There's a dignity about home-owning. Credit: Matt Cardy/Getty Images
It is a truth universally acknowledged that the Covid crisis has forced the Chancellor to spend — and borrow — a lot of money. But Rishi Sunak also has to work out how he’s going to raise revenues through the tax system — not as an alternative to borrowing, but so that the bond markets will continue lending to us at a non-ruinous interest rate. That’s because confidence in the ability of a nation to repay its debts depends on the robustness of its tax base. Unfortunately, the pandemic has played havoc with that too.
Some parts of the tax system, like business rates, were looking fragile even before the crisis. The effects of loading the tax burden on shops and restaurants, while allowing the online retailers to get off lightly, can be seen in towns and cities across the country. Lockdown means that the issue can no longer be dodged. We either go for wholesale reform or say goodbye to the high street.
It’s been reported that the Treasury is working on plans for an online sales tax — something I argued for back in 2017. Even better, it looks like serious consideration is being given to a “capital values tax.” This would replace business rates and would be a tax on the value of land (plus the buildings built upon it). Furthermore, it would be payable by the owner not the tenant.
You may be thinking that sounds rather like a Land Value Tax (something else I’m rather keen on) and you’d be right. So if Rishi Sunak introduces it, we’d be facing a truly remarkable moment in British politics: the first step toward a seemingly impossible political philosophy — Tory Georgism.
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Georgism is an economic theory named after Henry George (1839-1897) — an American economist and journalist. He lived through a time of unprecedented economic change — the transformation of the United States from agricultural backwater (and, in the southern states, slave society) into an industrial giant. He will have seen small settlements grow into mighty cities, walked in the shadow of the first skyscrapers and travelled on trans-continental railroads.
What he also witnessed, however, is landlords getting rich from the value created by all that development. Not that they had to lift a finger to make it happen — they just had to own property in the right places and rake in the rents. Putting that injustice right was his life’s work.
George was not a socialist. He supported free trade and free enterprise. People should keep the value they created, he believed. But by merely owning land, landlords don’t create value — they simply exploit their monopolies on the physical space that people need to live and work.
He saw all of this as a sickness at the heart of the capitalism, but one that had a cure: a tax system based on land values. The more a piece of land is worth, the more tax the owner would pay on it.
That way, value that would otherwise be extracted by private landlords would benefit the whole community — both by providing the state with revenue and by replacing taxes on income and consumption — i.e. useful activities that create supply and demand in the economy.
Taxing the value of land has further advantages. For a start, it disincentivises speculation and the use of land as a mere piggy bank. It also prompts land owners to make the most productive use of their land or sell it on to someone else who can. That’s why land value taxation has supporters on the Right as well as on the Left. Indeed the free market economist Milton Friedman called it the “least bad tax”. While a tax on income discourages work and a tax on dividends discourages investment, a tax on land does not discourage land. All of it will still be there no matter how hard you tax it. It’s one asset that can’t be moved to a tax haven.
But if land value taxation is such a good idea then why aren’t land value taxes more common? And to the extent that we have property-based taxes at all, why are they in the form of policies like the UK’s Council Tax and Uniform Business Rates — which are payable by the occupier not the owner and which are imperfectly linked to the actual land value?
Well, there are technical challenges to overcome — not least the accurate, ongoing valuation of land — but for Georgists the real answer is the ever-present influence of the “landed interest”. Landlords are just about the oldest and most influential of all lobby groups. Politicians who may not have the time for active business interests, often have ‘passive’ investments in property and are thus easily swayed against land value taxes.
Moreover, British Georgists sometimes identify the landed interests specifically with Toryism. Over the centuries, it can be argued that the Tories — as the party of farming, the countryside and the “gentry” — have acted to protect these interests over those of the urban population and commerce. It’s not nearly so simple as that, of course — but nor is it completely untrue. Successive Tory — and, later, Conservative — governments have given landlords an easy ride.
However, this aspect of Toryism isn’t entirely about grubby self-interest. There’s a moral case for the dignity of ownership, especially home ownership. Why shouldn’t Britons be able to call a piece of this Blessed Plot their very own? Why shouldn’t their homes, and their possessions contained within, be theirs to keep — paid for out of taxed income, but then free from the depredations of the tax man?
Ownership rights are the foundation of liberty — and one only has to look at countries where people have no secure title to their land to see how important these rights are. While socialists would like to make us all tenants of the state, conservatives (and many liberals too) believe that what separates us from totalitarianism (self-reliance, family life, basic privacy) begins at home.
Unfortunately, though, the Tories have a record of over-extending this moral case to provide cover for the exploitative ownership of other people’s homes (and workplaces) and of land that has little to do with home life, but which is important to the common good. It is, for instance, truly astonishing that 20 years into the 21st century, we still don’t have a complete register of exactly who owns exactly what land.
Digital mapping technology means this is entirely feasible. We have the Land Registry of course, but the information that it provides is incomplete and expensive to access — and, as recently as 2016, the Tories under David Cameron and George Osborne were planning on privatising it! This may have been an Osbornite policy, but a less Georgist measure could hardly be imagined.
Thankfully, we’ve moved on from that low point. Indeed, if Rishi Sunak really is about to introduce land value taxation then that would be a jaw-dropping turnaround.
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But given eveything I’ve said, isn’t Tory Georgism the ultimate contradiction in terms? One might as well announce a policy of violent pacifism or isolationist expansionism or universalist exceptionalism. It makes about as much sense as a square circle.
But, then again, the world is full of oxymoronic ideologies. We’ve already got capitalist communism (China), authoritarian liberalism (the woke Left) and plutocratic populism (Trump). I realise those examples aren’t exactly encouraging, but Tory Georgism is the oxymoron we need right now.
Indeed, the Tories need Georgism and the Georgists need Toryism.
The Government is in the tightest of financial spots. It has to rebuild the tax base, without raining down further blows on a traumatised economy. Hikes to income and consumption taxes would hurt the recovery — as would a further round of austerity. But a Georgist taxation policy would only hit non-productive activities that funnel wealth away from ordinary consumers into the pockets of the rich (who spend a lower proportion of their money than the rest of us). Both economically and politically, there is no better way to raise money right now.
Of course, that would require the Government to put in place a proper system for valuing land and identifying its owners — but then that’s what it needs to do anyway if it’s serious about solving the housing crisis — another vital part of any credible recovery plan.
The reason why the Georgists need the Tories is simple: they haven’t had much success selling Georgism on their own. There are no mainstream Georgist political parties. After all, Britain’s landlord-friendly policies can’t be blamed on the Conservatives alone. We’ve had Labour governments too, but they didn’t bring transparency to land ownership or stop lucky farmers from winning the planning system lottery.
If anyone can sell Georgism to a wary public, then it’s the Tories. The majority of the population are home owners and a lot of the rest hope to become home owners. They will resist land value taxation if they suspect it will be used to effectively confiscate their houses, slice-by-slice. A Land Value Tax will only be politically viable if tax-free thresholds are hardwired into the system to respect the right of home ownership — and also to protect small businesses that own their own premises. And, needless to say, the assets of charities and community organisation should also be sacrosanct.
Above all, Georgists need protecting from the utopian tendencies of the Left. In the long-term, a thoroughly Georgist taxation policy may deliver a fairer, greener and more prosperous society. But getting from here to there won’t be easy. Implementation needs to happen step-by-step, taking care to obtain popular consent at every stage — as well as dealing with all the practical complexities.
So forget the fantasy politics. If we get Georgism at all it won’t be in a sudden burst of ideological purity. It will be through piecemeal, painful progress — one least bad option at a time.
Peter Franklin is Associate Editor of UnHerd. He was previously a policy advisor and speechwriter on environmental and social issues.
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SubscribePathetic excuse. Its time to get tough on landlords so, Tax the Landlords! I can hear the mobs screaming already. But who are their intended targets? ……. The income from rent is already taxed, the increase in property value is a capital gain and is taxed when the property is sold on. Then there are ongoing insurances, management and maintenance costs that are further taxed directly or indirectly by the exchequer. Don’t be mislead a land value tax is not solely a landlord tax and it was originally suggested as a specific solution to a specific problem the people in the UK have never experienced because during the feudal days all land was effectivley stolen by the crown.
Over the last few hundred years many family’s have worked tirelessly to recover from this historic robbery, a robbery that never really occured in the young USA of Henry George. Nowadays many millions of ordinary families own property and as a result are land owners, and most likely their ownerships were fully documented in the Land Registry by their solicitors. Who do you really think this tax will land on? On big headless lawyered up corporations buying hundreds of acres alongside the HS2 route, or the foreign interests with nowhere else to spend the sterling we give for the flip flops or other tat we seem to need so much of today? Maybe it will hit the landed gentry whose ancestors stole or at least benefited from the ancient theft? I truely doubt any of these will get taxed… I think it will be me or you with our mortgages, or my young kids who my father left his house to, to give them a better start out in life than he had. Or maybe it will be our parents or grandparents who swapped easily a third or more of their lifespan for the 50m2 they can call home. I wonder what will happen to all those people whose house is now sitting on a plot that they could never afford to buy nowadays, and that is going up in value faster than their wages and where paying the tax reduces their spending power which will have a major chilling effect on the real economy? What happens when you can’t pay your land tax bill each year who gets your land, will the government force you off it and sell it to someone who can pay the tax bill, a big lawyered corporation perhaps.
Who/what are you going to tax to pay for C19 & the baby boomers?
Your emotional rant missed one small point; the driving force of UK economy ever since the mid 70s was/is the ongoing house bubble fuelled by debt.
Private sector debt as % of GDP:
Mid 1974 – c.40%
1980 – c.80%
1992 – c.160%
2007/8 – c.250%
Those foreign interest pay higher taxes than the British .
P.S. I own an apt in NYC and one in London.
Smith, you’re the “emotional” one. Now need ask, do you charge rent? Or do you allow free use?
I rent out my NYC apt and i pay tax on my income. I also pay c. 5,500 in state property taxes – annually.
Being a landlord is either a business venture, or a necessity (I rent out my house because I have been unable to sell it). Businesses pass their costs onto customers, so tenants will foot the bill whatever the structure of the tax. Jacinda Ardern increased student allowances in NZ which was immediately followed by landlords imposing a corresponding increase in student rent to fund the cost of meeting the simultaneous tightening of letting regulations.
Irrespective of the complexity of the regulations and systems in place, all the money in the system comes eventually from the customer.
Why do you think assessing the value of land for a land value tax will be any easier than doing so for business rates and council tax? All or nearly all economists think that except in the short run a tax “paid by landowners” is the same as one “paid by tenants”: the net amounts received by the former and paid by the latter will be the same. Moreover, it is not true that the supply of land is fixed; just look at Monaco, Holland, Dubai, or Hong Kong, the terraced hills in China, or the drained swamps in England…
“The drained swamps in England” – is an excellent example. If we tax the value of land how do we expect landlords to do altruistic things with the land? Leaving swamps or uncultivated areas of land for wildlife is considered a good endeavour in itself. If you tax someone on the value of land how can you ask them to then take action which will result in the loss of income needed to pay the tax. That is one of the many things missing from this article. All taxes must be paid out of income, how does the landlord earn that income to pay the tax!
The holes in the Mr Franklin’s arguments get bigger and bigger!
Peter,
Here is an idea, instead of thinking of new ways to tax people, start thinking of ways of increasing productivity – a bit revolutionary I grant you.
But, this could lead to more money for individuals and for the government.
If the government increased productivity in the state industries, they might even manage with less taxation.
Education could be a good place to start looking. How about in schools having all pupils looking to the front? How about changing the school terms, do we really need a long summer holiday – after all the need for children to help with the harvest is long gone. Can Universities reduce their degree courses to two years and do they require residence at all?
Now that we have invented computers how much face to face teaching is required? Will they use Zoom to supplement face to face teaching?
I look forward you next article tackling these ideas, I might have just saved you worrying about increasing taxation !!
Why do we not have Land Value Tax? Simple, in reality it is the worst idea there is!
Once you start taxing value, as was discovered with rates, the valuation becomes intensely political. Take a simple issues, a farmer owns a field on which he grows crops. The field has a value based on its agricultural use. In addition the local community have a right of way which they use for exercise. The local council change the planning boundaries for the nearby village and include this field in the planning zone. How is the land now valued? It’s value has just gone up many times if it is sold for planning. The decision on valuation is obviously going to have a major impact on what the farmer does because if he receives a bill for land value tax based on it’s planning value he has to sell, no other choice and the local community loose their path. The valuation applied will have major political ramifications!
The next question is what happens to Capital Gains Tax, the tax that we currently use to tax increase in value of land at the point of sale. Are we going to tax land twice or will we exempt land from CGT? If we exempt it, how do we stop speculators who buy land for short turns, avoiding paying both land value tax and CGT? If we go for a hybrid system we dramatically increase complex tax avoidance schemes. This is far more destructive than the long term holding of land by farmers and landlords who protect the land for long term gain.
We don’t have a Land Value Tax for good reasons. It’s time to put this debate to bed and accept ownership of land and it’s proper management is a vital part of our lives!
“…an online sales tax ” something I argued for back in 2017,”……”a Land Value Tax (something else I’m rather keen on)….”
All taxation removes capital accumulation from a free and functioning socioeconomic model. Taxation for the purposes of redistribution is bad enough. Taxation to achieve pre-determined, utopian social goals through coercive fiat placed upon a productive group of people is the keel on the good ship tyranny. Mr. Franklin does not look old enough to have written for Eric Honniker, but I’m sure they would have gotten on well.
My feeling is that there is something fundamentally wrong with individuals being able to accumulate property including 2nd homes when there are other individuals who aren’t able to buy a home because not enough houses are available to buy.
As such, I think there should be a right to buy a rented home if it is for primary residence. Everyone should have the right to own their home even if it is rented.
This isn’t a slight on landlords who do need to charge rent to cover the costs of wear and tear and maintenence along with some administrative costs but people should not be able to accumulate an extensive property portfolio which then deprives the opportunity for others to own their home as well as increasing house prices due to limited supply.
After reading most of the comments, I can’t comment on land value tax although I’ve usually thought it was a good idea.
Surely it’s simple to find out who owns land: make it compulsory to register it (within a reasonable period) or have it confiscated.
Having had intimate dealings for many years with the Victorian Land Tax system in Australia, I have the following comments/observations: (1) Valuations are now carried out every year by the valuation department within the relevant council. This has led to armies of land valuation surveyors being employed within councils who not only need to carefully apply consistent valuation techniques, but also spend much time in defending their valuations (which are often challenged). This of course means that lawyers may be brought into the process, which merely adds to the mountain of work created for such valuations. (2) As a result there is pressure on increasing council tax rates (3) Increased council tax rates (by law, required to be paid by the landlord in Victoria Australia) and land taxes (regarded as State revenue, not council tax revenue) discourage landlords from keeping rents at a lower level. (4) The Victorian Government claims rentals are too expensive……is this the outcome we wish for in the UK?
Ah yes..the bromide for all the ills. TAX the filthy Buggers! “They didn’t create that”. Famous words from a DemocratSlaveryParty President who never had a job that was real private sector. You have learned well Grasshopper Pete.
Economists used to consider Labour, capital and land as the factors of production, nowadays lands seems to have been dropped from the equation which is strange as we now have a rapidly expanding class of landlords living off the rents paid to them.
I have to say that I am strongly in favour of transferring the burden of taxation from income to assets. Under the current system there is a massive incentive to transfer income to assets in order to benefit from the opportunity of low or zero taxes on the increase in value of those assets (through avoidance or deferment.) This means that those with the highest incomes actually spend a very small proportion of that income thus reducing money supply in the wider economy and pay proportionally a lower marginal rate of tax than those further down the income scale. In addition, if you tax assets not income there is a much greater incentive to earn more (you get to keep what you earn so moving to employment really makes economic sense) and would remove the ever increasing burden on the middle classes (economic middle class not social.)
I sit on the fence regarding property taxation, since I don’t like that property is used as an alternative to money as a safe place to retain value or escape fair taxation. On the other hand, increasing property tax rates could cause owners to neglect or fail to make essential or worthy improvements, which makes all the difference where homes and neighbourhoods are concerned. On the whole, homes should be for people, not vehicles of investment growth, though I recognize homeowners are often the ones with the most incentive to maintain and improve their home over time.
As means to dealing with huge government debt, I tend to strongly dislike massive state intervention, including through a state-controlled central bank, but there is a reasonable sweet spot, and it is provable from the history of Canada during and after WW2 that creating money (now called QE) can be a powerful and effective tool, and in the case of Canada its nuanced use meant that inflation as a result of it was never rampant. (Canada Saving Bonds helped mop up when excess money floated in the economy.) The historical record is that the government of Canada in 1939 sprang our economy out of Depression era unemployment into a massively mobilized war economy that had every man and woman standing put in a workplace or enlisted. This was possible by the (arm’s length) BoC (Bank of Canada) creating out of thin air billions of dollars which we loaned at no interest to the Government. And most of the goods and services created were dumped into the war, not the domestic economy. The deployment of the BoC continued for years, until quietly tapered off in 1974. After that it was often derided as “funny money” and seems to have become a taboo subject amongst business talking heads. The commercial banks, stepping up to meet government borrowing needs after this made a killing (which they had probably persistently lobbied for) and it is due to shifting away from BoC borrowing that over 90% of accumulated government debt came about through compound interest.
I don’t know how it is in the UK, but assume some QE is being used.
I was incredibly astonished when earlier this year to hear on national CBC Radio the BoC announcement that this (taboo concept!) BoC was once again going to be deployed to lend billions to our government, to enable financing the anticipated massive Covid19 expenditures.
Two years ago, the director of the Office for Budget Responsibility wrote the following:
“Broadly speaking, the fiscal position is unsustainable if the public sector is on course to absorb an ever-growing share of national income”¦ The baseline projection in each of our reports ” since the first was published in 2011 ” has pointed to an unsustainable fiscal position over the long term.”
If that was the case in 2018, next year’s Fiscal Sustainability Report should make for stimulating reading.
In March (in other words, before the coronavirus crisis had properly hit the UK), this year’s budget deficit was expected to be £55bn (three per cent of GDP). It is now likely to exceed £350bn (roughly 18 per cent of GDP).
Consequently, government debt could reach £2.2 trillion this year ” a peacetime record ” with perhaps an additional £250 billion next year. Add to that dent in the public finances roughly £125bn of tax deferrals and loan guarantees offered to support individuals and businesses during the lockdown period, much of which will never be repaid.
And then there is the stockpile of unfunded liabilities that have nothing to do with Covid-19, including the state pension (roughly £4.5 trillion in 2018), public sector pensions (£1.9 trillion), unfunded provisions for nuclear decommissioning costs (£263bn), and clinical negligence claims against the NHS (£78bn).
How do we even begin to pay for this? More debt will certainly feature, but it leaves the Treasury (that is, taxpayers) increasingly exposed to rising interest rates. The short-term risk of inflation is low, but thereafter, no one knows. And as the debt-to-GDP ratio climbs, we increasingly risk a collapse in confidence in the gilts market, jeopardising affordable future issuance.
An old favourite of successive chancellors is financial repression, such as raising income tax rate thresholds by less than the rate of wage growth, thereby increasing the average rate of tax paid (a form of fiscal subterfuge). But the benefit to the Treasury will be seen as mere fiddling relative to the scale of its additional income requirement.
So, how are we going to avoid bequeathing a debt-laden future to our children? Let us not forget that they already face high university debts, rapidly rising unemployment, sclerotic economic growth, unaffordable housing, thin pension provision, and the prospect of having to support an increasingly ageing population. We need a plan to put their future on more sustainable footing.
Options are limited. The government’s 2019 manifesto unwisely commits it to not increasing income tax, national insurance and VAT. Raising corporation tax would put additional pressure on businesses that are already struggling to survive and threaten jobs ” and would, in any event, only produce an extra few extra billion, nowhere near enough.
The government faces a tough choice: it could break promises, savage tax reliefs (it will do this, but apart from pensions tax relief, there is a limit to how much this could raise), or tax household wealth.
Household wealth was last reported at £14.6 trillion, comprising pension pots (42 per cent), equity in homes (35 per cent), financial wealth (15 per cent) and physical wealth such as artworks or vehicles (nine per cent).
The £5.1 trillion in home equity is largely unearned as it is the result of rising property prices, and is heavily concentrated among the older generations ” over-50s hold 75 per cent of all Britain’s housing wealth.
So how’s this for a proposal: we should scrap principal private residence relief which means people are not liable for capital gains tax if they are selling their home, and introduce a 10 per cent property capital gains tax on all homes. It would be payable when cash is available (unlike, for example, an annual mansion tax), at the time of sale or settling an estate following the death of the last living owner.
To balance this out, the main home should then be excluded from the inheritance tax assessment. Unlike inheritance tax, a property capital gains tax would be hard to avoid by transferring assets prior to death. We should also scrap all stamp duty on the main home, and introduce a first-time buyers’ incentive. Consequently, sellers who have benefited from rising property prices will pay more tax, rather than struggling buyers.
Over the next 25 years, these proposals would likely produce well over £400bn for the Treasury. Yes, they are politically challenging, but they are progressive (the wealthy have the most valuable houses), they move the tax burden of home purchase from the buyer to the seller, and would help restore some semblance of intergenerational fairness.
The alternative is to leave the young facing a dangerously indebted future ” hardly a Conservative success story.
Radical thought, and one that will probably offend someone so I may well end up in court for hate speech but….how about the government spends less…
You know , like wot the Irish did..
Reply part 1:
Systemic debt of that magnitude has no meaning. What does it mean to “repay” the debt?
If it were being repaid to private lenders, they would either have to be given a tangible asset or the right to consume more than they produce while others produced more than they consume.
In this case, most of the debt is in the form of government bonds “bought” by the Bank of England with an entry on the ledger (i.e. not even printing paper notes). The simplest thing would be to write off the debt on BoE books. Just rub out the number and write “0”. The money has already been spent and will eventually inflate the prices of some things. The privately held government bonds will have to be repaid through taxes.
Without a write-off of the government bonds on the BoE ledger, the attempt to “repay” them through taxation would be an unacceptable drag on the economy.
I know this sounds like “new monetary theory” voodoo, however, if it is a one-off, it won’t lead to runaway inflation (as I say, the money has already been spent into the economy).
Reply part 2:
One caveat to the write-off proposal comes from how the government is spending the money. Following the “quantitative easing” following the 2008 crisis, you may have noticed that the stock market boomed, as did real estate, but wages stagnated. That is because the money was injected via the banks who lent (if at all) only to the well-healed.
The danger is the Cantillon effect (google it). 2008 was a text book example. Point injection of money benefits most those closest to the money spigot. It allows them to buy real things off people further from the spigot at a price which the sellers don’t yet realise is too low (because of all the extra money that has been created).
So the money rich get richer in real things while the poor get poorer when they recive money that is worth less than the realise.
To avoid the current stimulus doing the same thing we must scrutinise all the schemes to make sure that the funds are not going to the players who don’t really need it. That is going to be hard to determine, because there will be a lot of creative accountancy. The rules need to be as simple as possible.
Also, vital, is that the reliefs must be strictly temporary.
The danger of letting the Cantillon effect proceed continuously is a building of resentment as an ever smaller circle of rich get richer, and an ever wideneing circle of poor get poorer. A declining middle class would have the motive and the clout to foment revolution. You don’t want that, because revolutions have a way of being hijacked and bringing something far worse in their wake.
Whilst rending to agree with the bulk of the comments here (tax has to be paid by somebody and that effects everybody in the chain of users of whatever is being taxed) there is one glaring issue with land values – which is that most of the value is created by the monopolistic and restrictive processes of the planning system. Farmer Giles gets planning for housing or a business park – suddenly he is Plutocrat Giles. No such luck for Farmer Smith down the road, who stays poverty stricken (in farming terms). So why not remove a large slice of Giles gain in tax? Its pure luck that the planning system swallowed him up and gold plated him.
Agricultural land is around £10,000 an acre, roughly. Residential planning makes that £1m an acre. Let him have £50k or £100k, take the rest in tax.
Landlords already pay a disproportionately high level of tax. It is the only business where interest on loans is not tax-deductible. Until government build more housing landlords are a necessary evil. If you tax them out of existence without providing housing all you will do is increase homelessness.
Landlords buying property pay an enhanced level of stamp duty and landlords selling property pay capital gains tax. They already pay more tax than other home owners.
This idea appears seriously divorced from reality.
Firstly, anyone who owns a second home, or any other property they rent out, in the UK wants out. They are absolutely sick of not just the taxation, but everyone thinking that although it may belong to the landlord on paper, really, control of it belongs to the tenent, the council, the devolved government, the national government and every other busybody inbetween. Even before the ‘Rona, being a landlord was 5h!te, now, it’s seriously 5hite…….and you’d like to take that on to a new level of 5h!teness, hitherto unimaginable? No.
Secondly, people save a proportion of their heavily taxed income their whole lives to own property outright. They should be allowed to savour the fruits of their hard earned labour in retirement without being constantly taxed on it after the point that their income dries up.
Envious, miserablist, drivel.
Others have pointed out some of the flaws. My simple but fundamental point is this: would LVT be in addition to Council Tax or in place of it. If in addition, CT patyers are going to have a legitimate grievance and the idea is probably politically unworkable. If instead, there is presumably little or no net gain to the Exchequer. In a setence, we already have an LVT, albeit a rather crude one.
ok, I am having trouble seeing how this does not just directly increase rents
If every landlord has to pay this, then every landlord’s costs will increase and so they will raise rent. The only way this does not happen is if there is a competing product in the market which does not have the cost increase and so can keep rents low and undercut those who increase rents, thus removing their ability to push through the increase. Without this competition, the incidence of this tax will be on the renter not the landlord. Normally high rents would increase supply, but as the new supply would have to pay the tax also there is no economic surplus for new market entrants to go at, so I don’t see any pressure from new entrants.
Is the competing product buying (which might be below threshold) rather than renting? What about those who cannot buy?
I also cannot see how this means that landlords not not benefit from other’s improvements – they still get the ability to raise rents due to improvements on their land and indeed will have to as they will have to to pay the tax, and again as all the competition has a cost increase also there is no price competition to prevent the price increase.
Has my economics failed me? Or my chain of reasoning somewhere?
Would have been so much more interesting if he had thought about how this might work.
Council official come round to my farm & ascribe a ” value ” to it, like business rates?
If I got planning permission for a barn for elderly relatives – that might easily add £100,000 to the plot. Who pays the tax on that £100k? Me? My relatives when they move in so we could care for them? If it’s me -then I might well not have the (tax on 100K) so they could not come. If it’s them, that’s a big chunk of the money they have to pay for care.
When the tax is introduced, would that then be a 1 off lump sum payment for every owner of property/land in the country?
If he had bothered to try thinking it through would have been better.