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Dishonest principles

One of our supporters sent a copy of our comments on the report of the Treasury Committee Tax Review Inquiry back to the Treasury Committee. It was answered by the House of Commons Committee Assistant as follows:

“The Committee did not give an opinion either way on whether land value tax was worth further consideration. Instead it noted that radical tax changes had been mooted, and drew attention the tax treatment of debt and equity as well as land value tax. Its conclusion was:

“While we attempt to construct some principles to guide policy makers, we recognise that sudden wholesale reform is likely, in some areas of the tax system, to be impracticable. The principles we and others set out can shape the system over the long term. We welcome the fact that tax policy making is currently the subject of considerable analysis and scrutiny, particularly by practitioners. If this can be sustained, there is a reasonable prospect of gradual improvement to the tax system.”

“I’m afraid I cannot add to what is in the Committee’s report.”

Underneath this polite and complacent language lies a cesspit of intellectual dishonesty.

Land value taxation, as we are proposing, is neither sudden nor wholesale, nor is does it have to be seen as a reform. Indeed, in other correspondence at other times, we have been told that Britain already has land value taxation, in the form of the Council Tax, the Business Rate and Stamp Duty. For the sake of practicality alone, land value taxation would initially replace these, and possibly Inheritance Tax also. Far from being a sudden wholesale reform, it would simplify and tidy-up part of the present tax system. What happens after that is a matter of political choice. It could indeed transform, as Britain’s other taxes were phased-out.

Many countries have LVT in roughly the form we advocate, and quite low levels suffice to prevent valuable urban land being held derelict and out of use for decades, as happens in the UK, even when the sites concerned have actually got full planning consents. So to call it a “sudden reform” is dishonest piffle.

Equally worrying is that the government is confining its consultation to practitioners, who, in the nature of things, have a vested interest in keeping the present tax system going.

The entire conduct of this Inquiry was shabby and the damage done will go on far into the future. Failure in taxation policy, and the absence of effective land value taxation, lies, we would argue, at the core of the continuing financial crisis, which has now been going on for almost four years, with no satisfactory resolution in sight. The broader failure of British economic policy, of which taxation again lies at the core, is evident from the exchange rate against stable currencies such as the Swedish Krona, with a fall of nearly 40% since 2006.

Whether the public will continue to tolerate this state of affairs quietly is a question that the government should be addressing. There is a mood of anger in the country. People feel let down by politicians in all the main parties, and believe that they are being unfairly made to pay the price of economic mismanagement, when those responsible are being rewarded with bonuses. In the face of this, complacency is not appropriate.