30 years (and no indication of change in future) to implement LVT without creating a highly bureaucratic system full of arbitrary exemptions and unexpected consequences. Having flat rates makes their decisions directly answerable to the electorate.

I guess you don't mean the same the same tax/area (say per acre) in London and in Northern rural England, right? But instead the same (v high) rate across central London, then a cheaper rate for outer London boroughs, and cheaper still farther out, etc? Similar process for towns, villages, cities, land, etc?

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What a dream to be free, a full blown libertarian society, no politicians thus no wars and complete respect of property rights.

This libdem thing is whats going to be needed on top of everything else to keep this whole corrupt system going.

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By flat rate (...)

At first I thought your suggestion was good, as it would simplify the valuation issue. But Council Tax bands were set on a similar way, and the main problem will surely repeat iself if we allow politicians to set the bands: regressive tax, with lower percentage rates for more expensive properties, like Council Tax now. I would bet anything the same problem would occur if we let politicians set the bands.

I think it is better if market values were used and the same rate, same percentage (say 1%/year?) applied across the country.

I'm not even sure if agricultural land or pastures should receive distortive "protections".

.

Edited by Tired of Waiting

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The problem with council tax bands as you rightly point out is that they are set on valuations. I'm talking abut banding on land usage only. The biggest group of which would be residential. The main reason for this is to provide some protection for residential rates, as shelter is a necessity. So politicians won't be able to change anything based on value.

My proposition is that all land of the same usage, eg residential, is the same rate everywhere. Whether it's central London or a hill in Cumbria. I know some people think that won't work but I disagree. And because I am not keen on going down the route of valuations, which I believe has risks, it's the only fair way to do it.

When I mentioned regions setting land tax rates it would only be down to county level at most, because I have an interest in seeing counties have more control over their budgets and would like to explore the idea of regions competing on economic and political structure. A move towards more localised govt. But that's a separate issue for now.

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The problem with council tax bands as you rightly point out is that they are set on valuations. I'm talking abut banding on land usage only. The biggest group of which would be residential. The main reason for this is to provide some protection for residential rates, as shelter is a necessity. So politicians won't be able to change anything based on value.

My proposition is that all land of the same usage, eg residential, is the same rate everywhere. Whether it's central London or a hill in Cumbria. I know some people think that won't work but I disagree. And because I am not keen on going down the route of valuations, which I believe has risks, it's the only fair way to do it.

When I mentioned regions setting land tax rates it would only be down to county level at most, because I have an interest in seeing counties have more control over their budgets and would like to explore the idea of regions competing on economic and political structure. A move towards more localised govt. But that's a separate issue for now.

You mean 100 m2 of residential land in Chelsea should be taxed the same amount as 100 m2 in a council estate in Northern England?

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You mean 100 m2 of residential land in Chelsea should be taxed the same amount as 100 m2 in a council estate in Northern England?

Yes that negates a lot of the point of a land value tax, which is to capture the parasitical unearned rental income from private individuals and transfer it to the common treasury.

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You mean 100 m2 of residential land in Chelsea should be taxed the same amount as 100 m2 in a council estate in Northern England?

Yes.

Yes that negates a lot of the point of a land value tax, which is to capture the parasitical unearned rental income from private individuals and transfer it to the common treasury.

And the key point here is land that is rented out or has property on it that is rented out would be put in a specific business tax band with a higher rate than any others. Another band would exist for residential land with unoccupied property (ie second homes and speculative purchases). I find this sort of system a little cleaner and more direct. However it would require a govt with a particular ideology to even consider implementing it.

The devil is always in the details with reforms of this scale. And there is more than one way to skin the rentier classes. It all depends on the intent behind new reforms. The intent on HPC is generally towards more of a meritocracy but we all have our own layers of ideology. Which is why I don't trust our morally bankrupt politicians with most policy choices. The current political structure encourages short term bribes and brown envelopes. It would ultimately be better to strip the govt down to the bare minimum, institute a basic moral constitution, and limit politicians scope to mostly administration. Something closer to the voluntary ideals of Traktion.

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