General Election 2017
The issues of land, land value capture and Land Value Tax have been figuring significantly in the 2017 General Election.
As part of its Viewsnight series of short videos on 15th May BBC Newsnight set the scene:In this short video "Its time to tax the land beneath business" Times journalist Raphael Hogarth argued that the way we tax businesses in this country is "mad", and so needs radical reform.
On the 16th May the Labour Party Manifesto was published. Land value taxation was mentioned very briefly as a possible way to reform the current property taxes :
“We will initiate a review into reforming council tax and business rates and consider new options such as a land value tax, to ensure local government has sustainable funding for the long term.”
This was followed up by two articles in the Independent the same day:
John Stone, Political Editor wrote a piece entitled: Labour looks to replace Council Tax with a Land value Tax, Party to Launch a review into tax backed by many economists due to its efficiency.
It quoted Dave Wetzel, president of the Labour Land Campaign:
“This is an example of Jeremy Corbyn's Labour Party not only listening to us but also other economists across the political spectrum such as the Institute of Economic Affairs, The Adam Smith Institute and the Institute for Fiscal Studies that have all advocated Land Value Tax. If Land Value Tax were to replace business rates all productive businesses would benefit, land speculators keeping homes and premises empty would transfer their wealth to productive investments that create jobs and house builders would release their land banks for building new homes at reasonable prices.”
Ben Chu the Economics editor followed it up with a second business analysis piece:
Labour Manifesto 2017: What is a land value tax? How would it work? which set out the background behind the idea in an informative way.
On the 28th May Richard Winch wrote a blog explaining Land Value Tax
The Case for Land Value Tax In the Alt Left Journal.
What happened on May 30th is summarised in this Labour Land Campaign Press Release:
Yesterday saw a clearly concerted attack in five newspapers that largely determine the zeitgeist in British politics on a promise in the Labour Party Manifesto to “initiate a review into reforming council tax and business rates, and consider new options such as a land value tax”. Most of these articles present shamefully traduced Labour Land Campaign (LLC) research and misrepresents it as Labour Party policy. The Labour Land Campaign is a cross-party research and advocacy group—primarily membered by professionals in land-related occupations—that is unaffiliated with the Labour Party.
In remarkably similar wording (presumably lazily—or obsequiously—taken directly from a Conservative Party Press Release), Political Editors at the Daily Mail, the Daily Telegraph, the Daily Express, the Times and The Sun all misleadingly talk about a switch to Land Value Taxation (LVT) “trebling” most residents’ property tax bill—a policy that is ineptly dubbed a “Garden Tax” which highlights their misunderstanding of LVT; this all on the same day, fully a fortnight after publication of the Manifesto.
There was a supporting rebuttal from "evolve politics" The right-wing press are LYING to you about Labour’s ‘Land Value Tax’. Here’s the truth.
and also from coalition member Taxpayers Against Poverty in this posting: Right wing press is lying about land value tax - true story on TAP website. IT STOPS MOTHER OF ALL MONOPOLIES which was followed up on 2nd June by a letter in the Guardian explaining "The Strong Case for a Land Value Tax" explaining "The advantages are that land cannot be placed tax-free in an overseas bank, taxing land forces into use the 600,000 plots of unused land owned by the big builders, it is progressive, it relieves the incomes of hardworking people and companies by enabling the abolition of inefficient taxes such as council tax, business rates and stamp duty."
On 1st June a further clarification came when the articles published in the main stream media were subject to an independent fact check:
Labour’s Land Value Tax: will you have to sell your garden?
Introducing a Land Value Tax would force homeowners with gardens to sell them.
It would depend on how the policy was actually designed. Labour has only committed to considering the idea, as have the Green and Liberal Democrat parties.
The review went on show how false the claims made in the articles were and the way the figures used were a considerable misrepresentation. They concluded: "There would be winners and losers from replacing Council Tax with a Land Value Tax, but that doesn’t mean that you would necessarily lose out compared to the other options."
There is support for taxing land values from economists who focus on the economic benefits rather than the political implications.
On 30th May Tim Worstall of the Adam Smith Institute posted in response a much more rational analysis of Land Value Tax from the free market perspective than had appeared in the press. It was entitled Land Value Tax is a great idea – but it’ll never happen and gave quite a clear explanation for the economic rational of the tax.
On June 1st Sam Bowman of the Adam Smith Institute also blogged on Land Value Taxation with a suitably modest tittle of Why Everybody is Wrong about Land Value Tax (Except Me) which attempted to give a balanced view, explaining why a tax on land values would be better than the present business rates system that also taxes capital but got a little confused when he tried to argue that it would not be possible to replace other taxes.
There are Conservatives who appreciate and support taxing land values. For example there is a good review by Peter Franklin on the Conservative Home site entitled How and why we should tax land. He recognises "it would capture the “‘undeserved’ gains landowners make on the investment of others, such as the government improving nearby transport links.” One could also argue that it would be an excellent way of discouraging the excesses of the British property market.Recognising the political difficulties of implementing is preference is for a Land Value Appreciation tax which is effectively a capital gains tax.
Henry Pryor describes himself as “the BBC's favourite property expert” Buying Agent and 'Property Commentator of the Year 2017' gave a very helpful background in and article entitled: The great garden tax: a ‘cocktail of misery’ or a fairer way to levy land? published in Ham & Highbury Property on 2nd June written by Frankie Crossley but with Pryor extensively quoted. He rightly acknowledged that Hampstead and Highbury probably has some the highest land values in the country and so would be expected to to pay some of the highest amounts in tax. He explained that “Many would regard a Land Value Tax to be a much fairer way of ensuring that those who benefit from rising property prices through no direct effort on their part pay what Labour would regard as their fair share and the idea has considerable support from both academia and in political think tanks.”
The Young People's Party is a member of the coalition that is a political party and as they are putting up candidates in the election they were given an opportunity to explain why they support Land Value Taxation on BBC2 Daily Politics with Michael Gove looking on
The Liberal Democrats have long supported the policy of taxing land values. Their 2017 manifesto says:
4.2 Fair taxes
In order to balance the books and build a sustainable economy for the future we must ensure that everyone pays their fair share. Liberal Democrats have a long- standing commitment to fairer taxation, and in government we raised the personal allowance for Income Tax. It remains our ambition to make taxes fairer and simpler, to help those on low and middle incomes, and to ensure that those on the highest incomes, and large international companies, make a fair contribution. We will: …...
........Reviewing the Business Rates system, prioritising reforms that recognise the development of the digital economy, lessening the burden on smaller businesses, and ensuring high streets remain competitive. We will also consider the implementation of Land Value Taxation.
Vanessa Houlder took up the issue of the need to reform business rates in the FT in an article entitled "Parties find common ground on need to reform business rates" and included land value tax as one of the options that has been considered.
The Green Party does not have a manifesto but instead makes a number of pledges in their Green Guarantee .
Under A place to call home:
Action on empty homes to bring them back into use and a trial of a Land Value Tax to encourage the use of vacant land and reduce speculation.
This was covered in an article in Estate Agent Today: Manifesto wants new Land Value Tax and urges Right to Buy scrapped
The Sottish Green Party, in their Westminster Manifesto also support Land Value Tax. In the section on Delivering Equality they state:
Tackling wealth inequality will be a priority. We will introduce a wealth tax on the wealthiest 1%, continue support for a Land Value Tax and introduce laws to limit the size of CEO pay relative to the lowest-paid workers in the company. We will remove VAT from sanitary products and ensure that they are provided free of charge to those in extreme financial need.
The Conservative Party manifesto did not refer directly to taxing land values its manifesto contained three related points
p14 Review of business rates
We know that the business rates system presents considerable challenges to some smaller companies. That is why we have supported those businesses most affected by the recent revaluation of business rates. That is not all we will do. We will make longer term reforms to the system to address concerns about the way it currently works. We will make sure that revaluations are conducted more frequently to avoid large changes to the bills that businesses face, and explore the introduction of self-assessments in the valuation process. To ensure the system is sustainable for the future we will also conduct a full review of the business rates system to make sure it is up to date for a world in which people increasingly shop online.
p71 capturing land values
We will also give greater flexibility to housing associations to increase their housing stock,building on their considerable track record in recent years. And we will work with private and public sector house builders to capture the increase in land value created when they build to reinvest in local infrastructure, essential services and further housing, making it both easier and more certain that public sector landowners, and communities themselves, benefit from the increase in land value from urban regeneration and development. And we will continue our £2.5 billion flood defence programme that will put in place protection for 300,000 existing homes by 2021.
The significance of this aspect of Tory policy was taken up by the FT on 22nd May Conservatives tack to the left on UK housing market .It is quite a significant change of policy, firstly to recognise the importance of land values and the housing market and secondly to recognise that uplifts in land value when development takes place are due to the community as a whole not to the owner of the land and so naturally should fall to the community.
p82 Digital land
And we will use digital technology to release massive value from our land that currently is simply not realised, introducing greater specialisation in the property development industry and far greater transparency for buyers. To make this happen, we will combine the relevant parts of HM Land Registry, Ordnance Survey, the Valuation Office Agency, the Hydrographic Office and Geological Survey to create a comprehensive geospatial data body within government, the largest repository of open land data in the world. This new body will set the standards to digitise the planning process and help create the most comprehensive digital map of Britain to date. In doing so, it will support a vibrant and innovative digital economy, ranging from innovative tools to help people and developers build to virtual mapping of Britain for use in video games and virtual reality.
Isabell Fraser took this issue up in Daily Telegraph 18th May Tory manifesto proposes mapping who owns all the land in the country for the first time and the legal aspects were taken up in the Law Society Gazette 19th May Tories' land data body sounds excellent. But...
If we are to move to a situation where the economic rent of land is used for public revenue an important first step is that there is a clear register of who owns the land. These welcome promises would provide a step in that direction.
A significant issue in the election is social care and how it should be funded. In the present arrangement when someone goes into residential care the value of their home is included in as assessment of their assets. The Tories policy would be to extend this to the cost of home care. Given that a considerable portion of the value of a house is the value of the land the point has been reached where it is recognised that land assets should be used to fund social care. However, there is likely to be little correlation between individual's access to land values and their care needs. In the FT leader of 22nd May May’s welcome U-turn on an ill-conceived policy it was argued that a fairer way to share the burden would be through general charges on land such as land value taxation:
"If the government rightly wishes to levy unearned wealth more heavily to pay for the welfare state, it should look at raising cash through reforming Britain’s shambolic inheritance tax system or introducing other charges on wealth, such as land value taxation. But this should be on a general and equitable basis, not arbitrarily dependent on the health of one’s parents."
This headline from International Adviser: Conservatives Hint at Possible Land Value Tax on 31st May was perhaps a little off the mark and a rather fanciful interpretation of their manifesto statements but it indicates how much things have shifted that such a line should even be written.