Opportunity for a fair and efficient taxation system lost again 7 March 2024

HS2: vicious or virtuous? 27 September 2023

FIRE, the carrot and the stick 18 August 2023

We tax the wrong things 1 August 2023

What are the advantages of LVT? ChatGPT’s opinion 26 May 2023

Serious about growth? 20 March 2023

NIMBYs and YIMBYs 16 January 2023

Ignorance or hypocrisy? 4 January 2023

Something fresh in the state of Denmark 17 October 2022

It’s a shame about the real world 30 June 2022

The Elizabeth Line: winners and losers  25 May 2022

Land Value Tax Champions The Little Guy Against Amazon 1 March 2022

Serious about levelling up? 2 February 2022

Rewilding or rehashing?

Community created land wealth is feeding global corruption 6th October 2021

A rock, a hard place and the abyss 6 September 2021

Morrisons: wealth extraction not wealth creation 4 August 2021

The simplest, greenest and fairest way to revitalise our high streets 21 April 2021

Time to be brave, Chancellor 26 February 2021

Is taxing wealth possible. A good start. 4 January 2021

Confusing rents & profits 3 December 2020

Unintended overseas aid we could cut with honour 27 November 2020

Don’t penalise public sector workers, reform our corrupt tax system 23 November 2020

Private ownership versus community stewardship 4 November 2020

Trump could not avoid paying a Land Value Tax 29th September 2020

Reform of the planning system could benefit everyone 7 August 2020

A real New Deal  1 July 2020

When will we get a Chancellor who understands economics?  12 March 2020

“We’re not afraid to take them on!” Walk on    5 November 2019

Jeremy Corbyn launched the Labour Party General Election campaign with a call to challenge vested interests. “We’re not afraid to take them on!” is a brave statement because although those he singled out—dodgy landlords, tax dodgers, bad bosses, greedy bankers, media barons—represent only a tiny minority of citizens, they wield disproportionate power and influence, not only over the way we are governed but also over what we are told and what we believe.

In no sphere is the difference between the Few and the Many as stark as it is in the matter of land. Land accounts for over 50% of net UK wealth and two-thirds of it—40 million acres—is owned by 0.36% of the population while 26 million households share about three million acres and the other 15 million (and rising) households own none at all. And many of all these are constrained multigenerational households because the kids cannot afford to set up on their own. Corbyn singled out the Duke of Westminster as a “dodgy landlord” but this is the least of it. Far more socially damaging than the way he treats his tenants is how he benefits from the corrupt system established by his ancestors and their cronies in order to appropriate our wealth. For example, if Hugh Grosvenor had been liable for 40% Inheritance Tax on the £9 billion estate he inherited in 2016, he would have had to sell some of his assets, as we have to when death duties come around. His bill was actually of the order of £100,000 (about 0.001%) or less than a couple of month’s rent for one of his many houses in Mayfair. By controlling the legal and fiscal systems over the centuries and moulding them in their own interests, the Grosvenors and their ilk have been able to perpetuate their wealth and preserve their “elite” status, in many cases ever since the original “Gros Veneur” (Fat Hunter) and fellow warlords invaded Britain nearly a millennium ago. Ironically, the landed toffs on their sprawling estates have a lot of unwelcome new neighbours benefiting from the fiscal framework they so carefully created for themselves over the centuries, notably foreign criminals and speculators who have grown rich from financialisation of the economy, both groups being major “investors” in land in the United Kingdom.

The most impressive aspect of how landowners have managed to rig the game in their own favour is how they succeeded in shifting the entire burden of taxation off wealth and unearned income onto productive activities like work, trade, enterprise and investment, despite the observable economic damage that this inflicts. Anthony Molloy, Chair of the Labour Land Campaign says, “For years, vested interests successfully suppressed even any discussion of the central economic role of the UK’s most fundamental asset, its land. But the lid is coming off the box and it can’t be long now before we the people recognise that taxing wealth makes sense, and that land wealth is the easiest to tax. As evidenced by the dishonest, hysterical “Garden Tax” response to the 2017 Labour Party manifesto, massive forces will be mustered by the Few to oppose any form of land value taxation and we should be afraid. But with the Many having so much to gain, let’s walk on through the storm, there’s golden sky at the end.”

Lifting the Veil   5 June 2019

Land for the Few: lifting the veil

This week’s Labour Party report on Land for the Many[1] is the most concrete evidence yet that the veil of silence drawn so successfully over the repository of 51% of net wealth in the United Kingdom[2] is at last being lifted.

Land was originally written out of economic theory with the shift from classical to neoclassical economics in the late 19th century: instead of the three distinct classical factors of production, namely labour, capital and land, the last two were conflated: this is a very unhappy marriage because there are irreconcilable differences between the respective characteristics and economic roles of land and capital, but it is a very convenient one for landowners when it comes to government policy-making, especially fiscal policy. Even in classical economics, close reading of Adam Smith shows that, while his treatments of labour and capital are perfectly internally consistent, his treatment of land contains contradictions: cynics have suggested that he was obliged to obfuscate certain aspects of the real role of land because his sponsor was the Duke of Buccleuch who was at that time (and still is today!) the biggest landowner in the country. It would indeed be ironic if the father of economic science and free-market philosophy was nobbled by a vested interest when he was inventing the discipline.

This shift in economic theory paralleled a gradual shift in fiscal policy from feudal times when most state funding derived from taxes on land. With property-owning restrictions on who could vote and sit in the increasingly powerful Parliament, the tax burden was steadily shifted onto labour (Income Tax) and other economically productive activities (taxes on sales and profits). Our taxation system has been created by landowners and today, property taxes account for only a tiny part of government revenue.

From 1906, a new force emerged in parliamentary democracy that was to become the Labour Party, the main economic plank of which was to shift taxation back onto land wealth. In power, they passed the 1931 Finance Act which instigated a land value tax but, before this could be levied, a Tory-dominated administration took over, stopped the preliminary valuation process and revoked the Act. All talk of taxing land wealth then disappeared from the discourse of the country’s main socialist party until the 2017 election manifesto compiled under the leadership of Jeremy Corbyn and John McDonnell.

Anthony Molloy, Chair of the Labour Land Campaign, welcomes this report, “The sub-title—Changing the way our fundamental asset is used, owned and governed—bears witness to the commitment of the reinvigorated Labour party to repair the dysfunctional UK land market that has been engineered over centuries to benefit a few very rich citizens at the expense of the many.

[1] http://labour.org.uk/wp-content/uploads/2019/06/12081_19-Land-for-the-Many.pdf

[2] Office for National Statistics. 2018. The UK national balance sheet estimates: 2018

Sleight of hand

18 April 2019

It was recently reported that Council Tax debt has soared by 40% in 6 years and now stands at over £3 billion. In England 305 people have been jailed for non-payment – many of them too poor to pay.

This is not surprising as Council Tax is the most regressive tax we have. The billionaire owner of a Westminster mansion pays almost the same as the tenant of a Weymouth bedsit. One such billionaire owner, American hedge fund manager Ken Griffin, who paid £95 million in January for a property near Buckingham Palace with a gym, pool and underground extension, will get a Council Tax bill of £1507.70 in 2019; this compares with the property tax of upwards of $1.6 million per annum he pays on his $238 million flat in Manhattan.

Tenants are squeezed by both increasing rents and rising Council Tax bills. With the planned total withdrawal of central government funding for local authority expenditure by next year there is only more misery to come. Yet private landlords receive over £10 billion in housing benefits. No other country imposes a property tax on someone who is not the owner

The reluctance of government to tackle the iniquity of the Council Tax is no doubt owing to the spectre of the Poll Tax riots which led to hasty implementation of a new hybrid property/poll tax. Since 1993, failure to revalue coupled with a four-fold rise in property prices has eroded the property component to such an extent that, in much of the UK, Council Tax has essentially become the unfair, massively unpopular Poll Tax it was supposed to replace: an impressive piece of sleight of hand indeed.

It should be recognised that landlords perform a service in providing decent buildings for people to live in and this requires an outlay of expenditure. However the bigger part of the rent received, certainly in London and the South East, is due to the value of the location and that has nothing to do with the actions of the owner.

Carol Wilcox, Secretary of the Labour Land Campaign, says, “There is only one way to fix the property tax system and that is a Land Value Tax which charges the owners for the benefit they receive from location. This would force out exploitative landlords and bring down house prices. Local authorities could then buy up rented properties with sitting tenants and acquire a secure revenue stream at the same time as cutting the massive housing benefit bill.”

Did you get your fair share?

17 October 2018

“In 2017, the UK’s net worth was estimated at £10.2 trillion; an average of £155,000 per person. Growth in the UK’s net worth was estimated at 5.1% between 2016 and 2017… much of this was from growth in the value of land”                      Office of National Statistics Statistical bulletin: UK national balance sheet estimates: 2018[1].

Does this mean that every man, woman and child in the country got £8,000 richer last year: £19,000 per average household of 2.4 people? “Did you get your fair share?” asks Anthony Molloy, Chair of the Labour Land Campaign. “It’s very unlikely that you did if you don’t own your home or any other land[2] because most of this uplift has been in land value.” While the year-on-year rise in the value of all assets other than land (essentially buildings on the land[3], bank deposits, stocks and pensions) was just 0.9%[4], net UK land wealth rose by 9.1%[5]. In fact, over 60% of the more-than-trebling of UK wealth since 1995 has been in land value which now accounts for 51% of the nation’s net worth, higher than in any other measured G7 country and well above the one-third it was in 1995.

The value of land is dependent on its proximity to jobs, schools, hospitals, transport, etc., namely things that are created by the community (in particular the state) rather than the landowner. And yet, as Winston Churchill put it, “… every benefit which is laboriously acquired by the community increases the land value and finds its way automatically into the landlord’s pocket”.

Is this a problem? To answer that, one has to compare the £450Bn rise in land value in 2016-2017 to the £1Tn earnings subject to Income Tax in the same period. If it were true that every UK household received nearly half as much in unearned wealth as it did in earned income, it might be a cause for celebration but the reality is very different: 70% of our green and pleasant land by area is owned by just 0.6% of UK citizens and non-citizens (much of it, bewilderingly, “off-shore”) and this proportion would probably be discovered to be even more skewed if anyone bothered compiling figures on the more pertinent parameter of land value. Anthony Molloy says, “That the current UK system carries no significant taxes on our most valuable asset bears witness to our history of restricting rights to vote and sit in Parliament to property owners. Our fiscal system was designed and implemented by landowners but we, the witlessly conniving people, are now choosing to further enrich them without their having to lift a finger at the same time as our real wages for honest, productive work are stagnating”.

And it is indeed a choice: the 2018 ONS figures can only provide grist to the mill for the growing movement towards shifting taxes off economically productive activity and onto unearned wealth: land value taxation is progressive in that the wealthy pay more than the less well-off; it is fair because landowners will contribute in proportionate measure towards the public infrastructure and services that help drive their rising land wealth and rental incomes; it is easy to collect and impossible to dodge; and taxing unearned wealth rather than work (or trade or enterprise or investment) is economically efficient in that it does not shrink the economy like taxes on economically productive activity.

[1] https://www.ons.gov.uk/economy/nationalaccounts/uksectoraccounts/bulletins/nationalbalancesheet/2018#growth-in-the-worth-of-household-land-accounts-for-much-of-the-growth-in-uk-net-worth

[2] Notably if your household is one of the 8.5 million (39% of all households) in rented accommodation

[3] The value of bricks-and-mortar rose by 2.2%

[4] Financial net worth actually dropped in 2016-2017

[5] Within the land market, the value of UK non-household-owned land rose faster (12.7%) than that of owner-occupied land (7.9%)

Land Value Taxation is about so much more than just solving the housing crisis

15 August 2018

The inexorable lifting of the veil—some might say conspiracy—of silence on the subject of land value taxation (LVT) over the last couple of years is long-awaited. Even the tiny ivory-towers minority who own so much of our green and pleasant land and who would be the only ones to lose out from the taxation of land wealth, have recently been forced to address the subject at last, from newspaper/land-owners like the Barclay brothers (Daily Telegraph/a Channel Island) and Viscount Rothermere (Daily Mail/half of Wiltshire) to politicians like Philip Hammond (beneficiary of property developer Castlemead—although to what extent we cannot know because he has refused to publish his tax returns). The fact that much of the discussion consists of misinformation (“The Garden Tax”) comes as no surprise but there is another, more fundamental issue: even sympathetic coverage is exclusively focusing on LVT as a way of solving the housing crisis. While it is true that LVT would help optimise use of one of our most precious resources and thereby go a long way towards mending the broken UK land and property market that imposes unreasonable housing costs on both buyers and tenants (especially the young), this remains a corollary benefit.

The core benefit of a wealth tax like LVT is that it is economically superior to other taxes that it could be used to replace. This is because it has no deadweight losses (the “excess burden of taxation”): VAT raises the price of goods and services, demand drops, factories shut down, jobs are lost and the economy shrinks; Income Tax and National Insurance Contributions make working less rewarding and marginal wage-earners join the ranks of the unemployed. It has been estimated that, taking all current taxes into account, every pound of revenue to the Treasury shrinks the overall economy by about one pound[1]. In contrast, LVT has no such unintended, knock-on effects; in fact, by optimising use of the key factor of production that is land, it would tend to stimulate economic growth.

In this context, the key question is “Which taxes should be replaced by economically efficient LVT?” All our current taxes have different weaknesses and can be ranked accordingly: sales tax (VAT) and poll tax (Council Tax[2]) are unfair; VAT is expensive and difficult to collect (even easy to defraud!); business tax (Corporation Tax) is easy to avoid; property tax (Business Rates) disincentivises improvement. But economists naturally focus on the extent to which any tax will shrink the economy—which any tax on work, production, trade, enterprise or investment (i.e. all of our current taxes) will do. The reason that almost all economists from across the political spectrum down the ages have agreed (rare enough in itself!) that LVT is the “least bad form of taxation[3]” is that it will not constrain economic activity.

Above and beyond repair of the broken UK land market, LVT has many other corollary benefits including the attenuation of wealth inequality, redress of geographical imbalance between prosperous and deprived regions (notably between North and South), revitalisation of local government and, in time, establishment of a virtuous cycle in which local public sector investment drives rising land values leading to increased revenue for further quality-of-life-enhancing public sector investment. Anthony Molloy, Chair of the Labour Land Campaign emphasises “While the direness of the housing crisis warrants radical and immediate action, it is important not to lose sight of the fact that LVT would also address many other intransigent problems facing the UK from widening equality gaps to low productivity.

[1] Harrison, Fred (2016), Beyond Brexit: The Blueprint, London: Land Research Trust. NB: worryingly, in response to a Freedom of Information request, the Office of Budget Responsibility replied that they do not calculate these figures but this is an overestimate!

[2] When it was rushed in to replace the unpopular Community Charge, Council Tax was a hybrid property/poll tax and since then, the absence of revaluation has  steadily eroded its property component: today, the owner of a multimillion pound Westminster mansion pays the same as the tenant of a Weymouth bedsit.

[3] Milton Friedman in a 1978 interview

Save the High Street – scrap Business Rates

13 August 2018

Since 2010 Corporation Tax has been reduced by 8%, the last drop courtesy of Chancellor Philip Hammond with a promise of more reductions to come. This does not seem to have been of much benefit to the retail sector. Philip Hammond scratches his head and says he will look at a tax on online retailers.

Pity he wasn’t listening to the British Retail Consortium spokesperson who had this to say: “Business rates are deterring investment in local communities, causing shop closures and job losses in hard-pressed communities, and preventing retailers from delivering what their customers want in an efficient and cost-effective way”.

Property taxes are easy pickings for Hammond – so long as they are on businesses, which don’t have a vote. The average collection rate for Business Rates is 98.1%: it’s difficult to hide a shop, office or factory.

Everyone knows that the most valuable properties in the UK are certain residential locations in London and the South East even though owner-occupied dwellings generate no income. There is a simple reason for this disparity: the owner of a mansion in Westminster pays no more than £1,421 a year property tax (Council Tax); the property tax (Business Rates) on House of Fraser’s Oxford Street store is £4.5 million. Price is inversely related to tax.

The problem with Business Rates is that the rateable values on which they are based include the building, which is the main working capital of retail businesses. And it is not only retail which suffers from this ill-thought-out tax: plant and machinery are also included in valuations so investment in capital (e.g. to enhance productivity or improve working conditions) can result in higher taxes for business. Why does the Chancellor want to disincentivise investment?

The sensible way to tax property is to assess only the location value – the land. Because businesses locate in the places where they can achieve the highest returns. According to the type of business, this may be the location with optimum footfall, good transport links, local attractions, etc.

But there is a second reason why Business Rates are so bad for business. Rateable values are supposed to be assessed every 5 years. Huge economic changes can occur in 5 years, let alone the 7 years which separated the last reassessments. The Chancellor is still trying to deal with the outrage which last year’s bills generated.

Valuing land is simple because the only factors that need to be considered are location and potential use consistent with prevailing planning regulations. In contrast, when valuing buildings, many additional factors have to be taken into account, including state of repair, what the buildings are being used for, how old they are, architectural merit and internal space. Experience in jurisdictions which assess land and building values separately is that land valuations take less time, cost less and generate fewer appeals.

Secretary of the Labour Land Campaign, Carol Wilcox, says “Scrap Business Rates, Mr Hammond, they are ruining businesses as diverse as shops and steelworks. Replace them with a tax on land value only – Land Value Tax. And ask the Valuation Office to keep a constant eye on land values so that annual bills reflect what is truly affordable.

Tories at it again: misrepresenting land value tax as a “Garden Tax”. Economical with the truth, untruthful about the economy

23 March 2018

At Prime Minister’s questions yesterday, many must have been surprised to hear Theresa May revive the discredited characterisation of a land value tax (LVT) as a “tax on your home and your garden”. When last year, a very modest promise in the 2017 Labour Party Manifesto to “initiate a review into reforming council tax and business rates, and consider new options such as a land value tax” elicited a hysterical Conservative Party Press Release about the “Garden Tax”, retribution was swift. Among the most surprised yesterday must have been independent fact-checking charity FullFact[1] which originally ridiculed this misrepresentation within hours, concluding that not only “There’s no reason to assume enthusiastic gardeners would be badly hit by switching systems” but also “The idea will probably be on the table at some point, whichever party comes to power”.

When The Times, Daily Mail, Daily Telegraph, Daily Express, Daily Star and Sun all reproduced said Press Release more or less verbatim just before the election, they included cherry-picked figures from Labour Land Campaign (LLC) research to draw conclusions entirely at odds with those of the research itself. LLC made a series of complaints to the Independent Press Standards Organisation (IPSO) which resulted—after up to seven cycles of exchange with these publishers’ lawyers and enablers (no journalist was allowed anywhere near the process in any case)—in all six of these usual suspects having to publish retractions. These can be found on line[2]. But in the end, it is gratifying to hear the Daily Telegraph (the owners of which also own a whole Channel Island!) talking about “how a land value tax could be advantageously implemented to replace unfair, economically inefficient taxes”.

But why such a sustained, concerted attack on a reasonable promise to review a patently broken property tax system which sees, on the one hand the tenant of a £450 a month flat (Band A) in Weymouth paying just £100 a year less Council Tax than the owner of a £100 million mansion (Band H) in Mayfair and, on the other hand, the Confederation of British Industry—with the support of economists from across the political spectrum—describing the Business Rates system as “outmoded, clunky and regressive[3]“?

LLC Chair Anthony Molloy asks “Could the answer be that Boris Johnson and Philip Hammond—both quoted in the May 2017 Press Release—together with the aristocrats, developers and newspaper-owners who back their party and own so much of our green and pleasant land[4] are among the tiny but disproportionately powerful minority of citizens who would lose out if a fair, economically efficient LVT were judiciously introduced to replace patently unfair, economically disastrous taxes. Given how concentrated land wealth is in the UK, judicious implementation shouldn’t be too difficult—to ensure that there would be Many winners and Few losers.”

[1] https://fullfact.org/economy/labours-land-value-tax-will-you-have-sell-your-garden/
[2] https://www.telegraph.co.uk/news/2017/05/29/tax-homes-treble-labour-plans-land-value-tax/
     http://www.dailymail.co.uk/news/article-4553476/Labour-s-secret-plans-4-000-garden-tax.html
    https://www.thetimes.co.uk/article/labour-tax-on-land-would-slash-house-prices-wzr2gvmr5
    https://www.thesun.co.uk/news/3676113/labour-planning-new-garden-tax-which-would-see-council-tax-treble/
    https://www.express.co.uk/news/politics/810616/general-election-2017-jeremy-corbyn-council-tax-bills-homeowner-john-mcdonnell
    https://www.dailystar.co.uk/news/politics/618362/General-Election-2017-Jeremy-Corbyn-Labour-manifesto-council-tax-homes-gardens
[3] http://www.publicsectorexecutive.com/Public-Sector-News/treasury-launches-radical-review-of-clunky-and-regressive-business-rates
[4] Kevin Cahill: “the 16.8 million homeowners account for barely 4 per cent of land, and 70% of the country is owned by just 0.6 per cent of the population” In: Who Owns Britain (2001) published by Canongate

The Government could fix the housing crisis without threatening councils or developers

5 March 2018

Theresa May blames local authorities for not building more homes. Having already weakened them by eviscerating their funding stream she now proposes to take away their controls over local planning.

If a government wishes to incentivise an activity surely the worst thing they can do is to tax it. So why does Theresa May’s government persist in keeping intact two development land taxes – one of them introduced by the Tories, Section 106 Agreements (S106), and the other by Labour, the Community Infrastructure Levy (CIL).

Carol Wilcox, Secretary of the Labour Land Campaign, says: “It is these taxes which weaken local authorities’ control over planning and hand it to the big developers, with their access to expensive consultants. Even the small developer can go online and discover how to avoid S106s. It is doubtful whether any council has ever succeeded in squeezing out of developers the number of new affordable homes originally proposed. The objective of S106 and CIL is to provide a contribution towards the funding of new infrastructure and this too invariably falls short of original intentions.

Sanctioning councils which fail to achieve the government’s housebuilding goals will result in a further erosion of their control over planning. On the contrary, councils need to be enabled to undertake real proactive planning rather than be subject to the desires of individuals and developers.

They already have the power to redesignate any land within their domain, for example for residential development. What they lack are the resources to fund infrastructure and compulsory purchase orders.

The Conservatives should be listening to their free-market-friendly think-tanks by scrapping all current property taxes – Business Rates, Council Tax, Stamp Duty Land Tax, S106, CIL and the Annual Tax on Enveloped Dwellings – and replacing them with a land value tax land (LVT). This would provide the funding for new infrastructure, as well as maintaining what is already there – a virtuous cycle where increased investment leads to higher land values and hence higher LVT revenues.

Furthermore, there would be no need for compulsory purchase orders because the increased land value created by higher permitted use, would impose an unaffordable LVT bill on current owners, who would be forced to sell at low prices. Councils would be able to buy whatever land they need to fulfill their housing needs.

The government has also blatantly adopted as their own Ed Miliband’s threat to land hoarders of ‘use it or lose it’. But LVT would much more effectively stop this activity as the tax would have to be paid whether the houses are built or not.

A Land Value Tax would help address the UK’s Housing Crisis

13 February 2018

A report published this week by the Campaign for the Protection of Rural England (CPRE) identified existing brownfield sites across England that would be enough to accommodate more than a million new homes, most in urban areas and many in the very places where the shortage of housing is most acute, notably London and the South East (over 260,00 and 130,000 possible homes respectively). More than half of these already have planning permission for residential use and, in any case, planning permission is usually granted easily and quickly for such sites that have already seen development in the past.

CPRE ask a good question: why all the pressure to ease up planning regulations to develop greenfield land, including the Green Belt, to address the housing crisis?

The Labour Land Campaign (LLC) asks a different good question: why have such valuable sites not already been developed at a time when housing is one of the most—if not the most—serious problems in the country? Surely with property prices higher than ever before, the incentive to build and sell homes must be greater than ever before. Unfortunately, the dysfunctional UK land market does not work like that. LLC President Dave Wetzel explains that “House prices have risen because land values have risen”. Any property price comprises two components, one for the building and another for the land it is built on. In the last twenty years, UK property prices tripled, mainly because in the same time frame, land prices went up five-fold. Wetzel continued, “And that explains why so much potentially useful land—notably brownfield land for which planning permission is so easy to obtain—lies derelict, especially in areas where the need is greatest so land values are rising most rapidly. Instead of building houses now on land they own, landowners will make far more money sitting on it while it appreciates in value, to build later or even just sell it on in the speculative land banking market”.

To answer the CPRE question, it is far more profitable to obtain planning permission for hitherto undeveloped, greenfield land: when agricultural land is reclassified as constructible, its value jumps—literally at the stroke of a pen—by a factor of at least 100 (and a great deal more in many places). All this windfall goes to whoever owns the land which is often either one of the UK’s Big Five building companies or one the handful of aristocrats who own a third of Britain (both of which groups are major contributors to the Conservative Party).

And to answer the LLC question, Dave Wetzel concludes, “Among its many other virtues, a land value tax—an annual levy on the value of land whether or not it is generating income—would undermine the speculative land banking business model, bring unused and underused land into socially beneficial use, help resolve the housing crisis, bring more jobs and economic activity to currently deprived regions, and even preserve the Green Belt.

Not to mention the fact that revenue from a land value tax would make it possible to reduce or abolish any of our current taxes, all of which are either unfair, easy to evade or avoid or economically inefficient.

Who can be trusted to fix our broken housing market?

5 February 2018

Sajid Javid, Minister of Housing, Communities & Local Government, recognises that the root of the housing crisis is a broken market[1], especially the land market.  The ratio of average house price to average income has not more than doubled in the last twenty years because building costs have risen or incomes have fallen: it is because land prices have gone up. Last November, the Minister called for affordable housing policy “to be less cautious, to be more aggressive, and to be more muscular”.

With some of the Conservative Party’s biggest donors being from the property world, will this government take a first step with Shadow Housing Minister John Healey’s simple call last week for reform of the 1961 Land Compensation Act which stipulates that, “for the purpose of assessing compensation in respect of a compulsory acquisition … account may be taken … of the prospect … of planning permission being granted”. This is the so-called “hope value”: the owner of brownfield land required for development can demand compensation at the post-development value. If, for example, this land were one hectare of agricultural land near Cambridge acquired in 2010, the landowner paid about £18,500 for it. When planning permission is granted for much-needed new housing in Silicon Fen, this landowner is entitled to compensation of £2.9 million, a 160-fold return at the stroke of a pen in the local planning office. The landowner has done nothing to earn this windfall. Indeed, nobody—neither landowner, council, developer nor builder—has yet done anything apart from sign a few pieces of paper and transfer a great deal of cash. Sterile, economically destructive speculation, pure and simple.

This Act clearly creates an aberrant situation with serious social consequences for the many and obscene returns for a few—and this obviously cries out for reform. But Carol Wilcox, Secretary of the Labour Land Campaign asks “Why stop there? Hope value is just the most egregious tip of a massive iceberg of wrongness in our unstable land market, established and legislated for over the centuries by landowners for their own benefit. It is less than one hundred years ago that the right to vote and sit in Parliament was extended to those who do not own land. Landowners harvesting enormous returns without having to do anything at all is not confined to changes in permitted use: it pervades and distorts the entire land market. If public investment improves your area with a good school or a new transport link, your landlord will put your rent up, and he may well be one of the handful of aristocrats who own a third of Britain.”

A more profound approach to repairing the broken land market and solving the housing crisis would be a land value tax (LVT), an annual levy on the value of all land (conditioned by its location and permitted use) irrespective of any improvements made on it, past or present. LVT is fair in the sense that those who are most able to will pay the most. But it is also fair in that the few who reap the lion’s share of rewards from a state-sponsored system that perpetuates their privilege, contribute the most towards maintaining it—what could be seen as a charge for benefits received rather than a tax.

[1] DHCLG Report, February 2017, Fixing our Broken Housing Market [www.gov.uk/government/uploads/system/uploads/attachment_data/file/590463/Fixing_our_broken_housing_market_-_accessible_version.pdf]

Welcome to the campaign, Tony

4 December 2017

To anyone who understands land value taxation (LVT), Tony Blair’s endorsement will come as no surprise. Coverage in the media has it that it “will be seen by some as a shift to the left[1]” but it is no such thing. Anthony Molloy, Chair of the Labour Land Campaign, explains, “LVT is not left wing or right wing; it just makes sense. Left and right are about how much you tax; LVT is about what you tax.” What is true is that parties of the right the world over like the Conservative Party in the United Kingdom dread any discussion of the only economically efficient form of taxation, as witnessed by Boris Johnson’s hysterical “Garden Tax” response to a very slight mention of LVT in the 2017 Labour Party Manifesto[2]. But this is no principled, ideological stance: it is just loyalty to the vested interests they represent, who provide their funding and, in many cases, who they are, namely the tiny minority of citizens who stand to lose by a switch of taxation onto wealth, in this case land wealth. Exactly how tiny this minority is can be gleaned from figures on land ownership in the United Kingdom: 70% of the country is owned by just 0.6 per cent of the population and, although the scandalous incompleteness of the Land Registry precludes any accurate estimate, this proportion in terms of land value as opposed to land area is likely to be even more extreme. This minority, albeit tiny in number, is formidable in terms of power. That is how—over the centuries since Anglo-Saxon times through the emergence of parliamentary democracy in the early 19th century—they managed to switch taxation off wealth and ownership of the means of production (notably land) onto work, production, enterprise and trade.

Almost unanimously, economists down the ages and from across the political spectrum—Adam Smith, Milton Friedman, Joseph Stiglitz, Martin Wolf, the Institute for Fiscal Studies, the Institute for Economic Affairs, etc.—have agreed with 19th century American political philosopher Henry George that “The tax upon land values is the most just and equal of all taxes. It falls only upon those who receive from society a peculiar and valuable benefit, and upon them in proportion to the benefit they receive. It is the taking by the community, for the use of the community, of that value which is the creation of the community.” But the main reason that economists like LVT is not fairness or that it cannot be avoided or even because it will help solve the housing crisis. It is because LVT, unlike all our current taxes, is economically efficient: it does not have what the Treasury calls “deadweight losses” and therefore does not distort market forces or shrink the economy.

And economic efficiency rather than fairness may well be why Tony Blair has come out so solidly in favour of such a radical switch in our fiscal system. Anthony Molloy continued “After two centuries of manipulation of the fiscal system for the few not the many, LVT’s day has come. More and more people and even some politicians are realising that using LVT to replace any of our current taxes will favour the majority of citizens, expand the tax base, attenuate inter-regional inequality and boost the economy. Business Rates and especially the grotesquely unfair Council Tax may be as good a place to start as any.”

[1] The Guardian [https://www.theguardian.com/politics/2017/dec/03/tony-blair-backs-labour-land-tax-solve-uk-housing-crisis]

[2] The Independent Press Standards Organisation required the publication of clarifications by six national newspapers that reproduced misleading information taken from a Conservative Party Press Release on this subject just before the election

When will we get a Chancellor who understands the economy?

23 November 2017

Yesterday, Philip Hammond proudly announced the abolition of stamp duty for many first-time buyers.

Elementary economics has it that, if the price of any commodity drops, e.g. if the government reduces the tax on it, demand for it will rise and a new equilibrium price will be established. If the supply of that commodity can respond quickly to increased demand, the new equilibrium price will be close to the lower price: this is true of flat-screen televisions and washing powder. But if the supply of that commodity cannot quickly respond to increased demand, the new equilibrium price will be close to the original price. Homes are not like flat-screen televisions or washing powder because their supply is relatively fixed, e.g. the Chancellor’s declared target is the building of 300,000 new homes a year “by the middle of the next decade” (although he did not announce anything concrete to suggest that this target might be achieved). As no extra new homes can be built in the short term, except for those who have exchanged contracts recently but not yet completed the deal, most first time buyers will face an increase in price from the sellers when they place their property on the market. Therefore, as was immediately pointed out yesterday by the Office of Budget Responsibility, the ultimate effect of this policy will not be to help first-time buyers get on the housing ladder but rather to further enrich those already on said ladder at the expense of the public purse. Yet another transfer of social wealth to landowners and yet another example of an economically poisonous tweak of the taxation system that apparently aims to help the less well-off in society but actually helps the wealthy. Is multimillionaire property magnate and landowner Philip Hammond really that economically illiterate?

The UK fiscal system, drawn up and voted in by landowners, is fundamentally geared to prejudice the interests of the landless and it is becoming increasingly clear that the time for tweaks is past: the tax regime needs root and branch reform by taking taxes off work, production, enterprise and investment, and switching them onto wealth and land. Dave Wetzel, President of the Labour Land Campaign says “Today’s land values have arisen from generations of public and private investment in transport, roads, schools, health care, sewerage systems, clean water, leisure facilities, shops, factories, warehouses, offices etc.—all paid for by the population as a whole as taxpayers, consumers and real investors. However, that wealth is sucked out of the productive economy through the monopoly ownership of land. On the one hand, a land value tax will fairly fall on the wealthiest in society, make property prices affordable and smooth out inter-regional inequality; on the other hand, reducing distortive and inefficient taxes will enhance productivity and competitiveness, and boost the British economy. One day a Chancellor of the Exchequer will try to make our taxes fair and unavoidable but yesterday the current incumbent perpetuated the corrupt system that favours himself, his landowning friends and the backers of his party. The Shadow Chancellor is more economically literate and is challenging the historical injustice that has deprived generations of workers and real investors a share in the wealth they create”.

Hammond’s silver bullet a land value tax? Probably not

21 November 2017

The Chancellor claims that this week’s budget will address the issue of homes being unaffordable for a growing number of people. He has said that he needs to understand why there is such a “huge gap between planning permissions granted and housing units built”. The answer is simple: speculation and hoarding inflate land prices leading to homes being made unaffordable as well as adding pressure for new builds on green land. Hammond has also said that there is no “silver bullet” to solve this crisis. If he gets the problem, he might find the silver bullet: the solution to making homes affordable is to introduce a land value tax to replace unfair, distortive, avoidable taxes.

The Labour Land Campaign (www.labourland.org) together with other organisations and individuals of all political persuasions recognise that the current tax regime not only shrinks the economy by penalising enterprise and constraining productivity but also encourages avoidance and evasion. Today’s land values have arisen from generations of public investment in transport, roads, schools, health care, sewage, clean water, leisure facilities, etc.—all paid for by the population as a whole as taxpayers, consumers and real investors. However, that wealth is sucked out of the productive economy through the monopoly ownership of land. A land value tax will not only help tackle the housing crisis but will also provide a sustainable, economically efficient source of income to pay for national and local public services by collecting land wealth that arises from such investments. Moreover, reducing distortive and inefficient taxes will enhance productivity and mitigate the North/South economic divide because new businesses will be encouraged to look to areas where land is cheap, poverty levels high and jobs scarce.

If the Chancellor can only answer his own question properly he could make housing affordable for so many at a stroke, at the same time as boosting productivity and attenuating regional inequality. This Chancellor may not want to see an answer that would alienate his party’s most loyal constituency, namely landowners, but the Shadow Chancellor knows it!

Help To Buy? More like Help To Sell

6 October 2017

In a week when the rhetoric of Theresa May and Philip Hammond has—somewhat desperately—been all about boosting the virtues of free markets, the few concrete policies announced in Manchester to “realise the British Dream” have been very much in the opposite direction, from caps on utility bills to—most desperately of all—an extra £10bn for their demonstrably counter-productive Help To Buy scheme.

A central tenet of economic theory is that that taxes and subsidies often distort market forces, i.e. undermine free markets. And David Cameron’s flagship Help To Buy scheme has provided ample, solid evidence of this: these subsidies are only available for new-build properties, the prices of which have risen faster than those in the market as a whole since the scheme was introduced—a pleasingly perfect illustration of market force distortion. According to Stockdale Securities analyst and Property Week columnist Alastair Stewart, “Help to Buy has inflated prices, failed to deliver new homes where they are most needed and could push buyers into negative equity if the housing market slumps”. But, although taxpayers and house-buyers are losing out, the margins and balance sheets of the big building companies are likely to benefit, with big share price rises posted on Monday morning within minutes of the announcement (Barratt, the UK’s largest housebuilder, up 3.6%, Persimmon up 3.4% and Taylor Wimpey up 2%).

Are Theresa May and Philip Hammond economically illiterate? Or is all the rhetoric about helping young people get on the mythical “housing ladder” so much smoke and mirrors to disguise yet another taxpayer-funded bung to a sector in crisis that is a major donor to the Conservative Party. Help To Buy or Help To Sell? Is that what she’s in this for?

The crisis in the house-building industry is the result of years of short-sighted policy-making having created a completely dysfunctional UK land market. Builders are caught up in a dangerous spiral of rising land prices  and dwindling margins, largely as a result of the lucrative practice of speculative land banking. Landowners hold on to undeveloped land with a view to selling it on when its price has risen still further because of restricted supply coupled with rising demand. Thus house-builders are squeezed by rising land prices while land-bankers take all the unearned profit. The complication in this picture is that the big house-builders are some of the worst land-bankers.

Vice-Chair of the Labour Land Campaign Heather Wetzel says, “Until politicians realise that taxes are inversely related—and subsidies positively related—to land price, they  cannot hope to correct the dysfunctional UK land market”. One way to remove the disincentive on housing construction is to penalise landowners who fail to develop precious land by taxing land value—whether the land is developed or not. A Land Value Tax (LVT) based on the true market value of land (i.e. its rental value which is dictated by market forces) rather than its inflated price in a distorted market, would quickly bring vast swathes of currently untaxed, undeveloped, banked land into productive use and stop land speculation. But far more fundamentally, LVT is the only form of taxation that does not distort market forces (because the supply of land is absolutely fixed) so it is economically efficient. Finally, it is fair: since most land value accrues from activities of the local community and public sector investment, paid for by all of us as taxpayers rather than any effort on the part of individual landowners, a LVT would put the onus of maintaining said community and paying for said investment on those who reap the most unearned income  from it; and who are most able to pay.

Michael Gove: newly green or still mean?

22 July 2017

The Labour Land Campaign (LLC) has long called for a fundamental shift in what is taxed by replacing taxes on wages and productivity that depress the economy with an economically neutral Land Value Tax (LVT) on the unearned income that big landowners collect. Chair of LLC, Anthony Molloy is sceptical that when Michael Gove[1] calls for “a Green Brexit”, saying that “farmers must prove they deserve future subsidies after the UK leaves the European Union”, it means he understands how the £3 billion handed out every year in Common Agricultural Policy (CAP) subsidies benefits rich landowners to the detriment of small farmers, especially those on rented land. More likely, this is merely greenwash to disguise the fact that these much-resented, highly counter-productive hand-outs to the very wealthy are to be maintained in a post-CAP Britain.

The top 100 recipients of Single Payments[2] (the subsidy you get for simply owning the land which accounts for nearly three quarters of all CAP payments) receive more than the bottom 55,000 put together and include four offshore companies, 16 individuals on the Sunday Times Rich List, at least 20 aristocratic estates, Conservative MP Richard Drax[3], numerous donors to the Conservative Party and a Saudi prince.

LLC research has shown how such subsidies actually increase the value and therefore the price of land. Even the EU has long recognised that CAP subsidies soon capitalise into land value, raising rents for tenant farmers and making farmland more expensive to buy for young would-be farmers. Thus, some of the richest people in the country get the triple benefit of a hand-out on top of increased rents and rising asset value at the expense, not only of the taxpayer but also of those trying to make a living from farming.

Anthony Molloy went on to say “I hope the Secretary of State for Environment, Food and Rural Affairs has realised that not only should farming subsidies be earned but also that they should be designed to benefit farming and not be a hand-out to the wealthiest owners of farm land. LVT is a tool for ensuring all land is used efficiently and sparingly and if Michael Gove is serious about protecting the environment and enhancing rural life, then LVT will do just that. With LVT, farmers will only farm the land they need and will release the rest for new entrant farmers; and if land is unproductive, then it can be recovered for wildlife.”

Both rural and urban land should be used for homes, businesses, food production and recreation rather than as an investment by individuals and corporations. Real investment in public services and productive businesses—paid for by all of us as taxpayers, consumers and entrepreneurs—is what should generate land value. Not hand-outs.

[1] Is this Michael Gove the same one who, talking about greenfield sites in 2013, was “delighted by the release of more land for housing” [www.cps.org.uk/files/reports/original/130517122606-KeithJosephMemorialLecture.pdf]. And is this Michael Gove promising to maintain welfare payments for the very rich the same one who, in the same speech, welcomed his government’s slashing of welfare payments for the poor: “Instead of incentives for idleness and a culture of dependency, there are powerful incentives to work.”
[2] Greenpeace Energydesk [https://docs.google.com/spreadsheets/d/17JXyhterJZ2UI5Z7YYmON6nKrtTLIS3rPCPT4x-CkCk/edit#gid=1315968968]
[3] Another harsh critic of some types of welfare hand-out (talking about capping overall payments): “Many argue that the cap is far too high and, judging from the above figures, they have a good point” [www.richarddrax.com/news/welfare-reform-0]

Tragedies like the Grenfell Tower fire are a symptom of our corrupt tax system

17 June 2017

 “Kensington is a tale of two cities: it is one of the wealthiest parts of this country but the ward where this took place is one of the poorest” Jeremy Corbyn

Pointing to the iniquity of land banking that is so visible if you wander through the streets of Kensington after dark, Corbyn also suggested that some of the many vacant, luxury properties in the area could be requisitioned to provide temporary homes for families who survived the horrific Grenfell Tower fire.

Our economy suffers from the prioritisation of preserving high incomes for the few at the expense of the safety and health of the many, not only in the construction of homes but also in the workplace, the National Health Service and public services in general. Apart from a few Labour, Liberal Democrat and Green Party MPs, most politicians are still ignoring why we have such disparity between those who create wealth and those who then appropriate it as their own.

In the throes of an unprecedented housing crisis, we allow desirable homes in Kensington and all over the UK to lie empty while their owners—developers and speculators from both the UK and overseas—are seizing the rise in land value generated by the community, i.e. by us taxpayers, consumers and genuine investors in productive enterprises and services. This ability of the few to exploit the many is a symptom of a rotten, corrupt and distorted tax system that has been drawn up to help the wealthiest individuals, families and corporations drain common wealth (notably land or location value) out of the productive economy.

Anthony Molloy, Chair of the Labour Land Campaign (LLC), said “Homes for the poorest in society are being built on the cheap as in big regeneration projects where planning permission is contingent on the provision of some percentage of ‘affordable’ homes—which are then built to lower standards than the homes for sale. And if ‘affordable’ means some substantial fraction of market rent, only those on high incomes will be able to live in places like Kensington anyway. Land speculation has forced up the price of land thus squeezing making homes and business premises unaffordable for a growing number of second-class citizens.”

LLC calls for a shift in taxes off wages and production and on to the unearned income big land owners take from their holdings despite the fact that the value of their asset is generated by the infrastructure and public services our taxes pay for. The Labour Party’s mild manifesto commitment to “initiate a review into reforming council tax and business rates, and consider new options such as a land value tax” scared Boris Johnson, Philip Hammond, Conservative Party Central Office and the right wing press—flunkies of the elites who have robbed ordinary people for generations of the natural resource wealth they create—into craven misrepresentation of LLC research[1]. Anthony Molloy continued “At least some of the UK’s land wealth should be reclaimed and used to maintain and develop our public services instead of being sucked out of our economy by speculators and rich families such as Grosvenor Estates and Duke of Northumberland. Jeremy Corbyn sees it, John McDonnell sees it, Caroline Lucas sees it, Vince Cable sees it: heartening evidence that some of our politicians are coming round to the realisation that people are more important than profits made by a greedy few who are prepared to put lives at risk.

[1] “Land Value Tax: Scaremongering and Misinformation” – Labour Land Campaign Press Release – 31 May 2017 [https://www.labourland.org/press-releases-and-archive/]

Land Value Tax: Scaremongering and Misinformation

31 May 2017

Yesterday saw a clearly concerted attack in five newspapers[1] that largely determine the zeitgeist in British politics on a promise in the Labour Party Manifesto to “initiate a review into reforming council tax and business rates, and consider new options such as a land value tax”. Most of these articles present shamefully traduced Labour Land Campaign (LLC) research and misrepresents it as Labour Party policy. The Labour Land Campaign is a cross-party research and advocacy group—primarily membered by professionals in land-related occupations—that is unaffiliated with the Labour Party.

In remarkably similar wording (presumably lazily—or obsequiously—taken directly from a Conservative Party Press Release), Political Editors at the Daily Mail, the Daily Telegraph, the Daily Express, the Times and The Sun all misleadingly talk about a switch to Land Value Taxation (LVT) “trebling” most residents’ property tax bill—a policy that is ineptly dubbed a “Garden Tax” which highlights their misunderstanding of LVT; this all on the same day, fully a fortnight after publication of the Manifesto. In addition to turning in suspiciously similar copy, these journalists have another thing in common: they all work for very wealthy men who are big landowners[2].

Why such a disproportionately hostile response to such a mild proposal? Because it is the powerful Rothermeres and Barclays who constitute the tiny minority of citizens of this country who would lose out by the replacement of our current unfair and economically inefficient taxes like Council Tax and Business Rates with LVT. The wisdom of such a shift is recognised by economists from across the political spectrum[3] and the patent superiority of LVT is exactly why the tiny but all-powerful constituency of big landowners—who control the media either directly or indirectlyneeds to suppress even any discussion of it. LLC Chair Anthony Molloy notes that “When a policy is being criticised, it is worth looking at who is doing the criticising. Nowhere is this more true than with LVT for which the few citizens who will lose out happen to direct not only the party of government but also—through their control of the media—the hearts and minds of many regular people who in fact stand to gain both individually and collectively by such a progressive change in fiscal policy.

Three of these articles actively cite Labour Land Campaign research, disgracefully misrepresenting it in that all our evidence actually shows that most home-owners would pay less with LVT than with current property taxes—not to mention the 50% of households that rent who would pay no property tax at all.

Land value is generated from our public services and paid for by taxpayers all over the UK but uplift in land value is not shared by those taxpayers: it goes to the Rothermeres and Barclays who own so much of our green and pleasant land. LVT is a mechanism whereby land value generated from public and private investments will be used to maintain and develop public services.

LLC welcomes this  evidence of the Labour Party’s commitment to governance For The Many, Not The Few.

[1] John Stevens (Deputy Political Editor) – Daily Mail: Labour’s secret for £4,000 “garden tax”: land and levy plot could treble the average council bill [http://www.dailymail.co.uk/news/article-4553476/Labour-s-secret-plans-4-000-garden-tax.html]

   Gordon Rayner (Political Editor) – Daily Telegraph: Tax on homes ” to treble under Labour’s plans for a Land Value Tax” [http://www.telegraph.co.uk/news/2017/05/29/tax-homes-treble-labour-plans-land-value-tax/]

   Steve Hawkes (Deputy Political Editor) – The Sun: Labour planning new “Garden Tax” which would see council Tax treble [www.thesun.co.uk/news/3676113/labour-planning-new-garden-tax-which-would-see-council-tax-treble/]

   Anonymous – Daily Express: Imagine what Labour’s garden tax would mean

   Anonymous – The Times: Labour tax on land ‘would slash house prices’

[2] Notably Viscount Rothermere (who “owns” half of Wiltshire amongst much else, although all this is patriotically registered off-shore) and the Barclay Brothers (a whole Channel Island).

[3] Institute of Economic Affairs: https://iea.org.uk/publications/research/wheels-of-fortune

   Adam Smith Institute: https://www.adamsmith.org/policy

   Institute of Fiscal Studies: https://www.ifs.org.uk/publications/mirrleesreview/

Land Value Tax: For The Many, Not The Few

17 May 2017

We will initiate a review into reforming Council Tax and Business Rates and consider new options such as  land value tax

It is seriously good news that the Labour Party is at last considering replacing two of the worst taxes on the books with a fairer, more progressive and economically efficient land value tax (page 86 of yesterday’s Manifesto).

Council Tax is hugely regressive with an effective rate of 30-40% (of annual rental value) in the cheapest areas compared with just 3-4% in the most expensive, e.g. the owner of a £200 million mansion in Westminster currently pays £100 less Council Tax than the tenant of a £345 per month flat in Weymouth!

After wages and rent, Business Rates are often the biggest expense for many companies, particularly SMEs, and they are deeply resented by such as John Cridland, Director-General of the Confederation of British Industry, as “outmoded, clunky and regressive“.

A Land Value Tax (LVT) is an annual levy on a site based on its value which will be conditioned by its location and optimum permitted use. This form of taxation that ignores any developments made on land has many advantages over property taxes like Council Tax and Business Rates: it encourages rather than discourages investment to improve property (e.g. to enhance housing stock or increase productivity); it will bring unexploited and under-exploited high-value land into productive use for residential or commercial purposes; it will particularly favour the development of low-value land bringing jobs, housing and economic activity to the places that need them most; and perhaps most crucially, it is paid by the landowner, the sector that reaps most of the benefit from local amenities and services (public transport systems, hospitals, schools, sewerage, rubbish collection, …) in the form of higher rents and property values. With LVT, those who can most afford to pay – pay the most; and those who benefit most from public sector investment contribute most towards it in fair, proportionate measure. This is in contrast to the current situation in which, when the Council regenerates a run-down neighbourhood, tenants and regular homeowners are hit with the double whammy of a hike in rent and/or higher taxes. Two things that both look like taxes except one of them goes entirely into private pockets.

The Labour Party should be congratulated for considering LVT to replace the local taxes on buildings and business equipment. For a democratic socialist party operating in a mixed economy, it would seem to be a natural policy as LVT is the fairest, most economically neutral tax (far superior to any of our current taxes on work, production, investment, enterprise and trade). As for the Conservatives, is it because their most important constituency is the wealthy (and specifically, big landowners) that they cannot even talk about what the most distinguished economists from across the political spectrum[1] recognise as the only form of taxation that does not distort market forces?

LVT is the very embodiment of governance For The Many, Not The Few and might even presage a brave example of Strong, Stable Leadership. The Labour Land Campaign welcomes Jeremy Corbyn’s recognition that “Wealth should belong to the majority and not the tiny minority… The British people know that they are the true wealth creators, held back by a system rigged for the wealth extractors.

[1] Institute of Economic Affairs: https://iea.org.uk/publications/research/wheels-of-fortune
Adam Smith Institute: https://www.adamsmith.org/policy
Institute of Fiscal Studies: https://www.ifs.org.uk/publications/mirrleesreview/

Corbyn looking at a very good idea – replacing Business Rates with a Land Value Tax

27 April 2017

Addressing the Federation of Small Businesses last week, Jeremy Corbyn talked about replacing Business Rates with a Land Value Tax: “I’m interested in the idea… We are looking at it“.

After wages and rent, Business Rates are the biggest expense for many companies—particularly SMEs—by whom they are perceived as unfair (in that business is expected to bear a disproportionate part of the burden of paying for local services compared with residents): a typical opinion is that of John Cridland, Director-General of the CBI: Business Rates are “outmoded, clunky and regressive“.

A Land Value Tax (LVT) is an annual levy on a site based on its value which will be conditioned by its location and optimum permitted use. This form of taxation that ignores any improvements made to land has many advantages over property taxes like Business Rates: it encourages rather than discourages investment to improve commercial property (e.g. to increase productivity); it will bring unexploited and under-exploited high-value land into productive use; it will particularly favour the development of low-value land bringing jobs and economic activity to the places that need them most; and perhaps most crucially, it is paid by the landowner, the party that reaps most of the benefit from local amenities and services (public transport systems, hospitals, schools, sewerage, rubbish collection, …) in the form of higher rents. With LVT, those who can most afford to pay, pay the most and those who benefit most from public sector investment contribute most towards it in fair, proportionate measure. This is in contrast to the current situation in which, when the Council regenerates the run-down high street, local shops are hit with the double whammy of a hike in rent as well as higher Business Rates. Two things that both look like taxes except one of them goes into private pockets.

So, if LVT is so clearly superior to the current Business Rates system, why has it not been embraced by a “business-friendly” government that has been told about the advantages of such a switch by institutions as revered as the Institute of Fiscal Studies[1] and the Institute for Economic Affairs[2]? Because the Conservative Party has a far more loyal, longstanding constituency to placate, namely the small but disproportionately powerful minority who own most of our green and pleasant land and who would be the only ones to lose out with a switch to LVT. Corbyn put it well this week: “wealth that should belong to the majority and not the tiny minority… The British people know that they are the true wealth creators, held back by a system rigged for the wealth extractors.”

For the Labour Party, LVT would seem to be natural policy: strategically because it is the fairest tax; tactically, for a party that is often painted as economically irresponsible, because it is the only form of taxation that does not distort market forces; and practically because the Conservative Party cannot even talk about it.

Most citizens would benefit from the replacement of almost any of our current taxes on production, work, trade, enterprise and investment with a tax that is progressive, economically efficient, easy to collect and impossible to dodge. And Business Rates are a great place to start. There is even a cogent case that rental properties—effectively commercial land exploited to generate income like any other business—ought to be subject to LVT.

Labour Land Campaign Secretary Carol Wilcox says, “If politicians, the media and economists could only recognise how land value arises and who currently receives unearned income from it, part of it could then be collected through a reformed tax system, reducing economically counter-productive (literally!) taxes whilst increasing investment in our under-funded public services

[1] https://www.ifs.org.uk/publications/5353

[2] https://iea.org.uk/blog/the-case-for-a-land-value-tax-0

Philip Hammond’s Ides of March

16 March 2017

With Tory backbenchers’ knives out after the budget, Philip Hammond’s climbdown highlights how complicated and unfair the UK tax system is. The issue of whether or not to increase National Insurance Contributions for self-employed workers points up how our tax system is overly complex, inefficient, avoidable for some and unfair for many; it penalises work, trade and entrepreneurship whilst rewarding those who enjoy unearned income.

The system is so fundamentally broken that the time for minor tweaks is long gone: it is not just the National Insurance scheme that needs reviewing but  the whole system. That would provide an opportunity to realise that shifting taxes off work and production and on to the unearned incomes received by landowners through no effort of their own will not only be fair but will benefit the economy and encourage—rather than deter—investment in existing and new businesses. Because land values and taxes are inversely related, a shift to an annual Land Value Tax will make homes and business premises really affordable and will recycle the land wealth that accrues from public and private investments to provide a sustainable source of funding to maintain and develop our public services that are in such dire need of it.

Anthony Molloy, Chair of the Labour Land Campaign which argues for fair taxes, says “Let’s hope this current spat over raising National Insurance Contributions for self-employed workers—together with the negative impact on some businesses of belated Business Rates revaluations—makes MPs think about how hideously complicated and unfair our tax system is and how it could be reformed to address some of the most pressing problems in the British economy. An annual Land Value Tax fits the bill: it cannot be avoided or evaded; it will encourage work and entrepreneurial investment, thereby enhancing productivity; it will solve the unaffordable housing crisis; and it will level off inter-regional inequalities, notably the North-South economic divide.

London leading the way to fixing a broken system

27 January 2017

With today’s publication of the London Finance Commission’s (LFC) report entitled “Devolution: a Capital Idea[1]” on top of Mayor of London Sadiq Khan’s positive response earlier in the week to the Greater London Authority (GLA) Planning Committee’s report “Tax Trial: a Land Value Tax (LVT) for London[2]”, there is welcome evidence that at last an important political centre has a leadership that is thinking seriously and radically  how to repair a patently broken, unfair and economically inefficient taxation system. Both reports recommend investigating ways to capture the uplift in land values that accrues from public sector infrastructure investment and currently goes entirely into private landowners’ pockets; judiciously harvesting some of this unearned wealth back into the public purse could create a self-sustaining virtuous cycle of locally increasing land value driving further investment in a community at the same time as perennially raising the quality of life of all the community’s citizens. More concretely, both reports further recommend setting up a trial of “the operation of a land value tax pilot on undeveloped land”. If the trial proved successful, it could be rolled out across the capital on all land, then across the country and then across the world! It would not be the first time that London has led the way.

While a local LVT has only a fraction of the benefits of a national one (notably with respect to the kind of dire inter-regional disparities and inequities that characterise the United Kingdom), the LFC report emphasises the synergy to be gained from Mayors in cities all over the country working together on obtaining real devolution, i.e. genuine power over fiscal policy, especially when negotiating with a government that is stronger on rhetoric about devolving power to the regions than it is on seriously tackling inequality in all its forms.

Moreover, the LFC report does not address the key question of whether this land tax proposal would be an add-on or a replacement tax[3]. Rather than being a tax in the classic sense, LVT can be fairly characterised as a “payment for benefits received”; the benefits being driven by the whole community and the payment being received by the minority that owns most of the land. Thus, in addition to being fair in that those who are most able to pay will be paying the most and those who benefit most from public-sector investment will be contributing most towards it in fair and proportionate measure, LVT is economically neutral and does not distort market forces. While the introduction of LVT would have significant direct corollary benefits like solving the housing crisis in our major cities by bringing undeveloped and underexploited land into optimum use, its core virtue is that it can be used to replace other pernicious taxes on work, trade, investment, enterprise and productivity (Rule Number One of Taxation: The More You Tax It, The Less of It Will Get Done). In addition to being fair, progressive and economically efficient, LVT is impossible to dodge (you cannot put your Mayfair flat in the Cayman Islands); no other form of taxation combines all these virtues.

Dave Wetzel, President of the Labour Land Campaign who was the first Vice-Chair of Transport for London until 2008, says, “Whilst welcoming the Commission’s interest in an annual Land Value Tax, they need to understand that it is not just development sites that benefit from new and existing infrastructure but all land within the catchment area that derives unearned benefit and this is what LVT is designed to recover.”

[1] https://www.yumpu.com/en/document/view/56779094/devolution-a-capital-idea

[2] https://www.london.gov.uk/sites/default/files/final-draft-lvt-report.pdf

[3] Whereas the GLA report explicitly recommends replacing the three basic property taxes, i.e. Council Tax, Business Rates and Stamp Duty Land Tax

Only half of families own their own home – how do the other half live? 

28 December 2016

We now know for certain that the comfortable assumption that 64 per cent of UK citizens own their own home is a myth (1). Comforting because, although homeownership has been in decline since 2005, it still seemed to confirm that two thirds of households were achieving their dream and were not dependent on the precarities of the rental sector.

A decent home is a basic human right and the sixth richest country in the world should have no difficulty in achieving this for everyone here. The Labour Land Campaign has for over 30 years sought to show how homes can become affordable for all whether to buy or rent. Our policy is based on the fact that:

  1. House prices in desirable areas are substantially land value, which is created by the whole community through its economic activities and the locally provided public, and private, goods and services, including vital infrastructure paid for by general taxation.
  2. If the land value was shared by all those who create it the price of a home would be no higher than the building cost – even less if not new – just like second-hand cars.

The Labour Land Campaign calls for Council Tax to be abolished and replaced by Land Value Tax, which is paid by the owner, not the tenant.

At the moment the owner of a £200 million mansion pays £100 less Council Tax than the tenant of a £345 per month flat in Weymouth!

Labour Land Campaign Vice Chair, Heather Wetzel, writes: “My paper Welfare for the Rich – who really receives the biggest subsidies in the UK?’ (2) shows how landlords have benefited inordinately from the increasing value of land. For many years I have sought to prove that homeownership in the UK has been overestimated and that many more people are dependent on the exploitative private rental market to maintain a roof over their heads. I am grateful to Lindsay Judge and Adam Corlett for researching this important subject.”

[1]  http://www.resolutionfoundation.org/media/blog/only-half-of-families-own-their-own-home-how-do-the-other-half-live/

[2] https://www.labourland.org/wp-content/uploads/2015/10/Heather-Wetzel-Welfare-for-the-Rich-June-2015.pdf

Council Tax: a sticking plaster to staunch the social care haemorrhage

13 December 2016

The failure of the government to address the worsening crisis in social care in the Autumn statement attracted criticism from across the political spectrum with projections suggesting that 40% of current social care places could become non-viable in the medium term. Now, the belated response to the hue and cry is a proposal to increase social care funding by further increasing Council Tax. Of all our economically inefficient, unfair taxes, Council Tax—a hybrid property/poll tax—is deliberately and by Tory design one of the most regressive: a tenant in a flat almost anywhere in the country pays more than the owner of a similar flat in Westminster. Mark Wadsworth, Research Officer of the Labour Land Campaign (LLC) has shown that “across the country, Council Tax is hugely regressive with an effective rate of 30% or 40% [of annual rental value] in the cheapest areas compared with 3% or 4% in the most expensive”. It is a profoundly divisive idea to try to cure a fundamental, national problem like the expanding need for social care provision by raising the already unfair Council Tax. In addition to consolidating well-characterised inequality between the proportions of disposable income paid in tax by the poorest and the richest households within any given area and across the country, concrete figures from the King’s Fund think tank[1] show how this measure would further specifically exacerbate inequality in access to care services between prosperous areas with relatively low pensioner needs and deprived areas with high pensioner needs.

LLC President Dave Wetzel says “While all of our current taxes are either unfair, economically counter-productive, easy to avoid or all of the above, Council Tax takes the biscuit when it comes to making those who can least afford it pay the most. The history of the Council Tax is a prime example of how tax policy in Britain has been mismanaged: from its hasty introduction in 1991 to plug the gap left by popular rejection of the Community Charge, through the inexorably worsening geographical and social unfairness of this tax as a result of failure to revalue the base in England ever since. And the mismanagement now goes on with yet another sticking plaster, this one to cover up central government’s abdication of its responsibility to adequately fund social care spending, passing the buck to local authorities that have already seen their own funding cut by 40% since 2010.”

The Labour Land Campaign advocates replacing current taxes on work, production, trade, investment and enterprise with economically neutral taxation on land value and therefore wealth and unearned income. When Britain gets a government that is more interested in establishing a fair, efficient taxation system than it is in consolidating the position of a narrow constituency of disproportionately powerful vested interests, getting rid of Council Tax may be a good place to start.

[1] King’s Fund Report: “How serious are the pressures in social care?” [www.kingsfund.org.uk/projects/verdict/how-serious-are-pressures-social-care]

Failure “… to build an economy that works for everyone” (Philip Hammond, 23 November 2016, 12h32)

24 November 2016

In his Autumn Statement, the Chancellor talked about “tackling the three major weaknesses in our economy, namely: the productivity gap; the housing challenge; and the damaging imbalance in economic growth and prosperity across our country”. He went on to announce a series of sticking plaster measures that leave in place a corrupt tax system that: is anathema to productivity; has led to a sustained drop in house-building (especially of affordable housing) over more than fifty years; and favours rich over poor as well as the more prosperous parts of the country over the most deprived.

Taxing work (Income Tax, National Insurance Contributions), trade (Value Added Tax), private sector investment (Business Rates) and enterprise (Corporation Tax) makes goods and services more expensive and less competitive, and thereby reduces productivity; the housing crisis has been driven by the existence of strong incentives for landowners to restrict supply to a minimum and thereby guarantee rising prices for their scarce asset; regressive taxes (Council Tax, VAT) disproportionately fall on the less well-off, and taxes penalising private-sector, yield-bearing investment that are indiscriminately levied on prosperous and deprived areas alike (Business Rates) reinforce geographical inequality. These taxes account for some 85% of Treasury revenue.

Anthony Molloy, Chair of the tax-reform pressure group Labour Land Campaign, says “Until we tax the right things the poorest will continue to subsidise the richest.  We need a reformed tax system that is fair, transparent and cannot be evaded.” He explained that, as our economy has grown over generations, so owners of land have demanded more and more unearned income from those using their asset for production, services and homes. He continues “land wealth largely accrues from public services paid for by all taxpayers with no input from land owners. By reducing negative taxes that compromise trade and investment, and replacing them with an annual Land Value Tax (LVT) that collects the economic rent of land which properly belongs to all, we will see: enhanced competitiveness and thus productivity; an end to land speculation, the development of idle and under-used land, and resolution of the housing crisis; and a fairer system in which not only is more of the tax burden borne by those who can afford it most but also one that encourages regeneration of the most deprived parts of the country, instead of holding it back.

Rather than helping the intended beneficiaries, many of the measures announced today such as subsidies for builders, transport infrastructure and Business Rates will immediately capitalise into land value, thereby further the enriching the wealthy and exacerbating the problem at the root of the housing crisis which is over-priced land; history shows that all government grants and subsidies inexorably find their way into the pockets of land owners.

If Philip Hammond were serious about making the economy work for everyone, the underlying causes of low productivity, the housing crisis and growing inequality would have been ‘tackled’ in this year’s Autumn Statement. But then, his party has powerful vested interests to keep happy (the wealthy and specifically landowners) and, according to his declaration of interests in 2016, “I am a beneficiary of a trust which owns a controlling interest in Castlemead Ltd., a company engaged in construction, house building and property development.

How would Land Value Based Fiscal Reform contribute towards good, secure, affordable housing?

1 November 2016

Abstract for the “Commons Rent for The Common Good” Conference from Peter Smith

In the face of a deep and ever worsening housing crisis there is widespread frustration at the failure to increase the rate of house building to address the imbalance of supply and demand. A large part of the problem is that the profits of the development industry are intrinsically linked to inflated land values which are boosted by artificial scarcity. It is not in the interests of developers to flood the market with new builds as this would have a price-suppressing effect and hit their bottom line.

At present it is all too common for land owners to sit on development sites and demand an unrealistically high price from others who want to bring them forward, or otherwise demand that local authorities lift the obligation to build sub-market-rate, affordable homes in order to make schemes more profitable. The viability discussion, a circular argument over the relationship between site value and planning obligations, can be typified as a stand-off between the developer and the planning authority with the latter commonly lowering its affordable housing requirement in the hope that this will result in stalled sites being taken forward.

Land value based fiscal reform would strike at the root of the problem by fundamentally shifting the balance in favour of productive land use, rewarding the industrious and penalising the speculator. It would do this by introducing a modest annual cost on the land owner regardless of whether land is used productively or not. In return, one-off costs that developers currently face such as Community Infrastructure Levy and Stamp Duty Land Tax on development land could be eliminated in a revenue neutral way. These existing taxes are not paid by those holding land idle but are only levied once the decision is made to sell or develop the site. The revenue neutral fiscal shift could be extended further to eliminate other taxes on house building companies and construction workers including VAT, corporation tax, income tax and national insurance. Reducing these harmful taxes would lower the cost of development.

The net result would be a saving for those who proceed quickly with development and mounting costs for those who do not. The reform would prove to be an effective antidote to unproductive land banking and speculative behaviour which drives up the cost of land. Stalled sites together with underused and derelict land in both the public and private sectors would be unlocked and the build-out of development schemes would be accelerated. The surge of available land would have the effect of lowering its price, enabling new developers, including smaller house builders, self-builders and housing associations to join established volume house builders in providing a plentiful supply of affordable housing as well as creating additional jobs in the construction industry.

The fiscal shift would also result in a more efficient use of the existing housing stock. Bringing empty homes back into use would be rewarded and an incentive would be created for existing households to downsize where possible. Not only would this mean a greater number of larger homes coming onto the market but it would also reduce the requirement for greenfield land to facilitate urban expansion.

Thousands of hectares of land would be freed up and millions of new homes would be delivered across the country. Housing supply would increase to meet demand causing a fall in house prices as well as lower rents. At the same time the fiscal shift would mean higher after-tax incomes and greater spending power for the majority of people which would make homes more affordable to the population at large. Furthermore, the end to scarcity that increased supply would bring would result in better quality housing and a more equal relationship between landlords and tenants, reducing the insecurity of tenure and poor conditions currently experienced by many in the private rented sector. In essence, land value based fiscal reform would tackle the monopolisation of land which lies at the heart of our current housing crisis.

Reclaiming the terrain of economic efficiency for the left

11 September 2016

Motion submitted for debate at the Labour Party Conference

Conference notes:

  1. Neoliberal doctrine has driven economic policy in developed countries and has been forced upon many developing economies leading to a drop in living standards for all but the very wealthiest throughout most of the world.
  2. The claimed purpose of these policies is NOT to consolidate the dominant position of either developed countries and transnational corporations or the wealthiest individuals and companies. They just happen to do both these things!
  3. A cornerstone of neoliberal doctrine is the trickle-down argument that: the market knows best; taxes on labour, enterprise and sales distort market forces; reducing taxation will free up the market and lead to increased prosperity for all.
  4. Because taxes and land values are inversely related, all tax reductions eventually end up capitalised in land values, a distortion of the market that disproportionately hurts the poor who do not own property. Only one form of taxation is perfectly economically neutral: land value taxation (LVT).
  5. LVT is a levy on the value of land (conditioned by its proximity to jobs and services, its fertility, etc.), irrespective of any buildings or improvements on it.
  6. Big land owners and their political parties abhor LVT—what Milton Friedman called “the least bad form of taxation”—because they constitute the small minority of citizens who would lose out by its introduction.

Conference believes that Labour should replace taxes that have perverse market-distorting effects with economically efficient LVT.

Homes for Londoners: land value and taxation

29 August 2016

Some 100 days after an election dubbed a referendum on housing, our new Mayor of London has established the Homes for Londoners board. If Boris Johnson did not hide it, this board would do well to read this year’s report[1] by the GLA Planning Committee on how to address the housing crisis in the capital. In addition to a very pithy exposition of the virtues, challenges and history of Land Value Taxation (LVT), he will find the conclusion that, “The time has come to test it out. The conditions are right”. He will also find therein concrete recommendations that, as soon as the new Mayor takes office, he should cost replacing Council Tax, Business Rates and Stamp Duty with a LVT, and set up a trial in a specific area of London with a view to subsequent roll-out across the capital.

Last week the Mayor announced that he would try to force the release of tracts of urban waste land owned by Transport for London (TfL) coupled with a commitment to the construction of housing for regular Londoners. The very frank response from Tory transport spokesman Keith Prince AM was, “Selling TfL’s land with a massive 50 per cent affordable housing requirement ensures it will be sold for well under market value”. Well, yes, that’s the point: speculative market values are killing London by driving out the young and strangling the diversity and vibrancy that make our capital so great. If only Londoners could also get their hands on all the undeveloped land in their city which is being banked by private companies and which accounts for the majority of those bleak, off-putting, Trespassers Will be Prosecuted plots one sees everywhere.

Some may find it puzzling that there is so much undeveloped land in areas one would have thought eminently desirable—and profitable—like Greenwich and Southwark (and, if truth be told, anywhere in Greater London at all). The problem is that, as long as the price of land rises at the rate it has been in the last twenty years in London, a landowner can make more money doing nothing than by developing his asset for productive use. The solution is to tax land. LVT would stop dead the kind of speculation that leaves so much of London’s most precious natural resource fenced off, sad-looking and of no use to anyone. While rising land prices are due to inflation of the property market by the banks, rising land values are largely the result of public sector investment (not only homes for ordinary people but also schools, hospitals, sewerage systems, policemen, tube trains, etc.) so revenue from a land value tax could also drive a virtuous cycle in which public sector investment, as well as enhancing Londoners’ quality of life, further drives up land values and thereby increases revenue for the public purse … for further investment …

Landowners not only tend to be richer than tenants but they–along with the banks–are also the main beneficiaries of rising land values which is why Anthony Molloy, Chair of the Labour Land Campaign, says, “Taxing land would therefore not only ensure that those who are most able to pay will pay the most but also that those who benefit the most from public sector investment contribute most towards it, in fair measure.”

Sadiq Khan was elected on a mandate to solve London’s most critical challenge, its housing crisis. A good departure point would be the GLA Planning Committee Report.

[1] “Tax trial. A Land Value Tax for London”, 22 February 2016  [https://www.london.gov.uk/sites/default/files/final-draft-lvt-report.pdf]

Letter to the Guardian by Dave Wetzel, President of the Labour Land Campaign, in response to an article entitled “What’s needed to tackle Britain’s homelessness scandal

21 August 2016

The letter from Labour MPs and others on the need to address homelessness misses one crucial policy: we cannot build new homes without access to land. Before the government and others begin to build more homes they will need to acquire land, and in the face of this increase in demand, landowners will naturally increase the price of land, meaning the cost of these new homes will escalate. The answer is to remember that land is not a manufactured good but a free gift of nature. Housing policy needs to acknowledge that land speculation (the hoarding of land out of use) is the underlying cause of the high cost of homes. An annual land value tax would kill land speculation in its tracks and provide government with the funds to build more homes.

The housing crisis is not about bricks and mortar … it’s about land: tax it

2 August 2016

House prices have become detached from people’s earnings” Matthew Whittaker, chief economist at the Resolution Foundation

The Resolution Foundation’s well-timed and eye-opening analysis illustrates the extent to which property prices have risen disproportionately to wages since the early 2000s. Even Theresa May, in her coronation speech, drew attention to the “injustice [that], if you’re young, you’ll find it harder than ever before to own your own home”. Outside the pages of the Daily Mail, the zeitgeist has shifted towards a recognition that high property prices are incompatible with a balanced, fair economy.

But it is important to recognise that the component that has gone through the roof is not bricks and mortar, it is land. Bricks and mortar depreciate so if the same house costs more than it did twenty years ago, it is because the land that it is on has gone up in value. The reasons for this are many and various but the solution is clear: tax the value of land to capture this unearned capital gain.

A land value tax is levied on the part of the value of a property that stems from the size, planning permissions and location of its land, irrespective of the value of buildings and other improvements on it. Land value may be most of the property price (Mayfair) or very little of it (Port Talbot).

Land value taxation would solve the housing crisis in our major cities by:

  • bringing property prices down (both because future taxes will have be taken into account in the selling price and because vast swathes of underexploited land will be forced on to the market);
  • removing the incentive to leave useful land undeveloped;
  • encouraging landowners, landlords and home-owners to improve their asset to ensure that it is put to  its optimal use and generates as much income or joy as it can;
  • driving the regeneration of deprived areas where land value is currently low.

This is in contrast to the perverse effects of our current property tax system: if a home-owner improves his property to improve quality of life, he will have to pay higher Council Tax; if a businesswoman invests in her premises to enhance productivity, she will have to pay higher business rates.

Taxing land has many other virtues: it is fair and progressive; it is easy and cheap to collect; it is impossible to dodge; and most importantly, it is economically efficient, meaning that it does not distort market forces. Anthony Molloy of the Labour Land Campaign says, “if a land value tax were to replace any of our current perverse taxes that penalise work, business, investment and trade, the market would be freer to do what markets do best”. Surely an argument that ought to appeal to the woman who has stepped into Margaret Thatcher’s shoes.

Unfortunately, she, like her predecessor, is going to have to sacrifice the economic efficiency that her Party has laid claim to for the last thirty years in order to appease the tiny minority of vested interests—notable among them the banks, big building companies, property developers, speculators and, of course, the big landowners—who represent the core constituency of the Tory political machine—and who fund it.

Land value taxation: giving the lie to One-Nation Tories

14 July 2016

 “The government I lead will be not driven by the interests of the privileged few”

 Theresa May gave the now-traditional, One-Nation Tory, “Party-of-the-Workers” nod to the unwashed on her coronation yesterday. Presumably it was not written by Steve Hilton or Stewart Pearson but their spirit was in it: the spirit of spin devoid of ideology in cynical denial of their party’s dedication and indebtdedness to the powerful and wealthy vested interests that have been controlling fiscal policy for centuries in Britain since the days of Rotten Boroughs and Corn Laws.

More recently, the Tory Party has enthusiastically embraced the neoliberal agenda: shrink government, liberalise trade and deregulate to make production more profitable and boost growth. An End Of History argument that has proven bizarrely seductive to voters despite the corollary effects of such policies being a drop in living standards for all but the most wealthy and the creation of a dangerously alienated underclass.

The claimed virtue of market fundamentalism is to optimise economic efficiency and create wealth that will trickle down throughout all strata of society. In no way are these policies expressly designed either to further the narrow interests of the Tory Party’s traditional core constituency who fund them, namely the wealthy and, in particular, the land-owning class: they just happen to do this!

A key element in the neoliberal agenda is to reduce taxes to enhance economic efficiency: the underlying economic principle is that taxation reduces profitability and therefore cuts out potentially viable producers thereby inhibiting economic activity and preventing growth. While this is true of all of our current taxes, it is not true of land value tax which, being taken from economic rent (producer surplus), does not distort market forces. The cornerstone of market fundamentalism is that the market knows best and any distortion of market forces will have perverse effects. So, if economic efficiency is the guiding principle of the Conservative Party, why do they not advocate the only form of taxation that is not economically inefficient—land value taxation—what their guru Milton Friedman called “the least bad form of taxation”?

Claiming back the terrain

30 June 2016

Since the 1970’s, economic efficiency has been a terrain claimed by the right: shrink government, liberalise trade and abolish regulations to make production more profitable and boost growth. An argument that has proven seductive to voters in democratic countries despite the corollary effects of such policies being a drop in living standards for all but the most wealthy and the creation of a dangerously alienated underclass. Right-wing political parties have won power with this message across the world, transforming the most powerful economies to create a uniformly neoliberal globe from Europe through the Americas to China; the so-called End of History. And, at least until the financial crash of 2008 indicated that the End of History had perhaps not arrived just yet, few opposition parties in these countries dared to question the foundations and validity of the neoliberal doctrine, even when they were in power, preferring to revisit old domestic battles between workers and bosses or resort to the age-old, ever-reliable strategy of blaming foreigners and immigrants.

The claim is that the purpose of market fundamentalism is to optimise economic efficiency and create wealth that will trickle down throughout all strata of all societies. In no way are these policies expressly designed either to further the narrow interests of the developed countries that impose them or consolidate the position of the wealthy who constitute the traditional core constituency—and also fund—the political parties that promote them; they just happen to do both these things!

A key element in the neoliberal agenda is to reduce taxes to enhance economic efficiency; as implemented according to the Washington Consensus, the focus has been on tariffs, taxes on income (especially higher incomes) and taxes on business. The underlying economic principle is that taxation reduces profitability and therefore cuts out potentially viable producers thereby inhibiting economic activity and preventing growth. While this is true of tariffs, income tax and corporation tax—or any other of our current taxes—it is not true of land value tax which, being taken from economic rent (producer surplus), does not distort market forces. The cornerstone of market fundamentalism is that the market knows best and any distortion of market forces will have perverse effects. So, if economic efficiency is their guiding principle, why do those on the right not advocate the only form of taxation that is not economically inefficient; what their guru Milton Friedman called “the least bad form of taxation”? You know the answer: fiscal policy the world over has been managed by the wealthy minority—in particular the land-owning class—to consolidate their own advantage.

So when it comes to communicating about land value taxation to counter the predictable arguments of the tiny, overweeningly powerful minority of individuals and institutions who would be the only ones to lose out, an important message will be that, far from being single-mindedly committed to economic efficiency, those in the corridors of power today are as beholden to the same narrow, vested interests at the expense of good governance as they ever were in the days of Rotten Boroughs and Corn Laws.

Working and sitting at home: the problem with unearned income

10 June 2016

One of the great fallacies of life is that working is more lucrative than doing nothing, a fallacy that is perpetuated particularly vigorously by the Conservative Party. (NB: Who said this? “The Conservative Party speaks of the profit from land as if it were the fruits of thrift and industry and a pleasing example for the poor to imitate[1]”).

While it is true that most people earn their money by working, what is not true is that most money is earned through work; unearned income outweighs earned income. Canadian mathematician Jens Von Bergmann has just published[2] an illuminating comparison of employment income (the kind that is taxed in Income Tax) in the City of Vancouver and unearned income accruing from rising land value (the kind of wealth that is not taxed at all in Britain, Canada or hardly anywhere else). Between property tax assessment years 2015 and 2016, the value of owner-occupied single-family homes rose by $25 billion[3] while employment earnings in the same period amounted to $19 billion. Average hourly after-tax earnings were calculated at $26 from regular work compared with $126 from sitting at home (or more accurately, from sitting on your land, if you have any). Any similar assessment is impossible in Britain where the last property tax assessment was a quarter of a century ago.

Earned income is generally perceived as more “worthy” than unearned income (welfare benefits, rental income, profits from speculation, etc.) but it is as important to realise that siphoning money out of the real productive side of the economy into the sterile asset-based side is bad for the economy as a whole. A great part of this siphoning off can be seen in rising land values and, in consequence, property prices and rents. And this is particularly relevant in the year in which total housing wealth owned by UK landlords overtook that held by mortgaged owner-occupiers[4].

There are a number of reasons why our betters have chosen to tax—and thereby disincentivise—work, investment, trade and development rather than unearned income. To single out just two: our fiscal system was historically drawn up by landowners; and we, the baby-boomers, have done everything we can to enrich ourselves at the expense of our children.

Anthony Molloy, Chair of the Labour Land Campaign says, “Our flawed tax system is not fit for purpose and a major shift in taxation off wages and production and on to land value and other natural resource wealth would provide a sound foundation for an economy that will encourage positive and sustainable production”.

[1] Winston Churchill in Liberalism & the Social Problem, 1909
[2] Jens von Bergmann: Work vs Twiddling Thumbs [http://doodles.mountainmath.ca/blog/2016/01/24/work-vs-twiddling-thumbs/]
[3] out of the $45 billion by which land values increased overall, the $20 billion differential mainly accruing to landlords, large landowners, property companies, speculative building firms, … rentiers.
[4] Judith Evans: Landlord housing wealth eclipses owner-occupiers with mortgages [https://next.ft.com/content/1dc30d76-baf4-11e5-bf7e-8a339b6f2164]

Save the British steel industry by dipping into workers’ pensions or replace pernicious Business Rates with a neutral and efficient Land Value Tax?

30 May 2016

The Business Secretary’s latest wheeze to save some vestige of a British steel industry is a grab from the pension pots of 50,000 as yet unretired workers to plug an estimated funding deficit of £485 million in the fund. This desperate attempt to make the Port Talbot business more attractive to buyers at the expense of workers is not only illegal under present legislation, it also goes against the principle that pension benefits, once granted, cannot be taken away.

Many of the challenges facing the steel industry are specific to that industry but one anomaly in particular is a challenge for almost every business in the country, namely high Business Rates. These are a kind of property tax payable on the value of the land plus everything immobile on that land; in the case of Port Talbot, this comes to about £10 million per annum. Without denigrating the town of Port Talbot, the value of the land on which the steel plant is installed is probably close to zero; the £10 million will almost all be for the plant and machinery. Carol Wilcox of the Labour Land Campaign says “You couldn’t make it up! If a company invests in its premises to enhance productivity or improve working conditions, it will have to pay even higher business rates.” This goes against the first fundamental principle of taxation, that of neutrality meaning any tax ought to “contribute to efficiency by ensuring that optimal allocation of the means of production is achieved[1]

And while this applies particularly egregiously to manufacturing industry with serious plant, the same goes for almost every business in the country. In refusing to address the counter-productive—literally—impact of Business Rates, Sajid Javid is ignoring advice from experts in the field, notably that of the Institute of Fiscal Studies (the work of which is “the independent gold standard” according to David Cameron talking about something else altogether this week): their Mirrlees Report which has been on desks at the Department of Business, Innovation and Skills since 2010 makes an unequivocal recommendation: “abolish the current system of business rates and replace it with a system of land value taxation, thereby replacing one of the more distortionary taxes in the current system with a neutral and efficient tax.” According to the Confederation of British Industry, “Business Rates have become a barrier to entrepreneurship, investment and productivity growth for businesses of all sizes and need urgent reform”, but they do not even bother proposing the IFS solution of replacing them with a Land Value Tax because “it’s not what the Treasury wants to hear”. Pointing up the fact that, far from single-minded dedication to economic efficiency, the Tory Party is as beholden to the  landowning class as it was in the days of Rotten Boroughs and Corn Laws.

[1] OECD 2014: Addressing the Tax Challenges of the Digital Economy – Chapter 2. Fundamental Principles of Taxation [http://www.oecd-ilibrary.org/docserver/download/2314251ec005.pdf?expires=1464354260&id=id&accname=guest&checksum=33DE0B389D976749F0CA03099D7BA855]

Our NHS and land

25 May 2016

The NHS overspent by nearly £2.5 billion last year and this is unlikely to improve with the planned “move to market-based rental charging[1]” on properties belonging to NHS Property Services, a Limited Company set up in 2013 to manage the former Primary Care Trust estate consisting of property valued at around £3 billion. It is currently 100% owned by the Secretary of State but looks suspiciously ripe for sale. The sell-off of publicly owned property—while nothing new[2]—is a triple whammy for this government: firstly, they collect much-needed cash to plug the austerity-driven shortfall in government revenue; secondly they shrink the state that they abhor by selling off its most precious assets; and last but not least, they are paying back the profiteers and rent-seekers who fund their political machine.

The story of privatisation of public services is largely a story of the transfer of precious income-generating assets—notably property and land—to the private sector, often based abroad and all too often in tax havens.

Anthony Molloy, Chair of the Labour Land Campaign said “The day that a Government recognises that public services generate land value and that taxes and land values are inversely related, most of the population will be able to benefit from a shift away from economically perverse taxes on production and wages and on to an economically efficient tax on land value.”

Research carried out by the Labour Land Campaign shows how our skewed tax system disadvantages businesses and workers whilst rewarding land speculators, land hoarders and big land owners. Anthony Molloy explained that “as our economy grows, so owners of land demand a huge chunk of that growth through rents and capitalised land prices. Soaring land prices have left those on low and middle incomes unable to own or rent a home in an area of their choice, and distorted rents are squeezing the viability of many potentially useful businesses.”

Rather than penalising work, investment, productive economic activity and enterprise, government should begin to shift the burden of taxation onto unearned income by introducing an annual Land Value Tax to provide revenue to pay for public services like the NHS which are what generate land value in the first place. A virtuous cycle instead of the vicious cycle created by our current taxation system.

[1] http://www.property.nhs.uk/what-we-do/

[2] HMRC currently leases back the offices it sold to Mapeley Steps (a Bermuda-based company) in 2001!

Tax havens – one of many reasons for taxing the quintessential on-shore asset

5 April 2016

The documents leaked from Mossack Fonseca provide indisputable proof that the UK’s tax system is not fit for purpose and there needs to be a fundamental shift in what is being taxed to prevent the rich and powerful from avoiding paying taxes.

Dave Wetzel, President of the Labour Land Campaign says, “This leak only confirms what we already knew about the UK tax regime: those who are most able to pay avoid paying whilst workers and small businesses are left to fund public services.”

One reason why the Labour Land Campaign (LLC) has campaigned for years for land value taxation is because land is the quintessential “on-shore” asset and a tax on it is therefore unavoidable. Dave Wetzel went on, “It is ironic that so much of the wealth squirrelled away off-shore actually derives from the increased land values that are generated by public services paid for by UK taxpayers. And yet our tax system helps the richest and the unscrupulous avoid contributing to the cost of these public services that they are the very ones to benefit the most from.”

More fundamentally, taxing the unearned incomes land owners siphon out of the real economy will make it possible to eliminate all the dead weight losses associated with our current economically inefficient taxes which variously inhibit work, business, enterprise, trade and investment. Changing what is taxed will make our fiscal system fairer and more economically efficient to the benefit of society as a whole and to the profit of the vast majority of its citizens.

More bunce for the backers

17 March 2016

The Chancellor has plunged new depths of economic illiteracy in this Budget with his changes to Business Rates.

The new threshold for small business rate relief will increase from £6,000 to £15,000. Business rates will also be linked to CPI, the official measure of inflation, which has historically been lower than the RPI rate to which rates are currently linked.

As always when property taxes are reduced, it will do precisely nothing for business beyond their next rent review: their rents will then be increased with the landlord absorbing the benefit of the tax cut. One would think that, in the face of all the evidence, the Chancellor would have learned this by now unless the real constituency that he is serving is the economic rent-seeking vested interests that fund his political machine (landowners, big builders, speculators and the banks).

The changes to Business Rates will mean less revenue for local authorities, already in dire straits. To compound the effect, Osborne will give powers to privileged Greater London to keep all the high Business Rates raised there for themselves and not share them with the rest of the country. Given that infrastructure investment will continue to be concentrated in London yet is largely funded from general taxation, this is outrageously unfair as well as economically inefficient.

One of reasons why the Chancellor has been tinkering with rate relief is that the valuations on which Business Rates are based are more than seven years out of date and many small businesses are suffering, especially where commercial property values have fallen, i.e. everywhere outside the South East.

Carol Wilcox of the Labour Land Campaign says, “What the Chancellor should be doing is preparing to abolish Business Rates and replace them with an annual Land Value Tax (LVT) by initiating valuations. It is cheaper and easier to value just the land element rather than individual buildings – and even industrial machinery. It’s crazy to tax the working capital of a business on which it creates its profits.”

“And here’s the best bit. All beneficial investment in infrastructure increases local land values. Once regular valuations are established (annual revaluation being easy with modern technology), a LVT will foster a virtuous economic circle of infrastructure investment leading to increased land values leading to increased LVT revenues leading to increased infrastructure investment.”

This is in contrast to the current vicious circle of returns on taxpayer-funded investment being siphoned off out of the real, productive economy into private hands via the sterile, asset-based economy, depriving the Treasury of the resources it could invest to improve society.

WHAT we tax, a front line in the war between left and right

The economic case for land value taxation

7 March 2016

In the war between left and right, one of the main ideological fronts is always taxation. In the trenches on the left, relatively high taxes with big government for a fair, equitable society which nurtures its most vulnerable; across the bleak strip of ravaged mud, low taxes, small government and rewarding hard work and enterprise to maximise economic efficiency. That’s the ideology but closer scrutiny of actual policy suggests that:

  • The right—far from being single-mindedly committed to economic efficiency—is as beholden today to the same narrow, vested interests at the expense of good governance as it ever was in the days of Rotten Boroughs and the Corn Laws, first and foremost among these vested interests landowners and other monopolistic rentiers who collect unearned income.
  • The fact that the left has never felt strong enough in power to launch a root and branch attack on the central question of taxation points up the power and influence that said vested interests have had in the past and still have now.

Because one of the central questions in taxation is what you tax. While battles about how much you tax and how you spend the revenue may be important, this article is not about that: it is about economic efficiency.

In this country (like almost everywhere else) fiscal policy is mainly based on taxing work (Income Tax and National Insurance Contributions), trade (Value Added Tax) and business (Corporation Tax and Business Rates): these five taxes on labour, sales, production, enterprise and investment account for over three-quarters of all Treasury revenue. Rule Number One in taxation is that the more you tax it, the less of it will get done. That’s why smoking and drinking are taxed so heavily. If Income Tax plus National Insurance amounted to 100%, not many people would go out to work; if they were at 40%, more might (one hopes so because that is where they are). VAT and Corporation Tax as well as taxes on labour drive up the prices of goods and services, thereby lowering competitiveness and killing jobs. In other words, taxation distorts markets. But there is one form of taxation that does not: land value taxation (LVT).

LVT is an annual levy on the unimproved value of land, ignoring any buildings or amenities added to it by the landowner’s industry and investment, past and present. Land value is a function of the area of a parcel of land, its location (proximity to amenities) and its actual or potential permitted use (essentially local planning regulations). The value—as opposed to its price—of the ultimate fixed-supply asset of land is driven exclusively by market forces and, unlike the value of elastic factors like labour and capital, is unaffected by taxation.

  • The rationale for LVT is a recognition that the land of a nation – even when privately owned – is a common good in which every citizen has a stake.
  • The elegance of LVT is that any rise in land value as well as all rent is unearned income, the level of which is mainly conditioned by local public sector investment—roads, transport, schools, hospitals, teachers, nurses and doctors, sewerage systems, etc.—so taxing it means that those who benefit most from rising land value contribute most towards what drives said rise, in a fair and proportionate measure. Because wealth correlates so tightly with land ownership, those who are most able to pay will be paying the most. And because land ownership is so highly concentrated in Britain, taxing the most fortunate in society more heavily would mean that the less fortunate could be spared. In fact, rather than being a tax, LVT could be seen as more like recovering a payment for benefits received—a share of the unearned income landowners get from their assets without having had to do anything at all. If the Duke of Westminster enhances the value of one of his properties by building an Olympic swimming pool in the garden, it might seem different from the increase in the property’s value because Westminster Council built an Olympic swimming pool down the road but without LVT, it comes to the same. In just two years around the opening of the Jubilee Line extension in London, land values within 500 meters of the 11 new stations went up by about £13.5 billion, a 200% annual return to private landowners on a public-sector investment of £3.5 billion. If such profit from public sector investment were harvested for more public sector investment instead of going into private pockets, a virtuous cycle could be established in which state spending drives ongoing rises in land value (as it has always done) which are in turn harvested to fund more public sector investment and further improve the quality of life of citizens. This is in contrast to the current vicious cycle of returns on taxpayer-funded investment being siphoned off out of the real, productive economy into private hands via the sterile, asset-based economy, depriving the Treasury of the resources it could invest to improve society.
  • And the practical beauty is that LVT is easy to collect and administer (at least compared with taxes like Council Tax and Business Rates that demand the valuation of millions of unique properties), and impossible to dodge (you cannot hide your mansion or shooting estate in the Cayman Islands).

Corollary benefits are many and various. LVT will remove incentives that encourage land banking and speculation, thereby encouraging the productive exploitation of currently under-developed land (brownfield sites) to mitigate the housing crisis. It will encourage the regeneration of disadvantaged areas where land values are lowest, bringing jobs and economic activity to those parts of the country where they are most lacking. Moreover, LVT will encourage the optimisation of land use across the board so that landowners obtain as much income from their precious resource as they can.

But the most important corollary benefits by far will be those that result from getting rid of worse taxes with perverse economic consequences because LVT would be a replacement tax, not an add-on. You could choose to substitute LVT for taxes on labour: this would have positive economic benefits on competitiveness and the balance of trade. Replacing taxes on sales would similarly enhance productivity and competitiveness at the same time as getting rid of VAT, surely one of the most grotesquely regressive taxes ever dreamed up by Man. Abolishing property taxes like Council Tax and Business Rates would remove the disincentive to improve current stock leading to better housing and working conditions. Broadly speaking, in any arena in which advantage would accrue from making land use more efficient or labour and investment more lucrative, LVT will bring about corollary benefits.

So if LVT is obviously so much better than all our current taxes … ?
You know the answer: historically fiscal policy was drawn up by landowners who were the only ones entitled to vote or sit in Parliament and this has not changed as much as we might think in the one hundred years since property restrictions on suffrage were finally removed in the wake of the First World War (the vicious Housing and Planning Bill was recently passed by a House of Commons in which fully 30% of the Members—as opposed to just 2% in the population as a whole—declare receiving rental income; there are more landlords in the House of Commons than there are women!). So would our Prime Minister who is all about  organising the fiscal system to reward hard work agree with Winston Churchill that, “The Conservative Party … speaks of the profits of the land monopolist as if they were the fruits of thrift and industry and a pleasing example for the poorer classes to imitate … All goes back to the land, and the land owner is able to absorb to himself a share of almost every public and every private benefit …”. In March, will George Osborne be bringing in LVT, what his idol’s economic guru Milton Friedman called “the least bad form of taxation”? Of course not, because the constituency to which the Conservative Party is beholden is the wealthy and in particular the land-owning class. In the case of obviously decent guys like DC and GO, simple ignorance of the whole rich pageant of modern British life and a constrained world view as a result of limited experience may have lead them to actually believe that their policies encourage entrepreneurship and economic growth. A more jaundiced eye undertaking an analysis of actual policies might see that, far from any ideological commitment, their priority is to cater to certain vested interests—of which they are not only members and to which they naturally owe allegiance but which also fund their political machine—to the detriment of most of the citizens of the country that they rule. And, dear reader, you decide whether that includes you and what side you are on.

The core constituency of the left that is denied unearned income represents the majority of the population so the battle lines can be redrawn with LVT at centre stage—the big gun of economic efficiency solidly implanted on the left after years of accusations of economic irresponsibility in government (not entirely without justification). Of course, the right’s Big Media Bertha will be wheeled out to strike fear into regular homeowners and turn them into foot soldiers for the forces of reaction with an important human shield in the asset-rich, cash-poor “Widow in the Mansion”. But if LVT is formulated in such a way as to ensure that the vast majority of citizens (including said regular home owners) end up paying less tax and no specific population other than the tiny one of the wealthy rentier loses out—and we manage to communicate effectively—we may be able to take back some of the ground we have lost in recent years and perhaps even force into retreat the tiny (1%?) but armed-to-the-teeth elite that has so long called the shots.

The strategic reason why LVT is a natural policy for any socialist, democratic party operating in a mixed liberal system is because it is fairer and more economically efficient than all others form of taxation. The tactical reason why, for a political party that does not have to appease a powerful, internal vested interest, it is sensible to advocate a form of taxation that is patently better in every way than the current system is that the opposition will never be able to do it.

Let battle commence …

The Efficient and Fair Tax Budget 2016

1 March 2016

The UK’s skewed tax system is inefficient; wasteful, complex and unfair to wage earners; costly for businesses and self-employed people to administer; and it discourages worthwhile investments whilst rewarding those in receipt of unearned incomes, particularly those who claim ownership of our land and other natural resources.  Even worse, taxes are avoided and evaded by multinational corporations and the richest families and institutions.  These tax avoiders and evaders leave those who do pay their fair share of taxes to pick up the bills for maintaining and developing our public services.

The Chancellor needs to simplify the tax system by changing WHAT is taxed in his 2016 Budget, shifting taxes off buildings, work and worthwhile production and on to natural resource wealth that goes to the owners of land and other natural resources, that is – shift taxes off earned incomes on to unearned incomes.

Because land and other natural resource wealth is held in the hands of a few, the UK’s economy suffers from an historic wrong leaving more and more adults unable to afford to rent or buy a home in the area of their choice, and medium and smaller businesses unable to afford the high rents demanded by rapacious landlords. Financial grants and subsidies intended to benefit individuals, farmers and businesses end up being capitalised into land value thus benefitting only the landowner.

The Chancellor’s 2016 Budget should ensure that all taxes:

  • Are transparent and straightforward to administer for HMRC as well as for the individuals and businesses that pay them so that everyone can be sure that everyone is paying their fair share of tax;
  • Are fair, ensuring that people on lower incomes are not paying a higher proportion of their income in taxes than is paid by the richest individuals and businesses;
  • Are unavoidable and unevadable by individuals or businesses including international multinational corporations;
  • Are designed to encourage business and enterprise and correct our corrupted economy;
  • Return to the public purse the natural resource wealth that is generated from public investments paid for by taxpayers.

The Chancellor’s 2016 Budget therefore must set out a programme that will change what is taxed. Shifting taxes off earned incomes and onto natural resource wealth will make our tax system fair and preclude distortion of our economy by tax evaders.  This shift would address the problems of the North/South divide, reduce the Rich/Poor gap and go some way to reversing the wholesale transfer of wealth from the young to the old that the baby-boomer generation has manipulated.  Owners of our natural resources will be encouraged to use them sparingly and efficiently thereby benefitting our environment and at the same time, they will return some of their unearned proceeds accruing from public and private investments which they currently receive as windfall income.

Such changes are fundamental and far-reaching, so our Key Objectives for the 2016 Budget are to:

  1. Introduce an annual Land Value Tax (LVT) on the annual rental value of all land with each site valued according to its permitted use and with a built-in equaliser to ensure that the burden of taxation on individuals and businesses in currently low value areas is reasonably lightened by taxing those lucky enough to own high-value land. This will encourage development on urban brownfield sites and thus help protect urban green spaces, our countryside and the green belts around many of our towns and cities.
  2. Abolish all property taxes.   Taxing buildings discourages physical improvements and allows the owners of empty buildings and brownfield sites to enjoy the financial benefit of rising land values created by public services and investments whilst making no contribution towards either the public purse or social well-being.
  3.  Reduce Value Added Tax to a minimal level to mitigate the negative effects this distortive tax has on production and consumption, enabling businesses in low investment areas to flourish unhampered by negative taxes.
  4. Simplify and reduce levels of Income Tax, National Insurance Contributions and Corporation Tax to correct the ‘drag anchor’ effect these taxes have on employment and business, especially in areas with the highest unemployment rates and lowest incomes where land values are low. Shifting taxation from the real economy to the asset-based economy will also enhance productivity and competitiveness, both areas in which the UK performs poorly on the international stage.
  5. Apply a similar annual tax on the economic value of all other natural resources including oil, coal, minerals and ores, landing slots at airports, airwaves and the Internet, wind and solar energy, fishing in our seas … and on all other natural resources to ensure their sparing and efficient use.

If the government is serious about making the UK’s tax system fair and unavoidable as well as tackling climate change, they have to have the courage to rise to the challenge of implementing a just, efficient tax system.

“A Land Value Tax for London?” The answer is Yes!

22 February 2016

The Labour Land Campaign congratulates the Greater London Authority (GLA) Planning Committee for its bold and imaginative report [https://www.london.gov.uk/sites/default/files/final-draft-lvt-report.pdf] “Tax trial. A Land Value Tax for London?” and in particular for its courage in raising the question of how to repair a broken, unfair, economically inefficient tax system, a question that for murky reasons is rarely brought up in such a serious way in the corridors of power.

In recognition of London’s urgent need to encourage house building and find new ways of funding infrastructure development, London Assembly Member Tom Copley and the GLA Planning Committee were commissioned to prepare a report for the incoming Mayor on the case for and against a Land Value Tax (LVT) for London. This report signed off by the Committee’s three Labour and two Conservative members is published today and its conclusions are clear: “… the current system of property taxation does not deliver … LVT appears to offer an opportunity to secure the land and fund the level of growth required”.

In their review of the case for a LVT, the Committee emphasises how it would stimulate development of the vast tracts of land in the capital that are currently under-utilised as well as providing a better, more efficient way of funding the kind of public-sector investment that improves the daily lives of Londoners and makes the capital such an attractive place to live and work in. Less emphasis is put on the broader long-term economic benefits of getting rid of an unfair tax system with deeply perverse consequences for both households and business, and replacing it with a more progressive, simpler LVT. Anthony Molloy, Chair of the Labour Land Campaign, says that the reasons for this are understandable, “The report focuses on housing, a crisis situation that the incoming Mayor of London will be faced with the day he takes office. But our tax system as a whole is pernicious and it is high time to shift taxation off work, productivity, trade, enterprise and investment and onto unearned income, notably economic rent of land.” LVT is fairer, easier to administer, more difficult to dodge and more economically efficient than current taxes: “The least bad form of taxation,” according to Milton Friedman.

In their review of the case against LVT, the authors point up political obstacles, notably how it will be resisted by those who currently hold all the power (landlords and big landowners). They also address some practical challenges, notably difficulties stemming from failure to revalue the Council Tax base since 1991 and the uncertain question of whether or not the Mayor would need new powers to implement a LVT.

But their conclusions are clear: they recommend that, as soon as the new Mayor takes office, he should cost replacing Council Tax, Business Rates and Stamp Duty with a LVT, and set up a trial in a specific area of London with a view to subsequent roll-out across the capital.

An incisive report and a brave one. As an article on LVT in the Economist put it last year, “politically tricky problems are ten-a-penny. Few offer the people who solve them a trillion-dollar reward

Plus ça change

12 February 2016

The Housing and Planning Bill has now been sent to the House of Lords after having been passed by the House of Commons late last year to general dismay at its clearly expressed double intention of  shrinking the social housing sector at the same time as easing the path for big developers by privatising the planning process.

Some 196 Members of Parliament receive income from rental property[1]: this corresponds to a proportion of 30% compared with one of just 2% in the population as a whole. Among the Conservatives, 129 out of 330 (39%) are landlords. The majority in favour of the Bill was 93.

One is inevitably reminded of the People’s Budget in 1909, the first budget in British history with the expressed intent of redistributing wealth more equitably in the British population. It raised higher-rate Income Tax but its more far-reaching proposal to tax land value was dropped under pressure from a House of Lords dominated by landowning Tories.

Recusal is a principle applied in all corridors of power from the Courts through Board Rooms to Local Government: if an individual in a position of authority has an interest such that his/her impartiality vis-à-vis a certain issue might reasonably be questioned, he/she abstains from deliberating or voting on said issue. Judges, company directors, local councillors and even tax inspectors (sometimes) all routinely obey this essential aspect of good governance. But not apparently the members of our ultimate organ of governance, the Houses of Parliament. And until they do, Britain’s housing policy will continue to be determined by landlords.

[1] Meaning at least £10,000 per annum, the threshold for declaration; the actual amount they receive is not published in the MPs’ Register of Interests but this group includes major landowners like Richard Benyon MP who receives at least £120,000 per annum in housing benefit alone at the same time as making swingeing attacks on the “something for nothing culture”.

The latest Tory housing policy gives yet more backhanders to developers

7 January 2016

The Labour Land Campaign says the latest announcement by David Cameron to build more homes is at the expense of taxpayers and provides yet another a gift to property developers.

The way to bring brownfield housing sites along with idle development sites and empty homes into full use is through an annual Land Value Tax on all land valued at its optimum permitted use.  Dave Wetzel, President of the Labour Land Campaign says “It’s a pity that David Cameron doesn’t understand the current Zoopla TV ad where house-searcher Amy ecstatically caresses a house close to amazing transport links, a top-rated school and is in an area of Telegraph readers. Unlike David Cameron, Amy knows the type of location she wants and recognises that the owners will price the house accordingly. In addition, history shows us that subsidies to house buyers, property developers and land owners through grants and other measures merely puts the price of land up making homes even less affordable to buy or rent.  With his latest policy to give landowners £1.2bn to build on brownfield sites David Cameron is giving yet more of taxpayers’ money to property developers and landowners.  This is not only immoral but does not even make economic sense.”

He went on to say “that as David Cameron and many of his supporters are landowners and private landlords he is looking to favour them instead of the people he is purporting to support – first-time buyers”.

Research carried out by Labour Land Campaign shows that the fundamental answer to making homes affordable can only be successful when land wealth is shared by those who create it; it is public and private investments in the production and delivery of worthwhile goods and services that generates land value and we all pay for that as taxpayers, consumers and investors.

Dave Wetzel went on to explain “Land value is a free gift of nature to all of us. Owners of land do not generate one penny’s worth of land wealth, they merely take as their unearned incomes the wealth we all create as taxpayers and consumers when we pay for maintaining and developing public and private services and investments which inflate location values. We need a fundamental shift in taxation to discourage land hoarding and to bring idle development sites and empty buildings back into use. Taxes should be removed from wages, goods and services and levied on land values.”

The Labour Land Campaign believes that by taxing land value, land will be used more efficiently and will provide a sustainable source of income to maintain and develop local and national public services instead of it rewarding owners of land for doing nothing.

Response to the Report by the Scottish Commission on Local Tax Reform

15 December 2015

 “We believe that a system of land value tax is promising, but that, while the work done for the Commission has been of unprecedented scale, gaining a full understanding of its impact would require further analysis.”

This is the lukewarm conclusion arrived at by the Commission which undertook a broad-based review of possible ways of reforming the broken and unfair Council Tax system [http://localtaxcommission.scot/download-our-final-report/]. With a remit of assessing alternative ways of funding local government in the light of the taxation principles of “equity and fairness, administrative and economic efficiency, and autonomy and accountability”, the Commission reviewed some 175 written submissions from diverse sources (including the Labour Land Campaign and individual members), commissioned research from Scottish University departments and heard oral evidence from experts on taxation (including LLC). The three options ultimately considered in the report are taxes on income, property and land value.

Despite their often-mentioned dedication to “evidence-based” conclusions[1], their conclusion that land value taxation is unfeasible in the short term flies in the face of much of the evidence submitted which included concrete, costed implementation proposals with stipulated time frames of the order of two years as well as line-by-line refutations of many of the issues singled out as challenges [http://localtaxcommission.scot/submissions/].

Reading between the lines of the report with its repeated references to the simple idea of land value taxation being “complex”, it seems that the existence of different proposals as to how a land value tax might be levied may have confused the members of the Commission; as if there were only one way of levying a local income tax or a property tax.

The misconception that “a tax on land is a new and potentially complex concept” is a challenge for LVT-ers and we need to address how to meet it when given a well-organised, democratic and right-thinking opportunity like the Scottish Commission on Local Tax Reform.

[1] Happily, Commission member Jackie Baillie Labour MSP dissented from another of the Commission’s conclusions that “income is a fairer basis on which to levy tax

George Osborne comes out for land value taxation! (Only joking)

25 November 2015

On Wednesday, George Osborne proposed the establishment of a Shale Wealth Fund. Details here as elsewhere in the Statement were thin on the ground but presumably this means setting up a system whereby some of the wealth extracted from a natural resource is to be taxed for return to the community rather than it all going into private pockets. This involves recognising that citizens have a stake in a nation’s natural resources, whoever owns the land under which said natural resources happen to lie.

Will this Chancellor extend this recognition to land in general (the ultimate fixed-supply natural resource) which has seen its value rise so steeply in recent years that a whole generation is now excluded from the hope of ever owning their own homes?

Shifting taxation away from the real economy—labour, production, enterprise and investment—and onto asset-based wealth would go a long way to solving our low productivity and disastrous balance of payments, the two problems identified by Osborne on Wednesday as the “as-yet-unsolved” ones.  But it just will not happen under the Tories whose core constituency is the asset-rich and more specifically the land-owning class. Do not expect progressive policies from George Osborne unless they are conceived accidentally as a way of sidestepping an unexpectedly vigorous public backlash against a business venture that may prove to be environmentally devastating but will definitely be highly lucrative for some.

John McDonnell, Shadow Chancellor of the Exchequer
and member of the Labour Land Campaign

September 14th, 2015

The Labour Land Campaign (LLC) is excited to see one of its longstanding members in one of the most influential positions in British politics. LLC is a cross-party voluntary group working for land reform, notably the replacement of economically inefficient taxes on labour, trade, enterprise and investment by a land value tax, the “least bad form of taxation”*.

No surprise the gainsayers today.
The Daily Mail: “New Shadow Chancellor who wanted to kill Margaret Thatcher to push through plans for taxes on middle-class families”
The Mail’s non-dom owner Viscount Rothermere may well be afraid of impossible-to-dodge taxes on the vast swathes of Wiltshire and elsewhere that he patriotically owns through companies registered in the British Virgin Islands and other tax havens. Unlike other forms of taxation, a land value tax cannot be avoided—you cannot put Wiltshire in the Cayman Islands and if it is registered there (as so much of this green and pleasant land is), you still know where to go to collect the tax due.
The Daily Telegraph: “John McDonnell, the man who wanted to assassinate Margaret Thatcher”. (This seems to be the best line they have.)
The Barclay Brothers, owners of the Daily Telegraph, are residents of Monaco for tax purposes but they famously rule Brecqhou—the Channel Island that they own—through bullying, intimidation and litigation.

These gainsayers are right: they personally have every reason to be afraid of the introduction of a form of taxation that targets wealth rather than production and enterprise. In contrast, “middle-class families” can look forward to it. If LVT is introduced to replace or reduce taxes that are either unfair (Council Tax) and/or economically inefficient (Income Tax, Business Rates) and/or easy-to-dodge by those with access to skyscrapers full of accountants and lawyers (VAT, Corporation Tax), most households will end up paying less. By definition and simple mathematics, “middle-class families” will be paying less because LVT is a tax on wealth and wealth is highly concentrated in Britain: those who are most able to pay will pay the most. Furthermore, land value is essentially driven by public sector investment (local hospitals, schools, trains and buses, sewerage systems—access to public services and amenities in general) so LVT will also mean that those who benefit the most from such investment (through the rise in the value of their land), contribute most towards it, in a fair, proportionate measure. A vast improvement over the present, unfair fiscal system.

The truth is that the vast majority of citizens of this country can welcome the possibility of a Chancellor of the Exchequer who seeks a fiscal system that encourages work, investment and enterprise in place of the one that has been constructed over the centuries to favour a small elite. The fiscal system in Britain (and almost everywhere else) has been drawn up by wealthy landowners.
But don’t expect to hear this truth from the likes of Lord Rothermere or the Barclay Brothers. Be ready for plenty more hysteria to come, especially when the issue of reform of the broken British tax system actually arises. So when the criticism comes, take a close look at the critic. And think about who will win and who will lose as a result of the introduction of a land value tax.

Footnotes: *Milton Friedman

TORY BUDGET MEANS EVEN MORE WELFARE FOR THE RICH

July 6th, 2015

In its budget, the Tory Government is taking away essential welfare payments from those on the lowest incomes and upping rents of some living in Council-owned homes—whilst giving more subsidies to the better off.
This bleak budget does however contain some nuggets of social conscience. Apart from promises on the Living Wage, there is the cut to income tax relief on the interest paid on mortgages for buy-to-let properties. It may only be a cut and the plan may be to phase it out gradually and that may only start in 2017 but … This egregious form of welfare for the rich has driven speculation, skewed the housing market and priced normal first-time buyers off the property ladder. All that for a loss of Treasury revenue amounting to £6.3 billion in the financial year 2012-13, i.e. over 1% of all actual revenue; enough, for instance, to pay one thousand times over the contentious £650 million taken off the BBC by obliging them to bear the license fee break for over-75 year-olds.
By lifting homes worth up to £1 million out of inheritance tax, George Osborne is giving yet another tax handout to the better-off. A large part of the value of an expensive home is its location value that arises because of its closeness to infrastructures and public services. Roads, public transport, utilities, schools, health care services and so on are paid for by all taxpayers and it is these—together with private services—that gives land its value.
According to Dave Wetzel, President of the Labour Land Campaign (LLC), “this Tory Government is hell-bent on increasing the economic divide between the haves and the have-nots. Everyone is a taxpayer at some level and our public services generate land value that owners of properties receive through no effort on their part. Yet it is the owners of the highest-priced homes that will get the biggest hand-out from this budget at the expense of those dependent on benefits in order to survive. Tenants (both social and private) are another group of people who are punished in this budget as house (i.e. land) prices rise: tenants contribute to land value but get an increase in their rent whereas land owners, land speculators and land hoarders see their land value rise.”
The Labour Land Campaign calls for a fundamental shift in taxes away from wages and production and on to the unearned incomes that the owners of our land and natural resources get purely because of popular demand to live near employment opportunities, good transport, pleasant places and good public or private infrastructure and services.
Wetzel says “this government is determined to give even more subsidies to owners of land as they do when they give housing benefit to private landlords – who include Richard Benyon Conservative MP – to the tune of £9 billion a year. Land is a natural resource and if, instead of rewarding those who leave buildings empty and developable sites idle, government collected a part of land value to pay for our public services, negative taxes that penalise work and productivity—literally counter-productive taxes—could be cut and we would have a fairer economy, higher wages, fewer unemployed and affordable homes to rent or buy.”

ENDS

For more details contact our Press Officer at [email protected], or
visit www.labourland.org

HELP TO BUY WON’T HELP

October 12th, 2013

In his Financial Times article (10 October 2013, “Buyers beware of Britain’s absurd property trap”) Martin Wolf exposes the real reason for the Government’s Help to Buy Scheme – to stimulate land speculation in the UK and give land owners even more unearned income as the next property bubble grows and grows at the expense of the economy. Land values are created by our collective demand for public and private services and production; it is our taxes, our investments and our consumption that create land value. Because we have monopoly ownership of land in the UK (70% of land is owned by less than 1% of the population) we have monopoly ownership of land wealth. The poorest taxpaying commercial and residential tenants are subsidising the richest land owners.

Carol Wilcox, Secretary of the Labour Land Campaign, says “The mythical housing ladder is unattainable to a growing number of households and the UK’s tax system sustains this economic injustice and actually encourages land speculation. This is now so hideous that blocks of apartments are being built in London that have already been sold to overseas speculators before completion. We don’t need a government that fuels land price rises through subsidies which make homes even more unaffordable to a growing number to buy or rent. We need a courageous and imaginative government that tackles our tax system by shifting taxes off earned incomes and on to unearned incomes that the owners of our land and other natural resources take as theirs. By taxing the annual rental value of all land at its optimum permitted use value, the government will capture wealth that the whole of society creates to be reinvested in our public services.”

ENDS

For more details contact Steven Clarke at [email protected], phone number 07817 906299 or
visit www.labourland.org

THE TORIES IGNORE THE SUBSIDIES THE POOREST GIVE TO THE RICHEST

April 8th, 2013

When Iain Duncan Smith and his government try to justify their malicious benefit cuts to the poorest families in receipt of them, they chose to ignore the huge subsidies those same tenants together with other non-property owners give to freeholders and land owners. Taxes paid by all of us fund public services most of which ultimately increase land value and provide hidden financial benefit to owners of land. No tenants (residential and commercial) or other non-property owners get any of this increase in land value they have equally created. Indeed, as land values rise, tenants will normally find their rent increases.

Empty buildings and idle sites, kept out of use by land speculators, blight our communities.

It is not unusual to see these sites kept out of use for decades as their owners wait for more investment in local public transport, roads, schools, health care, street-cleaning and so on to get even more unearned income from their land holdings. Yet these owners are not only denying society the affordable homes, jobs, business premises, goods and services that are needed but take the land value that we all create.

Those taking the hidden subsidies of increased land value ought to concern themselves with the need for a fair tax system that not only encourages good investment but one which cannot be easily avoided or evaded as current tax system allows. A shift in taxation off wages and trade and on to the unearned income land owners receive will address the unfairness our society places on all tenants and other non-property owners.

Who is getting the biggest subsidy – a hard working Council tenant or the land owning Duke of Westminster whose family, for generations, has received fortunes from land value that was created by us as workers, tax payers, investors and consumers?

ENDS

For more details contact Steven Clarke at [email protected], phone number 07817 906299 or
visit www.labourland.org.

A BALANCED BUDGET FOR A FLAT-LINING ECONOMY?

March 21st, 2013

A balanced budget for a flat-lining economy? This does not sound like a recipe for growth.

However, George Osborne expects to start the engine by the magic trick of underwriting some mortgages for some prospective first-time buyers. Presumably there are lots of young couples with secure employment whose present rented accommodation is so affordable that they have been able to save a substantial deposit plus enough to cover stamp duty land tax and moving expenses. (The stamp duty relief in this budget was for share transactions, not homes.)

This will supposedly stimulate developers, sitting on land banks with planning consent for several hundred thousand homes, to get building, which will boost employment in the sector; which will increase tax receipts and reduce benefits.

Or will it? Perhaps, instead, developers will just wait for a real recovery before starting the process, when land values start to rise again and they can sell their houses in boom-time. In that case any stimulus to housing credit will merely increase house prices or, more likely help to maintain nominal house prices, the market having just experienced the mother of all house price bubbles.

The Labour Land Campaign agrees with the Chancellor that house building could provide the key to recovery, but we would suggest a few less carrots and a big stick.

What developers need to persuade them to unblock the stagnant market is an annual land value tax charged at the rental value of the land assessed according to its location with respect to local facilities and current permissions. The only reason to own land should be to use it and that is what would happen. The landowners would be forced to either get building or sell it to those who will do so.

But the Labour Land Campaign says, why stop there? If a land value tax were levied on all land for which there is a potential market, assessed in the same way and on a regular basis, not only would more houses be built but the Treasury would be in receipt of a huge and increasing revenue stream with which to fund public services and infrastructure renewal.

To quote from the Economist Growth Manifesto [1]: “One reason why companies sit on development land is because they do not pay taxes until the offices and warehouses are built. It would be much better to tax the land value: that would make hoarding expensive and force owners to sell to someone who can use the site. Once in use, the site value and the tax would rise—creating a virtuous circle, as the revenues pay for better infrastructure, making land more valuable.”

It should be noted that a land value tax could replace all existing property taxes, including Council Tax, Business Rates and Stamp Duty Land Tax plus income tax on the average wage.

ENDS

NOTES

1. ‘A growth manifesto: A little faster, George?’, The Economist, March 9th 2013

www.economist.com/news/leaders/21573113-british-economy-stuck-it-needs-structural-reform-looser-money-and-more-infrastructure

ARE HOUSEBUILDERS CONTRAVENING THE TRADE DESCRIPTIONS ACT?

February 28th, 2013

Amid the continuing economic gloom, what with credit rating downgrades hot on the heels of yet another negative quarterly growth figure, it’s nice to know someone is doing well.

Two of Britain’s largest housebuilders have reported excellent results for 2012 [1]. Persimmons’ pre-tax profits rose by 52% on selling prices up by 6%. Meanwhile, rival Bovis Homes saw increases of 69% and 5% respectively. So, the housebuilding trade must be going briskly, right?

Wrong. In fact, new housing starts in the last year dropped below 100,000 for only the second time in over 30 years – coming in at 98,290, a drop of 11% on the previous year [2].

So what’s going on? If coffee sales were at an all time low, would you expect to see Starbucks and Nestlé booming? If we all cut back on our weekly food shopping, would we be bullish on Tesco and Sainsbury’s shares? Of course not! So why should housebuilders be doing so well out of so little housebuilding? It’s because these companies, by calling themselves housebuilders, are stretching the Trades Description Act.

With housing supply near enough fixed, prices rise with ever increasing demand. And since homes are mostly bought on credit, rising demand reflects loose monetary policy – both low interest rates and the government’s funding for lending scheme. These companies can pocket these rising prices – without effort – because they are sitting on land; and as the land market is so rigged by landowners, new entrants can’t come in and undercut the existing house builders with cheaper homes, as should happen in a competitive market.

Should this worry us, the fact that these companies are making so much money when they are manifestly not doing what they are supposed to do? Yes, because broadly it is wrong for people to prosper without effort or providing useful goods and services. When you can prosper from owning rather than earning, you are rent-seeking. It is both unfair on those who have no choice but to earn their way in the world, and inefficient, as otherwise productive people are diverted into sterile speculation.

Land speculation may be good for landowners’ profits, but, in particular, this is bad for those for whom the dream of home ownership is slipping out of reach, for those whose rents eat up an ever increasing portion of their wages that could be spent on other things, those desperate for any accommodation or those forced to live with parents or friends. It is also a missed opportunity for the economy. After the last great prolonged economic downturn in the 1920s and 30s, economic recovery in Britain was accompanied by a housebuilding boom in the mid to late 30s [3]. Completions ran over 350,000 a year at the end of the decade, leaving the suburban semi-detached houses that still remain a valued and key feature of our built environment.

We could have similar housebuilding now. We certainly need more affordable homes, for which there is a huge pent up demand. Building them would put many to work and spending money. Unemployed youngsters could be trained up in plumbing, carpentry and construction, gaining valuable skills that would last them for life.

Government needs to provide the right incentives for housebuilders to build. Rather than sitting on land banks, waiting speculatively for land prices to rise, companies such as Persimmons and Bovis Homes could release them providing many years housing supply. If an annual Land Value Tax were implemented, sitting on empty homes or idle land which already has planning permission would become costly.

Appropriate land, with planning permissions, would be freed up to build new communities and further excursions into our valued green belts and countryside would become unnecessary as empty homes and brownfield sites in towns and cities are brought back into use. Governments could take advantage of record low interest rates to upgrade and invest in new infrastructure such as the road, rail, social housing, schools, hospitals and public parks which would make these new communities great places to live. And for those worried about this extra borrowing, the increased land values created by this investment would repay the initial cost – the revenues eventually being used to reduce burdensome taxes on wages and enterprise.

The vicious cycle we’ve been living through would be turned into a virtuous cycle. Economic growth could return, and a legacy of great new homes and a fair tax system would be left to us. It’s a legacy we need to start building.

ENDS

For more details contact Steven Clarke at [email protected], phone number 07817906299 or visit
www.labourland.org

NOTES

[1] ‘UK funding scheme boosts housebuilders’, Gill Plimmer, Financial Times, February 5th 2013.

[2] ‘Housing starts drop to post-recession low’, Kate Allen, Financial Times, February 21st 2013.

[3] ‘Metroboom: Lessons from Britain’s recovery in the 1930s’, George Trefgarne, Centre for Policy Studies, March 2012

A MANSION TAX IS FAIRER THAN INCOME TAX

February 18th 2013

Ed Miliband is right to look at shifting tax off incomes and on to unearned income by paying for the reintroduction of a 10p tax rate through a fairer property tax on high value homes. A home has two elements that make up its value – the building and the land it is located on. The land value is created by the whole of society not by any property owner and it is unfair that as land values rise because of public and private investments – paid for by us all as tax payers and as consumers – it is only owners of land that receive a financial windfall whereas tenants and other non property owners get nothing.

The Labour Land Campaign (www.labourland.org) reminds people that the “asset rich, income poor widow“ being trundled out by some objecting to Ed Miliband’s proposal applies only to a very small group of people, and there are ways of getting around the problem, such as letting them roll up the tax payments until they dispose of the property. “Asset rich income poor” people have to pay for their gas, electricity, council tax etc today, why should those who can afford to upkeep a £2million or more property be subsidised by those who live in modest homes, a large proportion of whom are tenants or living with family
or friends.

Heather Wetzel, Chair of the Labour Land Campaign, says “Ed Miliband could do even better by reforming all property taxes and abolish business rates and council tax and replace them with an annual Land Value Tax being applied to all land according to its optimum permitted use. Such a tax would result in those homes, commercial buildings and idle development sites being used to provide more affordable homes and business premises instead of being held out of use by land speculators.

Land investors do not invest in anything; they actually speculate that land values will increase providing them with an unearned income that has been created by the whole of society. When tax payers from across the UK paid for the London Underground’s Jubilee line extension, it has been estimated that the extension cost £3.5 billion to build and land values rose by over £13 billion around the new stations because of the economic benefit the extension brought to those areas. Tax payers paid but land owners received a huge windfall that should have been collected and reinvested in public services throughout the country.”

If the London to Birmingham/Manchester and Leeds high speed railway (HS2) were funded in the same way then many local rail improvements including CrossRail

2 (Hackney to Chelsea) could be sustainably funded.

ENDS

For more details contact Steven Clarke at [email protected], phone number 07817 906299 or visit www.labourland.org

YOU ARE INVITED TO ATTEND THE AFFORDABLE HOUSING CONFERENCE

October 8th, 2012

The Labour Land Campaign is pleased to announce that it is hosting an Affordable Housing Supply Conference on Wednesday, 14 th November at the Directory of Social Change, 24 Stephenson Way, London, NW1 2DP.

The conference will bring together senior researchers, housing executives, planners and campaigners from across the political spectrum to ask ‘Is there a permanent solution to the permanent housing crisis?’

It is widely recognised that Britain is not providing the affordable homes it needs. Rents are high and rising. Home ownership is out of reach for many younger people. The public sector no longer provides large numbers of council homes, but taxpayers foot the bill for housing benefits and loan guarantees.

The private sector does not respond to high house prices with extra supply. What is to be done?

The conference will look at:

  • Housing Policy.
    Learning lessons from the past, what is the appropriate mix of tenures, and how can they be supported? What is the impact of housing policy on the wider economy? Who will be the winners and losers in terms of housing costs and benefits? What would a housing policy for a well working economy and society look like?
  • The Availability of Land.How we use land and public spaces is determined by how they are owned and managed. What role does the land market play in the supply of affordable homes? Why has the private sector failed to respond to demand? What should be the role of the state here?
  • Finance.What role has finance played in the housing market, and what role should it play in the future? How are we to pay to build new homes? What are the options for fiscal policy?

We will discuss the underlying problems to our housing crisis, assess the approach of the present government and examine and share solutions. Speakers include Duncan Bowie, Jacky Peacock, Eileen Short, Stephen Hill, Bob Colenutt and Gordon Nardell, QC.

This conference is a must for those working in Communities and Local Government related areas including Housing, Social Cohesion, Planning and Finance. Students and members of the public with a strong interest in the built environment, land and community development issues are also welcome.

ENDS

For more details contact Steven Clarke at [email protected], phone number 07817906299 or visit
www.labourland.org


EXTEND LOGIC OF 4G AUCTION TO LAND

October 5th, 2012

Ed Miliband has won plaudits for his bravura notes-free speech at the Labour Conference. He should be heartened; David Cameron won the Conservative leadership largely on the back of a similarly-delivered speech at the Tory Conference in 2005. The British public, living under the continued “omnishambles” of his Government, may be beginning to wonder if we should demand greater qualifications from our leaders than the ability to memorise a speech.

Joking aside, the speech has increase Ed Miliband’s standing with his party, the press and the country. He landed blows on the Government, whilst painting a pleasant picture of a Labour Britain. There is much to applaud in Labour’s policy announcements. Strengthening vocational education. Making banks work for their customers, not bankers. Preventing the increasing marketisation of the NHS. Extending transparency in public sector contracts with the private sector. Pushing for a Living Wage.

One policy particularly caught the attention of Labour Land Campaign – when Ed Balls called for the income received from the auction of the 4G mobile phone spectrum to build 100,000 new homes. It doesn’t sound earth-shattering, but the economic principle behind it is very close to our hearts.

The spectrum used for mobile phones is a limited natural resource which people cannot create. The economic value of “owning” the spectrum is so high because it is a scarce resource. Mobile companies would grow rich not because of their efforts or the quality of their service, but because they own something they didn’t make and which someone else can’t have. This surplus value is economic rent, and this rent can be taken by the Government without reducing the incentives for companies to provide useful services.

The same logic applies to land. Land is a gift of nature, which people cannot create. Ownership of land confers unearned economic rent from ownership of a scarce resource. This economic rent can be collected by Government as an annual Land Value Tax, without in anyway reducing the incentive to provide land for the homes, shops, factories and offices we need. This money can then reduce other taxes, such as on wages, in such a way to make our tax system more progressive and efficient.

Mr. Balls plans on spending the money from the auction of the spectrum on building new houses. We undoubtedly need to increase the supply of affordable homes. The Labour Land Campaign believes that a Land Value Tax is a vital part of achieving this, both by encouraging more efficient use of the housing stock and by increasing the availability of appropriate, affordable land for development. But recognising there are many viewpoints and policies that can help, we are hosting an Affordable Housing Supply Conference, ‘A Permanent Solution to the Permanent Housing Crisis?’, from 9am on Wednesday 14 th November at the Directory of Social Change, 24 Stephenson Way, London, NW1 2DP.

ENDS

For more details contact Steven Clarke at [email protected], phone number 07817906299 or visit
www.labourland.org

LIBERAL DEMOCRATS SHOULD PUSH FOR LAND VALUE TAXATION

September 28th, 2012

Plastered on the podium at this week’s Autumn Liberal Democrat conference was the slogan ‘Fairer tax in tough times’. Oh, that our political masters would take it to heart!

The Liberal Democrats offered a radical tax plan at the last election – increasing the income tax threshold while plugging the lost revenues with capital gains tax increases, a mansion tax and a reduction in tax reliefs for the wealthy. It was a sensible plan, taking the tax burden off ordinary working families and onto beneficiaries of unearned windfalls.

Some of these changes have now been partly implemented. But the overall effect is marred by some of the Tory tax policies. If they had a tax slogan it would be Matthew 13:12: ‘ For whosoever hath, to him shall be given, and he shall have more abundance: but whosoever hath not, from him shall be taken away even that he hath.’ The VAT increase cancels out any gain from the personal allowance increase, putting up bills for low paid workers. The cut in the top rate of tax is a giveaway for very high earners.

At least the conference has reopened the debate on wealth taxes – specifically the mansion tax. A mansion tax has something to be said for it. It might curb housing booms and busts which so harm economic stability and create huge unearned inequalities which cascade through the generations. It might shield the pain of austerity from poorer households.

It also has its disadvantages. It would not raise significant revenue. The £2 million threshold might buy you a mansion in some parts of the country, but only a terraced house in London. The most damning critique, however, is that it would be a diversion from implementing the most sensible tax change of all, a switch to a Land Value Tax.

A Land Value Tax is not a tax on wealth per se; it is a collection of economic rent. As the earliest economists knew, it does not discourage productive economic activity. It will not cause people to work or save less. In as far as it replaces other taxes and discourages speculative land hoarding, it will actually increase economic activity. It promotes efficient use of land – forestalling the planning free-for-all that the Coalition wished to allow, but the rank-and-file Liberal Democrat delegates have bravely stood against this week.

It is not a confiscation of something that has been rightfully earned, as a site’s value is created by surrounding community, not the site’s owner. It is merely returning to the community that which was confiscated from it.

The Liberal Democrats already support changing the tax base of business rates onto undeveloped site values. Nick Clegg and Vince Cable are both Vice-Presidents of the campaign group Lib Dem Action for Land Taxation and Economic Reform, which pushes for Land Value Taxation. Why do they not have the courage of their convictions, and tells us what they really believe while they are in a position of influence?

Labour Land Secretary Carol Wilcox says, “The Liberal Democrats are in dire straits. Nick Clegg may go down in history as a man who sacrificed himself and his Party to other men’s principles.”

“He should recall the great reforming pre-WW1 Liberal Party, when David Lloyd-George and a young Winston Churchill stormed the country, calling for the unearned rents of land monopolists to be used for the creation of the Welfare State. A modern Land Value Tax would protect the Welfare State and create the fair tax system to lead Britain to prosperity”

ENDS

For more details contact Steven Clarke at [email protected], phone number 07817906299 or visit
www.labourland.org

LAND VALUE TAXATION IS THE BEST PLAN FOR GETTING THE HOMES WE NEED

David Cameron completed his first reshuffle of the Government this week, but so far shows no sign of reshuffling his failing policies.

The UK’s economic performance is still dire. The Government’s chances of meeting its fiscal targets and getting re-elected will be imperilled unless there is sustained recovery in growth and employment.

The Government knows this, which is why we will continue to hear of a flurry of initiatives and speeches about restoring growth. Today we heard the latest of these – a relaxation of planning laws to boost construction of homes and business premises, and ease improvements to existing properties.

While the aim of more housing is laudable, the policies will fail to have a big impact. The economy’s short-term problem is lack of aggregate demand. People are not spending enough to buy what our economy is capable of producing. This means that, for all the supply-side tinkering with planning rules, people will not rush out to buy new extensions or new houses at any great scale in the next couple of years.

The Government should directly invest in a house building programme and improvements to infrastructure. It can currently borrow at next-to-nothing and could put many people to work, paying taxes and spending money.

In the longer term, supply-side reform is needed, but these reforms do not tackle Britain’s long-running inability to provide the homes it needs. A sensible approach would be replacing existing property taxes with a tax on the site value, a Land Value Tax, which would be collected by local Councils.

For site owners, they would have the incentive to develop sites that have planning permission in order to pay the charge. The Local Government Association released figures showing a backlog of 400,000 prospective homes which have planning permission but have not yet been built. Under Land Value Taxation, these sites would be incurring a tax bill and so the developers would ensure those homes were built in order to pay it. Similarly, empty homes would also be running up a bill, and so it would be better they were used to house people in order to pay it. Land would be used efficiently, so there would be no need for rushed, developments and ugly urban sprawl.

Labour Land Campaign Secretary Carol Wilcox comments “The Government’s plans will not work. It has a few marginal benefits for property owners, but will not get the houses we need built. A few carrots will not be enough to break the cartel of land speculators holding back development; sticks are needed as well. The relaxation of the affordable homes targets are merely a gift to the profits of developers and the unearned income of land owners.”

She continues “A Land Value Tax is needed to provide the right incentives for land owners and developers to provide the homes needed for people to live in and the jobs our ailing economy needs.”

ENDS

Notes to editors

1. This is an amended version of the Press Release ‘Land Value Taxation Is The Best Plan For Planning’.

2. For more details contact Steven Clarke at [email protected], phone number 07817906299 or
visit www.labourland.org

A TALE OF TWO EXPORTS – RENT AND THE REST

August 10, 2012

Two pieces of recent economic data highlight why Britain’s economy is both sluggish and unfair.

UK exports fell 4.6% between May and June, with a drastic 8.4% drop in exports of goods over the same period. As imports fell by only 0.7%, the trade deficit rose to its highest ever level at £4.3bn. [1]

Meanwhile it was revealed that foreign investors own 23% of the UK’s property market. This is an increase of 106% over 8 years. [ 2]

Investors buy property in the hope that its value will increase rapidly – which it has done for many years. However, it is not the value of building that has increased, they depreciate over time like any man-made object. It is the value of the land the buildings sit upon that has increased.

This land value is created by the community. One site is more valuable than another because of its proximity to better public services, more productive industry, better transport links etc – not due to the merits of the site-owner or the improvements upon the site. A field in the middle of London is vastly more valuable than an identical one in rural Cornwall, say, and its owner potentially far richer if the field is developed; precisely because it is surrounded by a large, internationally connected Capital city of millions, not because of the greater sagacity and industry of London landlords relative to their Cornish counterparts. Land value then is that most social of assets – created by generations of communities in an area. This value accrues as land rent to the landlord under current arrangements and it is this rent that has attracted foreign property investors. Exporting land rent is a great British success story.

Perversely this high rent makes it very difficult for those businesses that could be exporting goods and services. Land is a primary factor of production and is a large cost to many consumers and productive enterprises making our exports uncompetitive.

It does not need to be this way. This rent could be collected as land value taxation and used to fund Government expenses. We could then reduce or replace the heavy taxes on wages, buildings, capital goods and trade such as Income Tax, Council Tax, Business Rates and VAT. This would immediately make British companies very competitive internationally. It would also end the speculative hoarding of land, keeping it un- or under-used in the hope of gaining an unearned increment in its value. Land, rather than sitting idle, would become cheaply available for homes and factories, allowing the productive sector of our economy to grow.

Dave Wetzel, Labour Land Campaign Chair, says “Our economy is set up to benefit the skimming off of rent by wealthy elites; money that is created by the whole of society and should belong to the whole of society. Meanwhile those that produce the goods and services that would allow us to earn our way in the world pay high rents and taxes on productive behaviour.”

He continues “Land value taxation should be introduced as the primary revenue for Government, allowing other taxes to be reduced or abolished. British consumers and producers would benefit extraordinarily as we reward those who make, not those that take.”

ENDS

Notes to editors


1. “UK trade deficit widens to record high”, Sarah O’Connor, Financial Times, 10 th August 2012


2. “Foreigners set to dominate UK property”, Ed Hammond, Financial Times, 10 th August 2012

3. For more details contact Steven Clarke at [email protected], phone number 07817 906299 or
visit www.labourland.org


RAIL INVESTMENT SHOULD NOT BE A HANDOUT TO LAND OWNERS

July 18, 2012

The Coalition Government’s announcement of £9.4bn of investment in railways in England and Wales is a welcome move. It will create jobs and growth, and benefit passengers and local businesses. It will also have an immediate effect on the value of the land in the surrounding area, benefitting land owners.

Government investment in public transport and other public services always increases the value of land in the areas they serve. This windfall is unearned by the land owner, who gains it, and could instead be used as a return to the taxpayer’s investment.

Eleanor Firman, Chair of the Labour Land Campaign says “This is yet another example of how our taxes pay for public services and then land owners get an increase in the value of their land with no effort on their part. Taxpayers are subsidising large land owners”

She continues “The Labour Land Campaign calls for a shift in taxes off of labour, buildings and trade and on to land value that is created by the whole of society, not land owners. Why should land owners get the unearned income they receive from land value that is created by the rest of us ? Why should we as consumers , taxpayers and producers subsidise land owners ?”

A recent example of this effect was seen in the London Underground Jubilee Line extension, which cost taxpayers £3.5 billion. It was estimated at the time that as a result of the extension, land values in the vicinity of just two of the stations, Canary Wharf and Southwark, increased by £2.8 billion; and over the whole extension by some £13 billion. Taxpayers could have been handsomely repaid for their investment – instead private land owners who contributed nothing to the project found themselves substantially richer.

By levying a tax on the annual rental income of all land, empty buildings and those sites that currently remain idle or underused will be brought into their permitted use – providing homes, business premises and leisure facilities. As the economic benefits flow from public investment ( such as the £9.4bn thegovernment has just announced for our national railways ) , so the levy would recoup the uplift generated by the new investment. This unearned land income should then be used to maintain and develop our public services; whether it is in transport, health care, education, social care, roads or leisure provision.

Eleanor continues “The whole of society pays for our public services as taxpayers and consumers – but land owners get a handout at no cost to themselves. Why should taxpayers and rail travellers subsidise the likes of the Duke of Westminster?”

ENDS

For more details contact Steven Clarke at [email protected], phone number 07817906299 or visit
www.labourland.org


LAND VALUE TAX IS THE BEST WAY TO ENSURE FAIRNESS BETWEEN GENERATIONS

July 16, 2012

In a wide-ranging speech this week, Tory MP Nick Boles discussed the future of public spending priorities. Despite starting from the wrong premise – that spending cuts are needed – Boles makes the case that spending should be focussed on areas which measurably increase productivity and competitiveness. Of course, little of this was reported. What did make the headlines was his suggestion that we means-test benefits for the elderly.

In today’s political environment, a politician would as soon advocate the killing of the first-born as upset pensioners – after all, they are numerous and are more likely to vote. However it is reasonable to raise the issue of fairness between the generations. Unemployment among 16 to 24 year olds is around 20%, compared with about 8% for the population as a whole (1). Much of the Coalitions’ policies have hit the young – cutting EMA, the child trust fund and housing benefits for under-25s, raising top-up fees, means-testing child benefit etc.

Whereas David Cameron has so far ruled out any cuts to pensioners’ benefits.

Consider also that personal wealth is very unevenly distributed between old and young. In 2009, out of a total of £6.7tn, £0.9tn or personal wealth was held by the under-45s, £3.5tn by 45-65 year old ‘baby-boomers’ and the remaining £2.3tn by over-65s ( 2). This disparity has grown over time. In the decade after 1995, the median personal wealth of the under-45s collapsed by over two-thirds while that of the ‘baby boomers’ tripled ( 3).

But the problem with this sort of analysis is that the deep divisions in our society are not between old and young but between the haves and have-nots.

The main division is between those that ‘have’ land, including homeowners and those that ‘have-not’. Man neither creates land nor alone can he give it value. Land values are generated by society as a whole. The value of land will increase as roads are built, public services created and improved, private enterprise flourishes. It belongs to the community as a whole, the young as well as the old, renter and owner, rich and poor. However, that value is currently appropriated by the land owner.

And those owners have seen the value of land soar many times over in the last decade as a result of policy decisions – loose credit, low house building, low property taxes – nothing to do with the character, prudence or industry of the owner.

Although not the only beneficiaries – the ‘haves’ come in all ages – the baby boomers have done very well from the process. They were able to buy property when it was much more affordable with higher wages as a share of national income. Higher inflation then eroded their mortgage debts and subsequently their wealth increased through a housing bubble. A narrow age cohort has been very lucky in its timing.

What are the solutions to these inequalities? Nick Boles already knows one of them. He has advocated a Land Value Tax. Such a tax would heal many of the deepest divisions in our society – between regions, homeowners and renters, old and young and ultimately haves and have-nots.

It would ensure that socially created wealth is socialised. It would allow for increase public investment – which is the real solution to our economic problems. It could reduce or replace other taxes, such as Income Tax and the Council Tax. It could help pay for a National Care Service, the final plank of the cradle-to-grave welfare state.

Do pensioners have anything to fear from a Land Value Tax? No. They would not have to pay if they could not afford it; merely roll up their payments until their property changes hands. And let’s not forget that they do not look merely to their own self-interest. They would know that their children and grandchildren and great grandchildren lived in a society where they could succeed on their own efforts, without the game of life being rigged by those lucky enough to be born to the right parents, in the right decade and the right area.

Labour Land Campaign Chair, Eleanor Firman says “We welcome cross party support for Land Value Taxation and were pleased to hear of Nick Boles’ support in the past. We hope he will join the existing Labour and Lib-Dem MPs supporting Caroline Lucas bill calling for research into its implementation which receives its second reading on 9th November.”

ENDS

Notes to editors:


(1) Office for National Statistics, Labour Market Statistics, June 2012


(2) Office for National Statistics, 2009


(3) A. Benito, J. Thompson, M. Waldron, G. Young, and F. Zampoli, ‘The Role of Household Debt and Balance Sheets in the Monetary Transmission Mechanism’, Bank of England Quarterly Bulletin, Spring 2007, figures from Chart 3. Pension wealth (which would tend to further increase this disparity) has been excluded.

(4) For more details contact Steven Clarke at [email protected] or phone 07817 906299.

WHO REALLY GETS THE MOST INCOME FROM “SOMETHING FOR NOTHING” CULTURE?

29 June 2012

The Labour Land Campaign says that instead of attacking the most vulnerable in our society, people on benefits, David Cameron should attack the biggest beneficiaries of the “something for nothing” culture – land owners.

Land values, especially those with buildings in the centre of towns and cities, arise from public and private investment in infrastructure, businesses, services etc. Public and private investments – paid for by all of us as consumers and taxpayers –enable land owners to receive an unearned increase in the value of their land. Tenants (private and commercial) of course get to pay higher rents as a result of increased land values.

The Labour Land Campaign calls on David Cameron to examine the real damage this does to our economy and to change our tax system away from wages and production and on to land wealth through an annual Land Value Tax on all land.

Then, as our economy grows, so the increase in land value will be returned to the public purse to pay for maintaining and improving our public services instead of going to property speculators as unearned income.

The results of this change in taxation would be many, including an incentive to develop all unused and underused sites with planning permission and bring empty homes and unused buildings back into use thus providing homes, business premises and leisure facilities. This would increase employment and therefore reduce Government expenditure on welfare benefits. Instead of properties (i.e. land) having inflated prices, homes would become more affordable whether for buying or for rent.

An annual Land Value Tax cannot be avoided or evaded and therefore the rich would have to pay their fair share of this unearned wealth that is created by the whole of society and not through any effort on the land owner’s part.

Eleanor Firman, Chair of the Labour Land Campaign, says “The real beneficiaries and perpetrators of a “something for nothing culture” have actually been with us for generations since common land that supported many livelihoods was first stolen and then enclosed. Today, we treat houses as assets not homes, and all kinds of businesses (not just landlords) speculate in property for capital gain financed by the taxpayer, or use sale and leaseback to cut their tax bill. The result is lower tax revenues and higher welfare expenditure. We should be cutting the vastly excessive tax benefits to landowners and landlords – not the meagre welfare payments to those on low incomes who have no control over inflated rents.”

ENDS

For more details contact Steven Clarke at [email protected] or phone 07817 906299.


LAND VALUE TAXATION MUST PLAY A PART IN RESOLVING THE EUROZONE CRISIS

18 June 2012

The €100bn bailout of the Spanish banks and the Greek elections are the latest, but no means last, episodes in the seemingly interminable eurozone crisis.

The dominant narrative of the crisis is that of profligate Peripheral European governments who have overspent, running up large debts and deficits. The solution, they are told, is fierce austerity measures to atone for their past sins and so placate the gods of fiscal rectitude who, they hope, will reward them with a return to economic normalcy.

This narrative is a myth. The real problems of the eurozone were sown with the creation of the single currency. It is to do with converging interest rates, trade imbalances, credit flows into the periphery which puffed up housing bubbles, bloated banks which have now blown up, taking economies and Sovereigns with them. The problem is that land prices and debt have been mutually ratchetting each other up – building up of imbalances in wages, prices and competitiveness across the Continent. Imbalances which now need to be unwound in a rigid currency union that doesn’t allow for symmetrical, palatable adjustment between core and periphery, debtor and creditor.

If this is the problem, what are the solutions? Clearly there is no silver bullet. Several interlocking solutions need to be put in place, including but not restricted to: higher inflation, recapitalisation, reform and regulation of banks, debt mutualisation, debt forgiveness, fiscal transfers, fiscal stimulus, perhaps even a move to greater fiscal and banking union. Such things are often suggested by intelligent commentators, but what are they missing?

What is needed is land value taxation. The trigger for the crisis, both in peripheral Europe and the US, was housing bubbles, which are largely land price bubbles. If the land price were to be socialised by being collected by the State for public revenue, speculative debt-fuelled housing bubbles would not get so inflated.

Labour Land Campaign Chair Eleanor Firman says, “In many ways fiscal union is the best way forward, but it would not prevent a repeat of the current crisis. If the eurozone fiscal union shifted taxes from labour to land this would allow land values to be captured for public benefit not by the banks and speculators. This revenue could help resolve the tax gap and stimulate jobs, consumption and sustainable – not volatile, debt-fuelled – growth.”

The tax would provide much needed revenues for cash-strapped governments to provide employment and training opportunities for the unemployed, to protect public services and to improve the long-run fiscal position of their countries.

It would allow for taxes on labour, which is abundant relative to jobs, to be reduced. This would ease the process of getting people into jobs, the most urgent task for all governments.

It would make a public infrastructure-building program more palatable as the infrastructure would raise land values, raising tax revenues.

Thinking more radically, if Europe does move to fiscal union, what should be the European tax? What better than a land value tax – it would fall most heavily on the most prosperous areas of the Continent, making it progressive, it falls on economic rent not returns to production, making it efficient. It should be adopted.

ENDS

For more details contact Steven Clarke at [email protected] or phone 07817 906299.