The valuation would be based on market evidence, in accordance with the optimum use of the land within the planning regulations. It is not an arbitrarily assigned value, nor is it a tax based on the site area alone. If the current planning restrictions on the use were altered, the site would be reassessed. All land, including agricultural land, would be assessed and subject to the tax.
The advantages
LVT is a natural source of public revenue, with all land making its full contribution to the Exchequer, allowing reductions in existing taxes on labour and enterprise. If we tax labour, buildings or machinery and plants, we discourage people from constructive and beneficial activities and penalise enterprise and efficiency. Existing taxes prevent economic activity from taking place, that would have occurred in the absence of the tax. This is known as“ deadweight loss”.
The reverse is the case with a tax on land values, which is payable regardless of whether or how well the land is actually used. It is a payment, based on current market value, for the exclusive occupation of a piece of land. There is no deadweight loss. In the longer term, this fundamentally new and different approach to revenue raising will stimulate new business and new employment, reducing the need for costly government welfare.
Economic activities are handicapped by distance from the major centres of population. Conventional taxes such as VAT and those on transport fuels cause particular damage to the remoter areas of the country. Land Value Tax, by definition, bears lightly or not at all where land has little or no value, thereby stimulating economic activity away from the centre – it creates what are in effect tax havens exactly where they are most needed.
' LVT stimulates economic activity away from the centre – it creates what are in effect tax havens exactly where they are most needed '
The land market does not function efficiently. Sites remain vacant for years even though there is planning consent for development. The rents of vacant shops and industrial buildings do not fall to market-clearing levels and they can remain vacant for years. The necessity to pay the tax obliges landowners to develop vacant and under-used land properly or to make way for others who will. Land Value Taxation also deters speculative land holding. Thus dilapidated inner-city areas are returned to good use, reducing the pressure for building on green-field sites.
Competition makes it impossible for a business producing goods on a valuable site to charge more per item than one producing similar goods on less valuable land – after all, producers and traders at different locations are paying different rents to landlords now, yet like goods generally sell for much the same price and employers pay their workers comparable wages. The tax cannot be passed on to a tenant who is already paying the full market rent.
The complexities of Income Tax, Inheritance Tax, Capital Gains Tax and VAT are notorious. An army of the most talented individuals in the land, working as accountants, lawyers, and senior tax officials, devote their energies to a cat-and-mouse game in which the former are trying to outwit the latter. This creates no wealth. By contrast, Land Value Tax is straightforward and substantial replacement of existing taxes by LVT would put an end to this nonsense. Once the system has settled down, landholders will not be faced with complicated forms and demands for information. Revaluation will become relatively simple.
Land cannot be hidden, removed to a tax haven or concealed in an electronic data system. The liability to pay the tax is linked to the land title and would ultimately be a condition of the validity of
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