Land Value Tax

Speak to any Thanet business owner and they will let you know quite how criminal they think business rates are, at a time when shops are going under on every high street and online shopping is sky-rocketing.

And the council being what it is, nobody particularly likes paying council tax.

Meanwhile, whether it is Pleasurama or Dreamland, sites left derelict whilst developers squabble around them are something sadly all too widespread this side of the Wantsum.

One Green Party policy would abolish both of them in one stroke – replacing two of the most widely loathed taxes with a Land Value Tax, as promoted by Winston Churchill (speaking to the Commons in 1909).

A Land Value Tax (LVT) has been a long-standing Green Party policy commitment – and here in Thanet with its widespread housing problems, we can see the need for it clearly. Luckily Green Party MP Caroline Lucas has been raising the issue in parliament with her Land Value Tax Bill.

She is calling on the Treasury to look into the practicalities of replacing Business Rates and Council Tax with a Land Value Tax – with a view to phasing it in over a period of 10 years or more. So what is an LVT?

We believe it is a compelling way to tackle destructive practices in the volatile property market and reform the way property is valued by looking into a new tax on unearned profits. LVT would be levied on the owner, rather than the occupier of property.

This means that land speculators who buy up banks of land, derelict areas or properties that have deliberately been allowed to become run-down, would pay the same as those who take care of and develop their properties, therefore incentivising a more productive use of land.

Caroline Lucas says: “A Land Value Tax could be a fair and progressive way to encourage both the creation of more homes, and a more efficient and sustainable use of land by making it unprofitable to sit on unused land.

“Over a period of time, it could help to stabilise the property market and tackle the boom-and-bust factor that contributed towards the 2008 financial crisis – discouraging disproportionate amounts of capital from being tied up in property and excessive accumulation of debt.

“Unfortunately, despite increasing support for the idea amongst economists and politicians (2), no government has yet been willing to look seriously into the possibilities of introducing an LVT. With the IFS Mirrlees Review stating that the case for a ‘thorough official effort to design a workable system’ of LVT is ‘overwhelming’, I’m now calling on the Treasury to commission research into how the reform might work in practice.

“The signs so far are not encouraging – in responding to my previous debate on LVT, Treasury minister David Gauke stubbornly refused to consider the benefits of the tax and completely misrepresented the IFS position. But I’m hopeful that the Treasury will look again at the need for research into an LVT, and recognise that the UK is in dire need of progressive solutions to make our broken tax system more effective.”

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