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Down to brass tax

Latin is of course out of fashion, but it can often help us understand the origin of things. The Latin dictionary defines the verb, taxo, taxare, as to estimate, rate, appraise the value of anything. In modern English, this is still the meaning in the courts of law, where a taxing master is one who taxes costs by examining them and allowing or disallowing the various component items claimed.

A wider use of the word has largely taken over from the strict, etymological meaning, so that taxation to-day signifies a government charge on certain things to provide money for the state.

The expression, taxation of land values, may therefore mean “the action of collecting a charge on the value of land to provide revenue for the state or, more simply and in accordance with the original meaning of the word, the act of appraising land in accordance with values assessed on and assigned to various plots or parcels”.

The use of the term “taxing land value” in the classical Latin sense presents no difficulty beyond making clear the use intended. However, adopting the term “land value taxation” (LVT) in the broader modern meaning does not do the policy justice. The main reason for allowing such a usage is that, in the UK, that is what it has always been called. In the early 20th century, there were, successively, the Land Values (Scotland) Bill, 1907, the Land Values (Scotland) Bill, 1908, and the Finance (1909-10) Act, 1910 (which introduced a number of land taxes, none of them actually land value taxation, even though the preliminary campaigning had indeed been for proper LVT!). Later, Section III of the Finance Act, 1931, was entitled Land Value Tax. For well over a hundred years, there have been numerous inquiries, in and out of Parliament and Whitehall, referring either to land value taxation or to its local government equivalent of land (or site) value rating.

Yet, to regard LVT as just another tax like income tax, corporation tax, the council tax, the uniform business rate, capital gains tax, value added tax, import duties and excise duties, is to underestimate its superiority and singular character. All of the latter are taxes on work – on the productive process itself or on trade in goods and services or on accumulated savings devoted to capital formation. The land is not man-made (no one paid to have it produced!) but is a gift from Nature, part of our planet, Earth. What each plot is worth, depends on the demand for its qualities, for the social and other benefits and opportunities it offers. Each plot is a monopoly location: land is not transportable from place to place.

A properly and fully implemented charge based on the assessed [taxed] rental value of land is nothing more than a payment to the community for benefits actually received. What the landholder pays to the Exchequer is thus compensation for what he gets the exclusive right to enjoy.

Although generally known as LVT, this policy is more accurately described as a National Land-Rent Charge. The Land Value Taxation Campaign is therefore advocating the collection of the rent of land for public revenue purposes, to be effected by passage of a National Land-Rent Bill.


While we still have the dictionary open, we find that “holism” is the tendency in nature to form wholes that are more than the sum of the parts by creative evolution. We are not too sure about that “creative evolution” bit, but we think that in political economy almost everything affects land value and that LVT therefore beneficially affects almost everything.

Let us look:

(i) LVT, in its local guise of site value rating (SVR), can replace both the council tax and the UBR, encompassing vacant and derelict land but excluding the value of all buildings and other developments. There is no reason to stop at just replacing these existing property taxes. One can go beyond this and collect sufficient revenue to replace centrally distributed grants to local authorities as well. Even so, LVT is not to be considered just a little local tax, for it does much more.

(ii) Spending on infrastructure by government bodies and private undertakings leads in general to large increases in the value of land in the surrounding neighbourhoods. Improvements in transport infrastructure and the associated increases in land value are a familiar example. Whilst LVT is admitted to be a highly suitable means of capturing this land value to defray project costs, it is frequently forgotten that LVT is not to be treated as a means of collecting only increments in land value but all pre-existing land value too, and is not merely to be used towards financing part, or even all, of a single project, but as the fundamental source of income for the public revenue.

(iii) LVT is similarly cited as applicable to regeneration plans, usually in an urban context and frequently in relation to the long-standing and vexed question of recovering “planning gain”. LVT does of course do this and, being related only to site value, it also rewards good development and penalises under-development. In a seeming paradox, it acts to make over-intensive development (expensive high-rise office blocks, lots of little houses cramped together) much less likely. The present system tolerates withholding and under-use of land, which makes it scarcer and dearer, obliging developers to resort to essentially uneconomic over-exploitation.

(iv) LVT, then, is not a mere financial measure, a better way of revenue-raising. It is certainly better to collect the national land-rent than it is to levy taxation on production, earnings, goods, services, and savings, but the consequences of a deliberate move to full operation of LVT go beyond merely finding a different way to fill the Chancellor’s coffers.

(v) Collecting the rental value of land as close as is possible to the theoretical maximum 100%, leaves bare land with practically no selling value, since the capitalisation of a theoretically 0% rental stream which the landholder can retain, is zero. Land is worth holding only for use, and for good use to boot. Speculation in land is killed stone dead. Whereas speculation in goods can do little harm, since withholding products from the market will stimulate further production at home and encourage imports from abroad [and may well be beneficial in making supplies available later if and when a genuine shortage occurs – think of the oil trader laying in stocks of heating oil against an especially cold winter], land is a natural monopoly, and its hoarding must always lead to artificial scarcity and diseconomy.

(vi) Housing is affected in many ways by adoption of LVT. Apart from the benefits deriving directly from what has been said above, shifting taxes off labour and capital, and off goods, including houses, means that buying a home no longer means shelling out to buy the land (in south-east England, half of the cost or more), but just the building, fencing, driveway, and any special improvements such, perhaps, as to the garden). Any mortgage required is for a much lower sum. The only outgoings are repayment of this now lower mortgage and meeting the land-rent charge (the LVT demand).

(vii) The mechanism of the cycle of boom and slump depends crucially on the rôle of land in the functioning of the economy. This is discussed in “Boom to Slump”. In essence, private appropriation of the rent of land leads, in a rising economy, to land speculation, to over-building to justify the rising cost of over-priced land, and to over-lending by banks on the illusory security of the rising spiral of land values – up to the point at which the bubble finally bursts. When site rents are paid to the national exchequer, private profit can be made only from the activities of labour and capital. Undistracted by the call of speculative takings from land dealing, the economy grows in an orderly manner, with the rewards of enterprise and effort going to those responsible for producing them.

(viii) Apart from what is needed to ensure capital formation, at present, created wealth is distributed as wages and to landowners. Because basic wages are set at the economic margin, and because that margin is artificially depressed by widespread under-use and withholding of land, wages are far lower than they ought to be. Most wage takers receive little more than they need to keep themselves and their families in something ranging from bare respectability to a reasonable comfort. Consequently they have little or no scope to set aside savings and become significant owners of capital. Thus it is that the owners of land (private persons, trusts, and bodies corporate) also own most of the capital. The assessment and collection of land values in place of present-day taxes will ensure that those who actually perform work become the chief providers of new capital.

(ix) How then can there be unemployment, other than transient? Men are idle, wanting to work. Capital too lies idle, rotting by the day. If people cannot supply, they cannot effectively demand. If the problem does not lie with labour or capital, it must lie with land. In fact, insufficient land is available on affordable terms. Land stands unused or under-used. Furthermore, Government sneaks its way in and imposes job-destroying taxes on labour and capital. LVT not only replaces those taxes but obliges landholders to put their land to use to generate the income to meet the land value duty.

(x) Imbalance in regional development is not a question of capital investment or of labour productivity; it is a matter of location. Northern Ireland, much of Scotland, much of Wales, and indeed large areas of England, lie on the periphery, distant from the economic concentration in London, the south-east, and the continental EU. Land values are normally lowest at the outer fringes, reflecting those regions’ geographical and other disadvantages as compared with the centre. To-day’s taxes – PAYE, VAT, NICS and motor fuel duty – take no account of this. At the margin, the taxes tip potential wealth creation into unprofitability. LVT, however, by definition, bears lightly at the fringes, and creates tax havens precisely where they are most needed.

LVT – collection of the national land-rent – is not just a tax policy, not just a useful tool to stimulate urban (and rural) regeneration or help pay for a new transport scheme, or any other items we have mentioned, or, indeed, not mentioned. It is much more – a holistic remedy that will fully reward the attention devoted to its establishment and nurture to fruition.