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.
The Green Party MP Caroline Lucas has tabled a Private Members Bill.... "to require the Secretary of State to commission a programme of research into the merits of replacing the Council Tax and Non-domestic rates in England with an annual levy on the unimproved value of all land, including transitional arrangements"
Supportive article in the Guardian from George Monbiot, showing how British society is "parisitised from above" by a wealthy landowning class.
The respected political monthly Prospect Magazine has published an article by ALTER's secretary David Cooper showing how landowers freeload on the productive part of the economy, diverting £100Bn annually in the UK alone from productive effort into unproductive rent seeking.
The UK's Coalition Government, formed in May 2010, consists of the centre-right Conservative Party and the Liberal Democrats, who are generally regarded as 'centrist'. Conservatives outnumber Lib Dems about 5 to 1 in Parliament, however Lib Dems claim that 75% of their manifesto is in the Coalition Agreement, which is the programme for government until 2015.
George Osborne is being urged by leading Tory MPs to raise council tax on mansions and expensive homes as part of a deal with the Liberal Democrats that would see the chancellor cut welfare benefits in real terms next year.
