Tuesday, 12 December 2017

 land value tax faces large political obstacles

So says a new publication from Civitas, an independent UK think-tank. This statement of the bleedin obvious comes at the end of very good chapter extolling the virtues of LVT. So whats their answer to overcoming political obstacles?
Hand over development rights to Local Authorities:
remove from landowners their ability to withhold land in pursuit of more favourable circumstances and a higher sale price at some point in the future. This could be achieved by enabling the public sector to purchase land that is designated for new housing at close to its existing use value 
 Pure funk! If we cant do the right thing then lets try some cack-handed largely untried Scheme instead!



Here in more detail is how Daniel Bentley, the author of  The Land Question  sets out his case for this solution to unearned land values.

First, he agrees that LVT is good, LVT is the answer to The Land Question:

There are strong arguments for taxing increases in land values ahead of much else. As the classical economists set out, rising locational value is an unearned income. The source of that unearned income is not just the advance of the wider community but specific public investments in infrastructure, such as roads, sewerage, public services and so on, all of which increase the amenity of housing in the local area and without which the land would be very much less desirable and therefore commanding lower values.

So far so good. But now comes the caveat. We tried Betterment Levy etc. before and it didnt work:

But introducing a tax on all land on an annual basis in the form of a land value tax faces large political obstacles.

A narrower tax focusing only on the very considerable increase in value that accrues to a small number of landowners when planning permission is granted is attractive on the same principles and has been attempted on various occasions in the past in the guise, for example, of a development charge and a betterment levy.

But such a tax is always impeded by the landowner’s ability to sit out such a policy and bring development to a halt.

Hes right of course. But his political fix of leave development rights to Local Authorities? Heres the proposal in full

A different way of achieving the same end would be to remove from landowners their ability to withhold land in pursuit of more favourable circumstances and a higher sale price at some point in the future. This could be achieved by enabling the public sector to purchase land that is designated for new housing at close to its existing use value – that is, without regard to the prospective planning permission that it might receive. This power might be wielded by local authorities, development corporations, combined authorities or the Mayor of London. Where utilised, this would enable the public sector to purchase land, grant itself planning permission and then either sell it to developers at its residential value, thereby collecting the increase for the state, or keeping it in public ownership to generate a permanent revenue stream and/or to provide affordable accommodation at much less cost than currently.

Did you follow that? Does this sound like a politically attractive idea?

Think what the Daily Mail would make of this!  They would shriek THIS LAND GRAB IS COMMUNISM ! ! ! !

NO! NO! NO!  LVT on all land, reclaiming the community-generated value, is the ONLY way.

Maybe communism in the form of total state ownership of all land would be an alternative. Isnt that what they achieved in Hong Kong under colonial rule, and which received such high praise from the high priest of neo-liberal capitalism, the great Milton Friedman of Chicago?
The only question that matters for LVT is:
HOW DO WE OVERCOME THE political obstacles?

Bentley, Daniel (Nov 2017) The Land Question: Fixing the dysfunction at the root of the housing crisis   Civitas—Institute for the Study of Civil Society Tufton Street, London SW1P 3QL   and it’s free to download too! Well worth a read.




[1] Bentley, Daniel (Nov 2017) The Land Question: Fixing the dysfunction at the root of the housing crisis   Civitas—Institute for the Study of Civil Society Tufton Street, London SW1P 3QL   and it’s free to download too! Well worth a read.

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