Saturday, 16 January 2010

Economic Justice: Land Value Tax

The Coalition for Economic Justice recently organized a House of Commons Seminar on Land Value Tax, hosted by Vince Cable MP. The seminar was aimed at parliamentarians and policy makers and saw a packed house. It examined the advantages of land value taxation, how it might be introduced and how transitional problems could be dealt with.

"Sir Sam Brittan (Financial Times) said the case for LVT was clear and simple. But perversely, people find this difficult to grasp; they expect complexity in taxes. Being a tax on unearned value increment, LVT was no disincentive to Labour or Capital. As a temporary expedient, pending the full introduction of LVT, he advocated the auctioning of planning permissions.  
Ashley Seager of The Guardian cited instances where public expenditure had led to massive increases in property (i.e., land) prices. In one case, the building of a school had led to such a big increase in local property prices that teachers in the school could not afford to live in the area. As the land of this country is provided free of charge by nature, “rising property prices do not raise national wealth one single penny”. They serve no useful economic purpose and are an obvious target for taxation. 
Professor Iain McLean (Politics, Oxford University) explained how, as a member of the independent expert group set up by the Calman Commission, he was looking at LVT as a way of financing public services in Scotland and Wales. LVT would replace council tax, business rates and stamp duty. 
David Triggs (Henry George Foundation) in the opening address also highlighted “The challenge that confronts those interested in establishing a just and equitable division of the fruits of production lies essentially in recognising that land values impound that part of the value created which is attributable to factors external to the individual, e.g., the country’s infrastructure, the system of governance, law and order and the density of population. It is manifestly unfair to tax the individual on what he produces while those community-created values are provided tax-free to the benefit of the landowner. These land values, arising essentially from location, should be the primary source of taxation.”  
Fred Harrison (Land Research Trust, and author of 'Boom Bust: House Prices, Banking and the Depression of 2010') reinforced this message. He showed how failure to collect location value led to diminished opportunity and life expectancy at the marginal location. James Black (a sixth-former) said LVT made common sense to the young and the opportunity should not be missed". 
This seminar was the first step in a campaign to interest parliamentarians in the formation of an all party parliamentary group on Land Value Taxation.  However a lot more work will be needed due to counter the huge vested interests of those who currently accumulate great wealth without adding any value, and who will resist the introduction of such a tax using all their influence, power and wealth.