Partly as a result of the discussions that have been taking place under the sponsorship of the Coalition for Economic Justice, of which the Campaign is a member, we have had further thoughts on how LVT might be introduced. The concern that has been expressed centres around the role of local taxation. Put simply, there is a lot of land value in some local authority areas and very little in others, and this is unrelated to the costs of providing the services. The highest rates of LVT would have to be levied in the poorest areas. It has long been recognised that there would be a need for an equalisation scheme to redistribute the revenue, a problem that applies to any tax; the same would be true, for example, of local income tax or local sales tax.

We put forward here for discussion a radical solution: capitation payments which the authorities would be free to spend as they wished - a kind of reverse poll tax. What are the objections? Is it undemocratic? Is it unjust? Please give us your views. Read our proposals here

Yes. It would transform them. It is not the least of the beneficial effects of LVT.

From the "Guardian's Comment is Free" website, this must surely deserve some sort of prize as the absurdest-ever argument against LVT


















"So someone who earns £1million a year and owns no land (or lives in a small flat) pays no tax, and a pensioner on nothing but the state pension who happens to live in an average house in Battersea, inner London, that he bought for £200 in the 50s would pay loads of tax?"

One could also avoid LVT by living rough. If there was LVT, would the homeless people who are living under the sea front at Brighton be joined by millionaires who were avoiding the LVT they would have to pay if they remained in their houses in Kensington?

The fact that the commentator had to postulate an almost impossible situation supports the case beautifully.

LVT advocates tend to hold back through fear of an angry reaction from homeowners, but consider this. Most land value is in land used for productive purposes, that is, land used for wealth creation other than agriculture. That must be so. The most productive land is not used for housing. But the value of land in commercial use is presently depressed by taxes that fall on business. The chief amongst these are taxes nominally paid by labour such as Income Tax, NI and PAYE, as well as VAT, but whose burden actually falls on employers, forming part of their labour costs and depressing their profits. Were these to be removed, business profits would rise sharply and with them, the ability of business to pay higher rents. A further factor depressing the price of land used for commercial purposes is that a significant proportion of land rental value is collected already, if inefficiently, through the Unified Business Rate (UBR), which would be superseded by LVT.

Thus, as existing taxes were phased out, the rental value of land in commercial use must rise sharply, and with it, provided that LVT is phased in gradually and valuations are frequent, the share of LVT collected on such land in relation to the total from all land.

This is best understood by first consider a simple example, such as a 10 storey block (with a lift) with one flat on each floor, each flat being identical in plan. At a first approximation the land value tax liability would be shared equally.

When valuation is made for LVT assessments, it is assumed that each plot of land is in optimum use in accordance with the planning system. A criticism often made is that there can be uncertainty about what the planning authorities would allow. Such a criticism is valid only if valuations are based on selling prices, since market values take account of the possibility of planning consent in the future.

"The reason why such asset taxes are a bad idea is because there is no obvious reason why the mere possession of an illiquid asset should correspond with ability to pay on an annual or any other periodic basis. Consider planting a forest for commercial timber for example. Each year, the value of the timber goes up, but according to you the owner should have to pay a tax on the rental value of the land every year - though goodness knows how you intend to assess that - even though he won't have any income from that forest for 30 years when the timber is ready to fell with which to pay the tax!

It is interesting how arguments against LVT have to invoke the hardest of cases. Yet this objection can be answered in a way that actually demonstrates the case for LVT very nicely.

LVT - a ten point plan for introduction

The former London County Council introduced a Bill to the 1938-39 Session of Parliament for the implementation of site value rating, based on annual rental values, within the administrative county of London. It was of course rejected, though, interestingly, on a technicality. The drafting of this Bill comes close to what we would regard as the model for the collection of annual rental values for public revenue.

The London Rating (Site Values) Bill 1938.

Details of the practical techniques for land valuation are described in the reports produced by the surveyors who conducted two surveys in Whitstable, Kent, in 1964 and 1973. These days, the task would be simpler due the availability of computerised geographical information systems (GIS) which ease the task of number-crunching.
Report of 1964 survey
Report of 1973 survey