Monday, August 17, 2009

Daily Mail

LAND TAX 'AN ATTACK ON MIDDLE CLASSES’

Usual rubbishing of Land Value Tax, not expolring any of its benefits.

Posted by the number cruncher @ 10:38 AM (2989 views)
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30 thoughts on “Daily Mail

  • Oh I like this:

    Owners of family homes on decent-size plots with a garden, a drive or a garage would be hit harder than those who live in smaller properties. And if the house is near good schools or public transport links, the land would be taxed even more.

    Err … isn’t that the whole idea of taxation? Those with more have a proportionately higher tax burden?

    The losers would be those with relatively low council tax and relatively high property values, and those with second homes or investment property portfolios.

    It’s an outrage! How much longer can we tolerate such sensible thinking and logical taxation!

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  • I think probably most people in their heart of hearts realise that LVT is the best, but it is difficult to see how it could ever be introduced. For starters, the UK population have barely servicable debts on property, they can’t afford to pay. I wonder if the only reason Labour are looking at this is because they have run out of revenue raising ability elsewhere.
    Back in 2000/2001 ok, but now its a different world.

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  • We already have a value based taxation system in council tax.

    Changing to a different type of value based taxation is simply a ruse to tax more without being caught – smell the rat!

    I agree that second and empty homes should carry a council tax surcharge, not a discount; and there is a case for more top bands in the council tax system; but you don’t need to change the whole system to make those changes.

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  • the number cruncher says:

    Uncle Tom

    The problem with council tax is that unfairly targets middle and poor income groups wile effectivly capping tax on the rich. Its outragous – how can you make such a statement?

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  • number cruncher,

    If you consider that a valuable house gets more or less the same level of services form the local council as does a less valuable house, you can make a good argument that the present system is manifestly unfair.

    If on the other hand you take the socialist view that the rich should always pay more tax, irrespective of what they get in return, then your argument is valid.

    What we have is a compromise between those two perspectives; and while no-one likes to be taxed, it probably has more popular support than either of the two extremes.

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  • the number cruncher says:

    Uncle Tom:

    Popular support – I highly doubt it. Its support comes from propaganda like this Daily fascist article

    Remember Mrs T lost because of the poll tax flat tax and council tax was a compromise for her supporters. Nulab where to busy keeping in with the right wing media happy to change it to a true progressive tax.

    Morally tax should be progressive and a tax on your total wealth and not just your income. The benefits to society are obvious and multifold and in those societies adopting such taxation systems have far better societies i.e. look at Botswana, Denmark and Japan.

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  • “The losers would be those with relatively low council tax and relatively high property values, and those with second homes or investment property portfolios.”

    What proportion of the population own a house with “relatively high property values?” I suspect the answer is a lot – perhaps even approaching 50% of households? Although we choose to criticise the arguments against the tax, the fact is that property owners are correct to be concerned at the prospect of the free money house bubble machine being turned off which is why LVT isn’t going to happen. There are too many interests being threatened for this tax to be accepted.

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  • japanese uncle says:

    LVT is the ultimate solution, undoubtedly.

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  • number cruncher,

    Although this piece was in The Express, it could just as easily have appeared in The Mail, which is now far and away the most read newspaper among the middle classes – having prospered by printing what their readers want to read..

    In a democracy one has to accept the view of the majority who trouble to vote, even if one does not agree personally. As the readership of The Sun has a very poor record when it comes to voting, it is The Mail readership that holds the balance of power, whether you like it or not.

    Suggest you read up on what Fascism is (or was) – else you’ll end up sounding like Rik Mayall in ‘The Young Ones’ – and be taken just as seriously..

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  • “There will be a huge disincentive to buy your own home” = house prices will be lower.

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  • mark wadsworth says:

    “It would raise even more than the £25.6billion a year currently taken by local authorities through council tax and would hit hardest those who have worked their way up the property ladder.”

    Classic DailyMailExpress style lying.

    How much the tax raises is a completely made up figure, let’s assume we replaced Council Tax with a fiscally neutral LVT, it would (at current values) be about 0.75% of property values, much like the progressive property tax in Northern Ireland (introduced 2006).

    If we go by David Cooper’s charts for ALTER, it’s only the top 5% who’d pay £1,000s a year more, the next five or ten per cent would be a couple of hundred of quid worse off, the next twenty per cent would be indifferent and the bottom two thirds would be better off, albeit maybe only be a few hundred pounds.

    Further, let’s say interest rates go up by two per cent soon – whom does that hit hardest? Answer, people with big mortgages with big monthly outgoings, who will really struggle to pay (maybe it serves them right, different topic). If they can be expected to pay an extra two per cent of the value of their property (assuming they have no equity), why is it unreasonable to assume that other people, with little or no mortgage (that’s half of all home-owners) can’t afford to pay 0.75% of their property value in tax (even ignoring the fact it’s a like-for-like swap for Council Tax)????

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  • mark wadsworth says:

    @ Uncle Tom “If you consider that a valuable house gets more or less the same level of services form the local council as does a less valuable house, you can make a good argument that the present system is manifestly unfair.”

    What’s that got to do with the price of fish? A high earner who pays shed-loads of income tax gets much the same level of “services” from the state as does a low earner who pays little or no income tax. So what? We are talking about how the tax should be RAISED and not how it should be SPENT.

    I also second what Icarus says.

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  • mark wadsworth says:

    @ Stillthinking, I believe in small state, low taxes, therefore although I am an LVT supporter, I see it as a replacement tax for e.g. council tax, SDLT and Inheritance tax at the very least. If we have scope to cut taxes, let’s cut damaging taxes on incomes and output.

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  • I agree with Uncle Tom, I don’t see why those of us that invest thousands on going to uni so that we can get a good job and earn a decent salary should have to pay more in local taxes (Be it Council Tax or LVT) than those that drop out of school and get low paid jobs when we all receive the same level of service. I’m fed up subsidising others (With the exception of those genuinely in need through no fault of their own).

    With regards to LVT it’s obvious that the govs motivation would not be to rebalance local taxation but rather to increase overall taxation. If the motivation would just to rebalance local taxation then the gov should state that the overall tax income will remain unchanged, and each year the overall income should increase in line with inflation. No chance of that though.

    Still, its kind of irrelevant as they wont be in power for much longer.

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  • eyeoftheweasel says:

    I thought the comment before “The losers would be those with relatively low council tax and relatively high property values, and those with second homes or investment property portfolios.” was even more ridiculous than that one:

    “According to Mr Lloyd, the main winners would be those who rent, pensioners and those who live in a local authority area with relatively low property values and relatively high council tax.”

    I wonder why ‘Have Your Say’ isn’t available on that article? I guess the Express considers renters, pensioners and people living in areas with low property values as some kind of low-life (or at least non-Express reading scum not worthy of their patronage).

    Not saying I’m especially for or against LVT, but just as this country has a fairly progressive income tax system, I think it needs a much more progressive tax on wealth and particularly home ownership. Even ignoring that, to say that the same sized house should be taxed the same whether it’s situated in a high density area on a small plot of land or has 5 acres based on cost to the local authority is incorrect; e.g. there might be the same amount of rubbish that needs collecting (unlikely), but it will cost the council more to collect if housing is more spread out. There is also the cost to the community of one home-owner hoarding a huge plot of land that others could make better use of.

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  • Mark,

    Taxation on income and expenditure is grudgingly accepted by the electorate, but taxation on wealth is conspicuous theft by the state, and much less acceptable.

    Council tax is raised, ostensibly, to pay for local services, and while the banding structures it as a wealth tax, it is not generally perceived as such.

    LVT won’t pass muster with the electorate, and as politicians and the fourth estate would lose from its introduction, there are no influential forces ready to sell the idea..

    – so it ain’t gonna happen!

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  • stillthinking says:

    The only way to get this through would be to make clear that there would be an offsetting reduction in income tax, which is kind of the point I suppose, so that for the median income mr. and mrs. average, there would essentially be no net change. Otherwise it would be rejected out of hand.
    I don’t see a way to avoid the accusation that it is simply raising the overall level of taxation, which is what it will probably end up doing. Also, existing property owners would get double whammied, having paid income tax first, and then subsequently falling liable for a property tax. Perhaps the income tax liable on the value of the house could be offset against LVT.
    But lets be honest, it doesn’t have a hope in hell, and trying during a period of raising effective taxation (fewer services same tax) looks so suspicious. You would have to trust the political party pushing it through, and nobody does, Tory or Labour.
    Weird that Labour are examing this from a think tank because actually the idea is deeply embedded in the history of the Labour party, this isn’t something that naturally fits with the conservative ethos, who believe deeply in the right to own property.
    There aren’t enough political parties for all the differences of policy …. LVT Tories, a breakaway faction !
    Interestingly, Hong Kong raises a budget surplus and runs on LVT, and look at the place, an absolute hive of activity.

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  • the number cruncher says:

    Uncle Tom

    I expect my knowledge of fascism and its foundation both historically in the Roman Empire (fascio a bunch of sticks symbolically held by roman legions to represent thier untied strength) and in its 20th century guises is as extensive as yours, if not more so .

    Fascisms rise was only made possible by the support of right wing media just like the Mail and Express. They moulded the views of the masses that allowed nutjobs like Mussolini and Hitler in. They created false demons, played on racism and passed of protectionism and monopoly as the free market.

    I consider reactionary right wing news sheets playing on the fears of the selfish and intellectually challenged to be the greatest danger to mankind. They give a fig leaf to racism and the idea that one class of people, like homeowners, are uniquely privileged and deserve the laws of society to promote their interests at the expense of lesser people.

    Our augments boil down to a simple question, should the rich be rich and the poor be poor and what balance needs to be struck.

    LVT is a great way to stimulate our economy, redress the imbalance in property ownership and avoid house price boom and bust.

    It is a magic bullet that could make our society so much better. And appeal to your sensibilities it rewards those who work hard and is a free market solution to a monopoly capitalist problem. Among its greatest advocates are the great leaders of the right, notably Churchill and Adam Smith.

    LVT is only an enemy to those who want to live of assets, get a free ride and not contribute to the real economy.

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  • mark wadsworth says:

    Uncle Tom “Taxation on income and expenditure is grudgingly accepted by the electorate, but taxation on wealth is conspicuous theft by the state, and much less acceptable”

    How is taxation of incomes not “conspicuous theft” of earned income, as opposed to taxation of property, which is unearned income? This is the HPC website after all – do you think that the hundred thousand pounds capital gain that the average home owner has made over the last ten years is somehow “property” deserving of tax exemptions, but the two hundred thousand pounds that the average earner has earned over the same period with the sweat of his own brow deserves to be taxed at average rates of nearly fifty per cent?

    Also, please do not conflate “property wealth” with “wealth” generally.

    “Council tax is raised, ostensibly, to pay for local services”

    Ostensibly, yes. But it only covers a quarter of local spending, the rest being topped up out of general taxation and Business rates (that are collected locally but then pooled at national level and then redistributed). But I suppose the myth that “council tax pays for local services” is another one of the Big Fat Lies of taxation that I shall spend the rest of my life debunking.

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  • We all want our economy to grow, so we should be incentivising people to work and spend. Income tax and VAT do the exact opposite. LVT should (IMO) replace most of the other taxes. People would basically choose how much to pay on the basis of where they choose to live. And it keeps a lid on house prices – what’s not to like?

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  • Re tax on wealth or real estate (and most wealth in the country is in real estate) we should remember that the amount of such wealth depends hugely on the government – planning and taxation (CGT, the old MIRAS, council/property taxes (which are much lower than property taxes at state level in the US) etc. and mortgage interest rates. The UK has relatively high property values only because of the relatively benign government treatment over the years of property and the consequent relatively heavy reliance on taxes on activities that generate higher living standards (income, business and consumption taxes).

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  • mark wadsworth says:

    Timmy T: “People would basically choose how much to pay on the basis of where they choose to live.”

    That’s music to my ears!

    I’m a tenant and rent in a very expensive area and I’m not whining – I have chosen how much to pay on the basis of where I have chosen to live.

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  • What about land that people buy in order to grow food??
    I thought the BBC and the government are supporting a return to grass roots stuff.
    A tax like the one proposed would undermine such efforts.

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  • vacuouspolitician says:

    It won’t happen. It’s just a warning shot to a new government…bring this in… or threaten to bring it in… and it’s a vote loser!
    After all too many people (with vested interests) will lose out…

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  • I think Uncle Tom has a point. Its the capital gains people make on property that should be taxed not the owning of it. Personally I think that all capital gains whether on property (yes, even your primary residence), shares, gold, whatever, should be taxed at the same rate as income. Unfortunately I don’t see this happening. Having said that I also think that its right for council tax to be banded because more expensive properties typically do use more services. After all, you can squeeze a lot more people into a 5 bedroom house than a 1 bedroom flat.

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  • scandinavian pessimist says:

    LVT is one of the best proposals that has come out from this government for ages. It makes sense and it works (take Sweden as an example). LVT is fair because it encourages development of high quality smaller properties where space is spares (city centres) and it encourages larger properties to be built where land is cheaper (outside cities). It also leads to a much more sustainable and responsive market since it will discourage land hording and encourage development when house prices and land value (and therefore the tax) are going up.

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  • mark wadsworth says:

    Shawkie, on a moral level you are quite right, but on a practical level you are wrong.

    Capital Gains Tax is a bad tax because it discourages efficient allocation of assets (it discourages transactions – you can avoid the tax indefinitely by not selling). Land Value Tax on the other hand encourages efficient allocation of assets – it encourages people to “right size” as it is an ‘enjoyment tax’ not a ‘transaction tax’.

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  • Land Value Tax will never happen.

    The original Poll Tax was introduced because of difficulties in Scotland over a much-delayed Rates revaluation – where local taxes were calculated, effectively, on house value, putting a disproportionate burden on homeowners (Tory voting) vs council dwellers (who didn’t pay anything).

    Thatcher era Scottish pols (Michael Forsyth as I recall was the rabid right wing Scottish Secretary of the time) pushed to replace it with a poll tax, which everyone had to pay. (Cue civil disobedience campaign). Because of various constitutional principles, the same system had to be introduced in England as it was against the law as it stood to have different taxation regimes north and south of the border. (Cue completely OTT civil disobedience campaign).

    Re-introducing land value tax would turn back the clock and put the burden back on higher earners – the Tories would never stand for it and the clock has run out for Zanu-lab.

    It’ll never happen.

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  • mark wadsworth says:

    Monty: “Re-introducing land value tax would turn back the clock and put the burden back on higher earners”

    You’ve just completely contradicted all the other knee-jerk opponents of LVT who say it would ‘put the burden’ onto low income people in high value properties, who are, by definition, NOT high earners.

    So I accept there is an anti-LVT movement, but quite whose interests do you represent? Those with high incomes, or those with low incomes but high property values? Or does the anti-LVT movement represent the 5% of super-rich landowners and to hell with the rest?

    What about high earners who are renting? According to your logic, would they win or lose from LVT?

    Just askin’, is all!

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