Monday, October 4, 2010

Outbreak of commonsense North of The Border

A Land Value Tax for Scotland

The bonus being that Yours Truly is mentioned on page 5 under "Political and academic interest in Land Value Tax".

Posted by mark wadsworth @ 12:53 PM (1599 views)
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19 thoughts on “Outbreak of commonsense North of The Border

  • “Political and academic interest in Land Value Tax”.

    More like an unhealthy obsession if you ask me MW 😉

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  • the number cruncher says:

    Keep it MW – you beat me to this one – well done for your policy input

    LVT is the only sane policy

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  • ontheotherhand says:

    Good read MW. Square a circle for me and apolgies if it’s in there. If land has an annual tax on it, then the value of the land will go down. Fine. But does this mean that the value of the tax calculated on the value of the land will go down? So if a government plans to, say, replace council tax with LVT, won’t the bandings have to dynamically move up to keep the total tax take constant?

    e.g. “A typical sporting estate of 10,000ha will pay £31,600 per year LVT on an asset worth around £1.4 million (land value = £1 million).” Well if the land carried a cost of £31,600 in perpetuity, then the value of the land will drop by £790,000 (I’m using 30yr gilt yield of 4%). So the land is now worth £110,000 and carries much lower LVT?

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  • sibley's b'stard child says:

    Congratulations MW.

    Let me know if you need any political lackeys; I can be had for a reasonable hourly rate…

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  • mark wadsworth says:

    Inbreda, the references something I wrote four or five years ago, and I popped in LVT purely as a simplification thing (to replace Council Tax, Stamp Duty, Capital Gains Tax, Inheritance Tax and TV licence fee).

    I would have left it at that, it’s just that people keep coming up with supposed ‘killer arguments against LVT’ which are all based on lies, special pleading, economic illiteracy and other nonsense, so over the years I have become more rabid about LVT and more and more opposed to any other form of taxation.

    OTOH, having now read the thing in full, I think he makes the whole valuation thing far too complicated. It is relative and not absolute property values that are important. What we need is a tax of £x per square yard of developed or developable land, where x is low in crummy areas and higher in genteel areas.

    So to reply to your question, once he has multiplied CURRENT market values by the magic 3.16%, that gives us £x for each council or ward or postcode, and then we wing it from there. He suggests increasing the tax to reduce income tax by 3% (which the Scottish Assembly is allowed to do). To achieve this, £x would be increased by 50% in all areas (or whatever).

    TNC, TC, SBC, thanks.

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  • Don’t get too excited – despite having a bastardised form of PR, only two of Scotland’s 129 MSP’s represent the greens..

    ..as inbreda says, an unhealthy obsession..

    – and also futile..

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  • On the competing post someone says that the landed gentry will fight it. The landed gentry won’t have to do anything to prevent it because hell will freeze over before the British public vote for LVT. I admire a quixotic crusade as much as the next man but if you explained it to the average person in the street, they’d recoil in horror or think you were nuts. In the very unlikely event that a debate on the subject was aired sufficiently, to be noticed by the public, it would be also be very hard for advocates of LVT to fight the accusation that they were just trying to snag a cheap house. Some of you really should ‘fess-up’ on this one.

    I do think that the idea has some merit (only some) but it has to be recognised that if the majority of the population regard something as silly or nuts, then it could only be imposed on us in an undemocratic system. Is it worth fighting for something that can never be? Maybe so.

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  • ontheotherhand says:

    MW. I think the whole valuation aspect is complicated, but doable I’m sure using a bit of differentiation or simultaneous equations or something!

    He also makes the point under their example that 75% of homeowners (Bands A-D) would be better off each year in the reduction of tax they will pay in LVT compare to council tax. Since this is in effect a new yield to those homeowners, 75% of properties would see an increase in value (all else being equal). Perhaps this is how you could sell the idea?

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  • ontheotherhand, you’ve just told the members of HPC that 75% of properties would see an increase in value under LVT. If it were true (it’s actually just a slight of hand), HPC’ers would drop LVT like a wet turd.

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  • Just imagine if LVT were imposed and 75% of properties consequently increased in value. MW would be dismembered Mussolini style at the next HPC booze up.

    MW is it just a sleight of hand to hoodwink homeowners into supporting LVT or has onetheotherhand just signed your death warrant?

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  • Concerning valuation, I like the idea tried in China some time in the distant past: the owner sets the value of the land to be taxed. The state then has the option to buy it for that price if it wants.

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  • mark wadsworth says:

    Flash, OTOH is quite correct – by being less regressive than Council Tax, LVT would push up values of Band A to C properties slightly and push them down a bit in Bands F to H. That’s neither a good thing nor a bad thing in itself – it just reverses what happened when they shifted from Dom Rates to Council Tax.

    This is why I would go further and also scrap the other Poll Tax (TV licence fee); the subsidies to low income households (Council Tax Benefit); the subsidies to private landlords (Housing Benefit); and the jealousy surcharges like IHT or SDLT just to level the playing field – the overall impact on house prices would be virtually nil.

    Uncle Tom, Flash, I am a great espouser of Lost Causes – from legalising/taxing drugs, to re-legalising fox hunting or smoking in pubs, leaving the EU (and NATO, UN, WHO, IMF G7 etc), scrapping VAT (and income tax etc), turning off the traffic lights…

    .. if the cause is lost, then the chances are that I’m all for it!! The simple fact that none of this will ever happen does not detract from the fact they would be of enormous economic or social benefit.

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  • Dear old ever hopeful MW and the LVT saga.
    More regular than ‘Eastenders’, and twice as fanciful.
    What makes you think that any politician will p*ss on the bonfire of his own ‘pension’?
    Not one of the three main parties see the need to even mention the distortion that BTL inflicts on the supply of ‘buyable’ FTB properdee – what chance this idea that is both redistributive and quite complicated to grasp?
    …Still, I’m tuned in for the next episode

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  • @Flashman

    Good to see you’re back at the blog.

    “it would be also be very hard for advocates of LVT to fight the accusation that they were just trying to snag a cheap house. Some of you really should ‘fess-up’ on this one.”

    I think some of us on the blog are a bit malevolent towards those who have done well by property speculation in the past – particularly BTLers. Now that’s something to fess-up to isn’t it?

    Regarding LVT and housing costs, I would happily take the benefits of cheaper housing if that was achieved by LVT. If a portion of the population turn out to have overpaid for their properties then that’s just hard luck. The word ‘snag’ seems to be implying that I hope to get the better of everybody else in the buyers market which would be rather naive.

    @Mark Wadsworth

    Well done. I’d be pleased with myself for getting a mention in a national policy paper. Raspberries to the pragmatists 🙂

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  • Turn off the traffic lights? You jest. Mind you, the Dutch do it at the weekends.

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  • mark wadsworth says:

    BD, you answer your own question.

    QG, ta.

    Alan, in the Netherlands they do all sorts of stuff of which we can only dream – smoking in pubs, buying cannabis, no subsidies to young single mothers, contemplating a burka ban, no whining about rising sea levels, public sector debt is about 20% of GDP; they are a smaller country than the UK but still manage to export food to us. All of this is do-able. No sense of humour though, they aren’t perfect.

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  • the number cruncher says:

    Once old age pensions where just a fanciful pipe dream
    Once health care for all was a fanciful pipe dream
    Once wishing that children would not starve on the streets was a fanciful pipe dream
    Once banning child prostitution was just a fanciful pipe dream
    Once the thought of banning child labour was just a fanciful pipe dream
    Once protecting workers from industrial accidents was just a fanciful pipe dream
    Once education for all was just a fanciful pipe dream

    Once LVT was just a fanciful pipe dream….

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  • mark wadsworth says:

    TNC, add “Women’s right to vote” or “Independence for India” or “ending slavery” to that list.

    I think that people just lack imagination. Imagine we woke up tomorrow morning and all taxes had been replaced by LVT (with exemptions or discounts or something for pensioners). Every household in a similar house on the same street pays the same tax, people adjust to things quite quickly, after a few years, this would just be the way things are.

    If you then suggested replacing LVT with income tax again, the higher earners on the street would be up in arms, and would say “F* off, why should I pay more tax so that the lower earners can pay less? If they can’t afford to live here, they can trade down, can’t they? There are plenty of other higher earners who’d love to live here. Or do these loony income-taxers think that lower earners should get discounts on their new cars as well, paid for out of my income?”

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