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Mikhail Liebenstein

Let’s get LVT back on the agenda!

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Article in this week’s money week on the subject.

https://moneyweek.com/497288/land-value-tax-the-least-bad-tax/

I think now is a good time to push for this policy. The Government is eager for extra taxes and these ones can't be hidden by dodgy accountants.

At the same time they could get rid of council tax and drop business rates to revive the economy.

This would be a vote winner in my opinion!

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Expect to see lots more high-rise flats if this is adopted.   Why waste all that land on a bungalow when you could stack 20 on top of each other and pay the same tax?

The way land is valued would have to be very complex.  If we are saying that the land under a 20-storey block is more valuable than the same land under a bungalow then it's basically a property tax, i.e. you've gone full circle back to where we already are.

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If we do introduce this then I think the amount paid in LVT + council tax should be about the same as (or less than) the amount currently paid in council tax for average homes.

Also we need to make sure there are no exemptions for house builders and those that bank land.

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3 hours ago, Si1 said:

You mean the garden tax? 😫

Tories gonna Tory. They'd rather collapse the whole real economy than touch land values.

Edited by Dorkins

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35 minutes ago, Will! said:

Since there is little hope of ever having free markets in anything in the UK, I think we have no choice but to do something along those lines to counteract the distortions created by the rigged system we have, which is effectively what the proposal addresses.

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Traditionally, the left have had a blind spot when it comes to land and rentseeking, LVT was originally a liberal idea, and was famously supported by Churchill. But with the exception of the “mansion tax” proposal form the LibDems the only party really talking about it now is Labour. 

The Tories have been assimilating a lot of Labours ideas recently, but attacking the wealth of landowners and rent seekers is probably a bridge too far for them.

I mean, what is the actual point of the Conservative party if it can’t protect the right of those born into wealth to receive income from those who work? 

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49 minutes ago, Bear Goggles said:

Traditionally, the left have had a blind spot when it comes to land and rentseeking, LVT was originally a liberal idea, and was famously supported by Churchill. But with the exception of the “mansion tax” proposal form the LibDems the only party really talking about it now is Labour. 

The Tories have been assimilating a lot of Labours ideas recently, but attacking the wealth of landowners and rent seekers is probably a bridge too far for them.

I mean, what is the actual point of the Conservative party if it can’t protect the right of those born into wealth to receive income from those who work? 

We used to have a limited lvt in the form of the council tax, which had stagnated in importance for decades now.

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10 hours ago, Tes Tickle said:

Expect to see lots more high-rise flats if this is adopted.   Why waste all that land on a bungalow when you could stack 20 on top of each other and pay the same tax?

The way land is valued would have to be very complex.  If we are saying that the land under a 20-storey block is more valuable than the same land under a bungalow then it's basically a property tax, i.e. you've gone full circle back to where we already are. 

Good point. However LVT would also lower the price of housing so those flats or a bungalow would be cheaper to buy in the first place. Of course that's comparing to what we have now (e.g. an apple with a fault compared to a completely rotten one).

Different ways this could be approached. Perhaps LVT on just land banks and land with planning permission that hasn't been used in 2 years would make a difference would be a good start.

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It'll only work if the royal family and the Church don't manage to wrangle an exception. 

It would be better for tenants as presumably they wouldn't be expected to pay it. About time that tenants got a council tax exemption. Charging the aristocracy for land-hogging would pay to keep the street lamps on and the bins collected for infinity.

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On 09/11/2018 at 12:47, Captain Kirk said:

I think we have no choice but to do something along those lines to

How are WE going to do that 

5 hours ago, EnglishinWales said:

About time that tenants got a council tax exemption.

no way they use local facilities such as schools roads bin collection etc - many have large families so use more than some homeowners  

council tax should be levied by the umber of people in a household - if you have 6 kids you pay more - simples

On 09/11/2018 at 17:29, Bear Goggles said:

I mean, what is the actual point of the Conservative party if it can’t protect the right of those born into wealth to receive income from those who work? 

what is the point of a Labour Party that is not extremely fascist and anti-semetic and has a leader who supports Hammas the IRA and goes to bow and grovel at the grave of a terrorist 

and a shadow home secretary who famously said the only thing wrong with Britain is the white people in it 

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On 09/11/2018 at 10:30, Tes Tickle said:

Expect to see lots more high-rise flats if this is adopted.

No. Why?  We already pay a land value tax, it’s just we pay it to private land ‘owners’ rather than using it to fund public services. It’s planning law and cost that prevents high-rise building. 

On 09/11/2018 at 10:30, Tes Tickle said:

Why waste all that land on a bungalow when you could stack 20 on top of each other and pay the same tax?

Maybe you want a bungalow?  Why waste all that money on a wagyu steak when you can have a frozen asda burger?  In any case you already pay a LVT, it’s the upfront or ongoing cost of the land. The pressure to make efficient use of it already exists.

On 09/11/2018 at 10:30, Tes Tickle said:

The way land is valued would have to be very complex.  If we are saying that the land under a 20-storey block is more valuable than the same land under a bungalow then it's basically a property tax, i.e. you've gone full circle back to where we already are.

Think you’re a bit confused. The value of land doesn’t depend upon the buildings that are on it, that’s the whole point. The land for the bungalow costs the same as the land for a two story house. As it does now, under our current private sector land tax.

LVT is a charge for property. ‘Property’ doesn’t mean ‘building’. It’s exactly the concept that people should pay for property rights over land, and they should pay the providers of those rights rather than some random bludger who’s too lazy to get a job.

Of course, it isn’t really a tax but that’s a separate issue. 

Edited by BorrowToLeech

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1 hour ago, BorrowToLeech said:

 

No. Why?  We already pay a land value tax, it’s just we pay it to private land ‘owners’ rather than using it to fund public services. It’s planning law and cost that prevents high-rise building. 

Maybe you want a bungalow?  Why waste all that money on a wagyu steak when you can have a frozen asda burger?  In any case you already pay a LVT, it’s the upfront or ongoing cost of the land. The pressure to make efficient use of it already exists.

Think you’re a bit confused. The value of land doesn’t depend upon the buildings that are on it, that’s the whole point. The land for the bungalow costs the same as the land for a two story house. As it does now, under our current private sector land tax.

LVT is a charge for property. ‘Property’ doesn’t mean ‘building’. It’s exactly the concept that people should pay for property rights over land, and they should pay the providers of those rights rather than some random bludger who’s too lazy to get a job.

Of course, it isn’t really a tax but that’s a separate issue. 

Errrr... I'm not really sure what point you're trying to make.  Let's step away from policy statements and come down to earth with a real-world example...

E.g. I own a bungalow.  In the suburbs of a city, with 4-storey blocks of flats nearby that set a planning precedent.  I want to knock it down and build a 4-storey block of flats in its place - 3 flats per floor, so 12 flats in all.

Under the present system, I am paying a band E council tax at say £2000.  Let's assume that each flat will be band A, and will pay £1000 each.  If I knock down my bungalow then the owners of my flats will pay £1000 council tax each, £12000 in total - possibly fair, as there will be 12 households using public services.

Under land tax, let's say my fairly big plot's worth £3000 in tax.  That means that I only need to charge each leaseholder £250 each.  Alternatively I could charge them £1000 each and keep the £9000 per year profit for myself.  Either way, it's a big windfall for owners of flats, and it would massively encourage even higher density development.

Edited by Tes Tickle

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2 hours ago, BorrowToLeech said:

The pressure to make efficient use of it already exists.

Not really. If you own the land you can choose to leave it unused for speculation on rising price (massive when planning permission is awarded) with no penalty except rent foregone, which on agricultural land won't be very much, so why have those pesky tenants to deal with? Heard of Tesco's "land bank"? Surely under LVT there is additional pressure to rent foregone (double?) and reduced incentive for speculative holding since when planning permission is awarded the landowner does not benefit as much from the uplift.

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1 hour ago, Tes Tickle said:

Under land tax, let's say my fairly big plot's worth £3000 in tax.  That means that I only need to charge each leaseholder £250 each.  Alternatively I could charge them £1000 each and keep the £9000 per year profit for myself.  Either way, it's a big windfall for owners of flats, and it would massively encourage even higher density development.

In a competitive market a landowner probably does not have much latitude in the lease they can charge. But LVT would encourage higher density development. In my view a good thing, since spatial spread makes developments more resource intensive, higher costs to hook everyone up to services and utilities, roads etc. etc. Needs to be tempered by land use planning or there would be infill development everywhere, but that just means one policy does not fix everything.

 

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22 hours ago, nickb1 said:

Not really. If you own the land you can choose to leave it unused for speculation on rising price (massive when planning permission is awarded) with no penalty except rent foregone, which on agricultural land won't be very much, so why have those pesky tenants to deal with? Heard of Tesco's "land bank"? Surely under LVT there is additional pressure to rent foregone (double?) and reduced incentive for speculative holding since when planning permission is awarded the landowner does not benefit as much from the uplift.

For someone choosing to buy land, the cost of the land reflects the possibility that it can be used for high density accommodation. They pay a higher price as a result (potentially, I’m not actually sure tower blocks are the most lucrative or efficient form of housing, and I’m ignoring planning rules). 

With a LVT, the tax is capitalised into the price, which would be lower.  The decision on how best to use the land is essentially the same.

You are right that the incentives would change though, I was implicitly considering this case of someone buying land to develop, and I didn’t mean to claim the incentives were identical, just that they were broadly similar.

What changes, is not who pays but who collects.

Landowners can’t collect LVT in the form of rent. Instead the cost of providing exclusive land rights is paid to the people who provide it (or at least a proxy for that, the state [yes libertarians, I know, I just don’t care]). 

LVT isn’t a tax, it’s payment for a service, it could (in theory) be made voluntary, to the extent anything can operate without a state.

Also, there’s a difference between the steady state, where we’ve had a LVT for a decade or two, and the transition period.

Edited by BorrowToLeech

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23 hours ago, Tes Tickle said:

Errrr... I'm not really sure what point you're trying to make.  Let's step away from policy statements and come down to earth with a real-world example...

E.g. I own a bungalow.  In the suburbs of a city, with 4-storey blocks of flats nearby that set a planning precedent.  I want to knock it down and build a 4-storey block of flats in its place - 3 flats per floor, so 12 flats in all.

Under the present system, I am paying a band E council tax at say £2000.  Let's assume that each flat will be band A, and will pay £1000 each.  If I knock down my bungalow then the owners of my flats will pay £1000 council tax each, £12000 in total - possibly fair, as there will be 12 households using public services.

Under land tax, let's say my fairly big plot's worth £3000 in tax.  That means that I only need to charge each leaseholder £250 each.  Alternatively I could charge them £1000 each and keep the £9000 per year profit for myself.  Either way, it's a big windfall for owners of flats, and it would massively encourage even higher density development.

Flats are cheaper than houses or, at least, flat buyers pay less for the land than bungalow buyers. That happens now. 

Rents are lower for flat tenants than for bungalow tenants, all else being equal. That happens now. 

People who use less space pay less for the space they use.  

It’s who they pay that is the problem.

Furthermore, it’s council tax that is the anomaly, not LVT. LVT is a price, council tax is an arbitrary tax.

Council tax is unfair precisely because it doesn’t account for the services people use. 12 families in flats are not using significantly more resources than one person in a house on the same land, because they are taking up far less space.  Landlords are taking far more from the state in the form of land rights than they are paying in the form of...ok, than they are taking in the form of tax credits.

Space is valuable, so valuable it makes the people who control it rich.  Yet, when it comes to looking at costs, we totally ignore it and focus on the cost of bin removals. Give me a couple of acres of land and I’ll pay for my own waste disposal. 

Edited by BorrowToLeech

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One final thought - tower blocks are expensive.  I don’t know how expensive. 

There will be a point at which the cost of the land to provide one more home ‘horizontally’ is lower than the cost of the engineering to provide one more home ‘vertically’. 

As a result, I’m not sure whether tower blocks are the most efficient form of housing and, if they are, how significant that advantage is compared to say back-to-back or terraced housing.   

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