Common parts of all submissions

Common parts of all submissions relating to Aims of the Campaign, definition of terms, wider benefits of LVT and other background information.

 

ABOUT THE LAND VALUE TAXATION CAMPAIGN

The Land Value Taxation Campaign (“the Campaign”) is a non-party organisation which was established with the aim of securing legislation which would fundamentally change the basis of public revenue in the United Kingdom. It proposes that existing taxes on wages, goods and services should be progressively replaced with a property tax on the annual rental value of all land. This is referred to as Land Value Taxation (LVT) and is defined and explained in later sections. The Campaign would wish to see 100% of the land value collected in this way.

GENERAL BACKGROUND CONSIDERATIONS

1 The Land Value Taxation Campaign believes that confusions arise through imprecise definitions of “land”, or rather, through indiscriminate use of otherwise precise definitions. Whereas at law, “land” means immovable property (“real property”), the Campaign uses the word in its meaning in political economy (the whole of the material universe outside of man and his products). A landowner in economics is not necessarily the freeholder. Anyone with a beneficial interest in land (a holding which could be let or sold at profit) is to that extent a landholder. Popular usage more nearly corresponds to the Campaign’s: people do not normally think of houses, factories and farm buildings as “land”. To add to the potential for confusion, book keepers drawing up balance sheets regard land as capital, which in political economy it definitely is not.
2 The Land Value Taxation Campaign considers that this confusion has implications for a wide range of policy issues, including transport, and is one of the reasons why they are a pparently intractable. 3 Although the Campaign was established to promote the case for a national land-value tax, we would point out that, as is the case with all forms of property tax, LVT is suitable for all tiers of government and could be readily adapted to any multi-tiered structure, for example that resulting from Scottish devolution or the Greater London Authority; thus local expenditure on transport infrastructure would give rise to an increase in both the national and local tax bases. 4 We point out en passant that Land Value Tax is morally justified, being in accordance with the “benefit principle”; land values are created and sustained by the presence and activities of the community today – any arrangement made in previous centuries is of little relevance since land value rests on the assumption that public services and a state of civil order will be maintained today and for the foreseeable future. Railways provide a good example of the operation of this principle.

DEFINITION OF LAND VALUE TAXATION

1 LVT is a tax on the annual rental value of land. The valuation is the current annual market rental value of the land alone, disregarding buildings and other improvements.

2 Each unit of land is assessed at its unimproved site value, with all surrounding land taken as being in its existing condition.

3 All land, including vacant and agricultural land is subject to the tax, and the valuation is on the basis of optimum use within whatever permissions and constraints apply.

4 In practice, LVT would operate in much the same way as the present national non-domestic rate, with the difference that no land would be exempt and buildings and other improvements would in effect be de-rated.

DEFINITION OF LAND VALUE

DEFINITION A

The following definition of land value is that given in Section 3 of London Rating (Site Values) Bill, 1939‡.

The annual site value of a land unit shall be the annual rent which the land comprising the land unit might be expected to realise if demised with vacant possession at the valuation date in the open market by a willing lessor upon a perpetually renewable tenure upon the assumptions that at that date –
(a) there were not upon or in that land unit –
(i) any buildings erections or works except roads; and
(ii) anything growing except grass heather gorse sedge or other natural growth;
(b) the annual rent had been computed without taking into account the value of any tillages or manures or any improvements for which any sum would by law or custom be payable to an outgoing tenant of a holding;
(c) the land unit were free from any incumbrances except such of the following incumbrances as would be binding upon a purchaser –
easements; rights of common; customary rights; public rights; liability to repair highways by reason of tenure; liability to repair the chancel of any church; liability in respect of the repair or maintenance of embankments or sea or river walls; liability to pay any drainage rate under any statute; restrictions upon user which have become operative imposed by or in pursuance of any Act or by any agreement not being a lease.

[“works” does not include any works of excavation or filling done for the purpose of bringing the configuration of the soil to its actual configuration;]
[“road” does not include any road which the occupier alone of the land concerned is entitled to use.]

CAPTURE OF DEVELOPMENT VALUE

1 Under a system of LVT, the valuation would be based on the full rental value of the site, at its optimum permitted use. Thus, increases in land value (betterment) arising from planning decisions would automatically be collected as a revenue stream, along with existing land values and betterment arising from all the other causes which influence land values.

2 Furthermore, the system would contain a built-in compensation mechanism. Where the value of land was depressed by – for instance – planning blight, traffic noise, or the presence of listed buildings or other restrictions on its use, this would naturally be reflected in the valuation, and the landowner would be relieved accordingly.

3 Thus, LVT is a payment for benefits actually received, and falls only upon values which can be enjoyed or realised. If planning restrictions prevented more intensive or rent-enhancing use, eg, requiring preservation of a garden, or limiting a piece of land to use as a golf course, or for agricultural purposes, the land value would be assessed accordingly. The introduction of LVT would not conflict with the existing system of planning controls; on the contrary, it would greatly reinforce the planning process by removing, or at least reducing, the financial incentive for overturning restrictions on development contained in existing statutory plans.

FOR FURTHER INFORMATION

1 The London Rating (Site Values) Bill of 1938-1939 is an example of model LVT legislation. This would obviously have to be updated and adapted to suit present circumstances and to conform to the law in Scotland and Northern Ireland. Copies are available or may be downloaded.
The URL is http://www.landvaluetax.org/government-papers/london-rating-site-values-a-bill.html

3 Proposals for a transition from existing local taxes to a land-value based system are set out in the Campaign’s publication “Options for Property Tax Reform. Copies are available or may be downloaded.
The URL is http://www.landvaluetax.org/submissions-to-the-government/options-for-local-government-finance.html

5 Following a comprehensive study of local taxation, commissioned in 1986 by Brisbane City Council and chaired by Sir Gordon Chalk, KBE, LlD, formerly d eputy premier of Queensland, a report was published in 1989 in which the committee strongly recommended that the city keep its existing system, based on site values. T his is essentially the stance advocated by the Land Value Taxation Campaign. A copy of the summary of the Chalk Committee’s two-volume report is available on request or may also be downloaded.
The URL is http://www.landvaluetax.org/government-papers/brisbanes-inquiry-into-land-value-rating.html