Land Value Tax (LVT) is a levy on the unimproved value of land, it disregards the value of building, personal property and other improvements to real estate. LVT has been referred to as "the perfect tax" and the economic efficiency of a Land Value Tax has been known since the eighteenth century. LVT is a progressive tax in that the tax burden falls on titleholders in proportion to the value of locations, the ownership of which is highly correlated with overall wealth and income.
Land Value Tax would be payable each year depending on the location and size of a plot. We advocate that it should replace some existing taxes. It should not add to the overall tax burden, its purpose is to shift tax away from income taxes . Land means the site alone. A vacant plot in a row of houses would be taxed the same as a similar built-on plot. It taxes the size and location of he plot. It does not tax buildings or other works.
There are three strong arguments for the tax. It is socially just. It is the best way of financing infrastructure. And it is economically efficient.
First social justice. Property taxes are fairer than income taxes. In the UK the wealthiest 1% own almost 25% of all property. Today we base the tax system almost entirely on income rather than assets. This means the very rich avoid paying their fair share of taxes. This entrenches inequality.
Second, infrastructure. The benefits of infrastructure are uneven. A fast rail line from London to Birmingham will provide a windfall for property owners in those locations. It won't benefit other locations nearly as much. At present every taxpayer, everywhere, pays. Land value tax corrects this. It recoups costs from those who benefit the most.
Third, economic efficiency. Land value tax is payable whether or not the owner actually uses the plot productively. It penalizes owners of empty houses; owners of run-down sites. Unlike now, they would be taxed at the same rate as a site in productive use. This would promote inner city regeneration. There is a myth that Land Value Tax would destroy green spaces. In fact, the City of New York made a profit when it created Central Park. It greened over existing built-up areas. The increased property tax from surrounding neighbourhoods paid for this.
In summary, Land Value Tax is pro-enterprise and green. Its introduction would allow other taxes to be reduced; especially those on income and profits. Enterprise would be better rewarded. Building on a property doesn't change its location value. The location value of land comes from geography -a beautiful view; or from investment elsewhere - for example a high speed railway. Location value is maintained by society. It just and efficient to tax it.
ALTER's Executive committee has met to decide on its Party Conference fringe event theme at Liverpool in September. Speakers will be asked to comment on a new chapter in the successful book (The Case for a New Peoples Budget) which ALTER published last year, by Brian Hodgkinson, probing the links between the global banking crisis and failure in land markets.
ALTER is confident of having a 'good' Party Conference this year, having noted that two policy motions on the agenda feature the role that resource taxes can play in helping to turn around the UK economy.
The Mail's online version featured a piece on Saturday 11th September about the debate at Party Conference next Tuesday on "Fairness in a Time of Austerity", which mentions "taxation" and "land values" in the same sentence! As one would expect, they don't approve.
ALTER has added a speaker on Bank of England Reform to the panel at its fringe on Saturday. Alongside Brian Hodgkinson, economist and author of "A New Model of the Economy", who will be answering 'yes' to the question in the event title "Does the Banking Crisis Strengthen the case for LCT?" will be Ben Dyson, a young Yorkshire-based financial sector entrepreneur who is campaigning on reform of the entire money-creation system. Ben's answer to our question is likely to be "Maybe"!
ALTER's Fringe at the Liberal Democrats' conference in Liverpool last month heard the recently en-nobled former leader of Newcastle City Council announce that his city could be a study area for the Party's policy of Land Value Taxation. Cllr Lord John Shipley, who has served on the Council for 35 years, was speaking a month after resigning as Leader to become a full-time working peer. The Liberal Democrats have run Newcastle since 2004.
The topic for ALTER's Fringe event at this year's Lib Dem Conference, in Liverpool on 18 September, was "Has the Banking Crisis Strengthened the Case for Land Value Taxation?". ALTER committee member Brian Hodgkinson presented the 'for' case; Ben Dyson, from the PositiveMoney campaign (but also a supporter of LVT) agreed - but argued the case for Money Reform to come first.
