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
* lead to most households paying less than they currently do in current
* lead to most businesses paying less than they currently do under in
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  - 0.001% of its £135m value - while
the Sultan of Brunei pays only £32 a month more  in council tax for
his Kensington Palace Gardens home than some of the poorest people in
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  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."