What prospects for LVT?

Having been out of the UK for several months, I have had an opportunity to get a sense of what the politics of the country is, viewed from the outside. It does not look good. The economy of the UK is undoubtedly in a bad way, but neither politicians nor economics commentators seem to have much idea about what is going on. William Keegan and Will Hutton, who write for the Observer, are ureconstructed Keynesians, and even when their account of events is perceptive, they have nothing to offer apart from old failed policies. The FT commentators stand out from the mass but even they offer little that sounds convincing. Particularly depressing is the general quality of the comments made in response to columnists’ blogs, even on the sites of the “quality” newspapers, again with the exception of the FT. With rare exceptions these display an outstanding level of ignorance. They are the views either of The Man in the Pub or unreconstructed Marxists in the Arthur Scargill mould. These are the people whose opinions would have to be shifted if LVT were to enter the field of public debate.

The quality of the British press seems particularly poor in comparison to Sweden’s. Express and Aftonbladet look like “red tops” but contain what by British standards is serious content, whilst the two quality newspapers, Svenska Dagblad and Dagens Nyheter, have a heavier cultural, political and economic content than any British newspaper apart from the FT. Despite the higher quality of public debate in Sweden, it has not prevented the country from being affected by the currrent economic problems, with a slide in property prices following last year’s boom, countered in some sectors of the market by the ill-considered abolition of some property taxes. Norway has escaped trouble, no doubt because of its huge oil reserves. In Denmark, the Roskilde Bank, the country’s eight largest, was caught out by the sub-prime mortage crisis and had to be bailed out by the national bank. I would not be surprised to see more Scandinavian bank trouble, due to their involvement in property in the Baltic states, which participated in the property boom.

I have had curious correspondence and come across curious reports in which LVT has come close to or actually reached the surface. One respected journalist, who has often come close to hinting at LVT, told me privately that he was in favour of it, with no reservations. A repected Oxbridge academic went so far as referring to it as “the dog that was not allowed to bark” – this is discussed elsewhere on the LVTC web site. This recalls the comments by Sir Michael Lyons, who praised LVT in his final report and then moved on to dilute the idea.

One of the things that I turned up by accident was “Who owns London”,  Four families own the lion’s share, it turns out. There is no surprise there and again, you can read about it on this web site. What does all this mean for LVT campaigning?

My suspicion is that powerful vested interests apply subtle pressure to ensure that the subject is keep off the public agenda. One would not be able to air the subject on, for instance, Any Questions or Any Answers, where the topics are finely screened. The RICS would never be able to come out in favour of LVT. If the subject is raised amongst people who work in think tanks such as the Fabian Society, the best they will say is that it is quite a good idea, but… Quite often, they will move to attack by describing LVT supporters as wild-eyed vegetarians or otherwise cranky individuals. Which disposes of the argument, doesn’t it? The subject sometimes gets a mention amongst Oxford academics, but again, they will almost never come out openly in favour.

Prominent amongst the body of LVT opponents are unreconstructed Keynesians or Marxists. Here is vested interest of another kind, in long held and cherished ideas despite all evidence. The economic events of the past 12 months have provided almost daily opportunities to make the case for LVT. What of the political events? Labour will probably be swept away at the next election, the Liberal Democrats will not take their place and the chances are of a Conservative government. They too have no new policies, being able only to repeat the mantra of “tax cuts”. There is no sense that anyone has the idea that what is taxed, or not taxed, is at least as significant as the amount of tax collected.

Taking all this together, it can be concluded that LVT has no chance of being implemented in Britain within the period of the government after this one, which realistically means until about 2025, which, in the absence of LVT, will be a year or two before the crash after the present one. And the opposition will regroup, leaving the incumbent Conservatives will little effective opposition for at least until the middle of the next decade.

What of other countries? The SNP in Scotland is going to burn its fingers with local income tax. The Irish Republic will  before long be hit by the bust after the boom, which should provoke reflection. The near continent? Without an understanding of the country it is impossible to say.  Belgium is in upheaval over its community divisions. France and Italy look improbable for LVT. Of Spain I know nothing, but there is LVT literature available in Spanish from an organisation based in Nicaragua. Germany would greatly benefit from LVT, with high unemployment and the former East Germany continuing to trail. The same applies to the Netherlands, Sweden and Denmark. Sweden is in an odd mood at present. There is, on the one hand, a desire for the return to the secure welfare states that were a feature of those countries 40 years ago. On the other hand, the high taxation of earnings is resented and it is a recognised cause of the high unemployment levels, some of which is concealed in sickness figures.

Denmark, of course, was one of the few countries where LVT was actually applied, but it was promoted by the Justice Party, which was, I understand, a single-issue party. When other issues came to the fore, the Justice Party lost its seats and out went LVT. But that was not – though I stand to be corrected – the only reason. Danish LVT was on capital values, which, due to the low level of LVT, had bubbled up, to the point that people, often pensioners, felt that they were paying tax on a price which was absurdly higher than they had originally paid. LVT campaigning in Denmark would need to recover ground which has been lost, which would be more difficult than if there had never been LVT in the first place. The same complaint about taxation of capital values applies in Sweden, where the centre-right government abolished a property tax as a concesssion to participation in the coalition by the Christian Democrats, with a base of pensioner support. Despite the partial dismantling of the Swedish welfare state, people are still too comfortable to be interested in economic reforms, and in any case, outside the three main cities, the population density is so low that land prices are not an issue and the cost of a house is often little more than the building cost.

An important contributor to Sweden’s public revenue comes from mineral royalties and income from LKAB, the nationalised mining company that works the Kiruna iron ore mountain. I do not have figures but this revenue is of course from “Land” in its ecnomic sense.

One problem for all LVT campaigners is that the movement is not recruiting new members in sufficient numbers, which makes for an age profile that will lead to non-viability over the next couple of decades. It is necessary to draw in a wider body of supporters.

What can be concluded? Although events are moving our way, we do not have the people to present the case. Perhaps we need to present the case differently? Perhaps we should look further afield than Britain? The difficulty is that we know little about circumstances abroad. It might be useful to have some of the key material on our web site translated into other European languages, but which ones? There is Danish material on the site already. German, French and Spanish are obvious choices, but do we have people who can do the work?  Dutch? Swedish is possible but with only 9 million speakers, many of whom know English, is it worth the expense?

LVTC’s own remit is to campaign for LVT in Britain, but if it were to be applied in any EU country, it would enormously strengthen the case for LVT in the UK and the example would make it far easier for LVT campaigners in Britain.