ALTER holds parliamentary briefing on LVT
Behrooz Tavassolian writes:
My knowledge of Land Value Tax was sketchy at best before I attended a meeting on Wednesday 16th July 2013 alongside Cllr Tony Vickers, William Davidson and MPs Vince Cable (Twickenham), Tessa Munt (Wells, Somerset) and Andrew George (St Ives, Cornwall). The meeting was held at Portcullis House which is located within Westminster Parliament. I found the meeting highly informative as it alerted me to the many different socioeconomic ramifications that Land Tax has on our society.
Vince Cable initiated the proceedings as he discussed the flaws in the current tax system pertaining to business rates that tax land and buildings together and how this affects town centres which are in competition with internet businesses. This results in investments being penalised as the less well maintained buildings on sites of great wealth are taxed lighter than sites which are fully utilised. This creates an environment which breeds speculation with regards to the properties that haven't been maintained to a high standard.
The second part of the meeting revolved around Tessa Munt as she disclosed the fallout regarding the rural payments agency. For Example, the average British household contributes £245 a year to the CAP, most of which was handed to the wealthiest landowners. Originally established with the intention of supporting small farmers and reducing Europe's reliance on food imports, the CAP accounts for 43% of EU budget and has become what is tantamount to being a slush fund for the elite. An investigation conducted by the New Statesman uncovered that with the exception of Spain no other land is more unevenly distributed as 70% of acreage is held by just 0.28% (158,000 families) of the population. Figures like Duke of Westminster (net worth £7.4 bn) received £748,716 of taxpayer's money and the Duke of Devonshire (£700 million net worth) who received £251,729 (Statistics due to Freedom of Information 2011)
This situation is exacerbated by the fact that the EU's definition of "farmer" doesn't require individuals to actively produce food or other agricultural products. Therefore many recipients are in effect paid not to farm. The largest UK beneficiary was Sir Richard Sutton who was paid £1.7 million for his Settled Estates despite having net assets of £136.5 million.
This highlighted the issue pertaining to inequality and poverty that while income is distributed unevenly ownership of wealth is distributed even more unevenly. William Davison then embarked on a presentation to demonstrate how the Lo-Tax (LVT) could be adopted to gradually replace council tax, business rates and SDLT. He outlined the deficiencies with the current system e.g. the regressive nature of council tax as its highest band is only three times higher than its lowest band. The business rates are an aggressive tax on Capital values of buildings. Davison proposed what positive qualities the Lo Tax proposal would bring if introduced e.g. 3.25% on all land not currently covered by Business Rate and that all Industrial, Business and Retail land would be taxed at 8% including vacant and derelict sites.
Many different examples exist worldwide that illustrate when Land Value Tax has been implemented it has always had a positive effect. Such notable examples include certain cities in Pennsylvania (U.S.A) which since the 1970s has adopted a higher rate of tax on land than on buildings compare in economic performance, over a 30 year period with those that have not. The conclusion was that for every one Per cent shift off building value onto land value there was a 16% increase in the value of construction permits issued. This measure is roughly equivalent, in UK, to the value of planning permissions awarded.
In conclusion this meeting succeeded in alerting me to the wide range of possibilities that await as a result of introducing a Land Value Tax as well as the current confinements of the current taxation system. From my perspective the real test now will be to see if the Liberal Democrats can use their influence as part of the Coalition can negotiate some kind of agreement which will make progressive inroads pertaining to this policy area.