Green MP publishes research into replacing business rates and council tax with New Land Value Tax ahead of appearance at Liberal Democrat Conference.

8 March 2013

 

A TAX on unearned profits in the volatile property market could put an

end to boom-and-bust and create a fairer housing system by shifting the

tax burden onto developers and wealthy individuals who profit from

soaring property prices, according to a report published by MP for

Brighton Pavilion today.

 

A LAND VALUE TAX FOR ENGLAND: FAIR, EFFICIENT, SUSTAINABLE _(1) sets

out a strong case for a new tax on the value of land to be gradually

introduced over a period of 10 years as a replacement for Business Rates

and Council Tax, concluding that an LVT would:

 

* treat all land on an equal basis

 

* eliminate inefficient allocation of land

 

* eliminate speculative gains arising through unproductive activity

 

* promote affordable access to housing and other vital land-based

assets

 

* lead to most households paying less than they currently do in current

council tax

 

* lead to most businesses paying less than they currently do under in

business rates

 

The report clearly illustrates that a Land Value Tax would be fairer

than the current council tax arrangements, under which the owner of the

most expensive flat in London's One Hyde Park development, for example,

pays only £1,369 in council tax [1] - 0.001% of its £135m value - while

the Sultan of Brunei pays only £32 a month more [2] in council tax for

his Kensington Palace Gardens home than some of the poorest people in

that borough.

 

The concept of an LVT has long been touted by figures such as Winston

Churchill and Vince Cable (2) as a fairer way to levy property taxes, as

it seeks to return to the community the value added to a property

because of improvements, like transport infrastructure, that have been

paid for by the public purse.

 

The Brighton Pavilion MP, whose Land Value Tax Bill [3] is due its

second reading in Parliament in April, will make the case for an LVT at

an event at the Liberal Democrats' spring conference on Saturday.

 

CAROLINE LUCAS MP SAID:

 

"This report shows clearly that introducing a Land Value Tax would be

an affordable and feasible way of addressing the severe inequalities in

our property market and the wider economy.

 

"An LVT would be levied solely on the unimproved site value of the

property, which is affected by its location and community efforts around

it - and is levied on the owner rather than the occupier.

 

"Where a property rockets in value because a tube station is built near

to it, for example, LVT would seek to tax that windfall increase in

property value to be re-invested back into the community.

 

"Owners of speculative land-banks, derelict land or properties that

have deliberately been allowed to become run-down would pay the same as

those who take care of and develop their properties, therefore

incentivising a more productive use of land.

 

"In light of this report, and the conclusion of the IFS Mirrlees Review

that the case for a 'thorough official effort to design a workable

system' of LVT is 'overwhelming', I hope the Treasury will look again at

the need for research into an LVT as a fair solution to help fix our

broken tax system."

 

ENDS






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