3 thoughts on “Three cheers for Gatwick’s compensation offer, but now kick out the politicians and let local residents decide”

  1. Posted 14/03/2014 at 13:56 | Permalink

    A Land Value Tax would automatically balance all externalities caused by a changes in the spacial environment (as well as economic ones). In this case airports, but it would be most useful for new building.

    On the premise, new construction lowers HP’s, NIMBYS are compensated by lower liabilities, or if new construction raises the level of net amenity their liabilities increase (instead of being capitalised in to unearned higher HP’s).

    And of course the above works it NIMBYs block new construction. If their right to exclude raises land values, we are all compensated.

    With LVT it is the market that decides who is to be compensated and by precisely how much.

    And if Local Authorities are allowed to keep a % of revenues, planning can also operate on a market driven basis. ie revenue maximisation. They will have to balance providing and protecting amenities(demand) with attracting as many people into their constituency as possible(supply)

    Planning would become a straight cost/benefit analysis.

    This would also apply on a National level.

  2. Posted 14/03/2014 at 16:14 | Permalink

    “if Local Authorities are allowed to keep a % of revenues”
    -How about doing this the other way round: Allow local authorities to raise their own revenue, and leave it up to them how they do it. They could then opt for a LVT, although they would not have to. It is quite likely that many would, though, because the more local the tax system, the more you would have to go after immobile factors. The most immobile one being, of course, land.

  3. Posted 15/03/2014 at 12:44 | Permalink

    Kris, the LVT or local income tax question answers itself.

    All things being equal, people will go to where they pay least tax, everything else being equal. But that includes privately collected taxes as well, so you might as well say that people will go where rents are lowest. To sum up, people will go where rent + tax is lowest.

    (It is a secondary issue whether that is LVT or income tax or any other kind of tax).

    We know that the total rental value of a site is dictated by external factors and not how the rental income is split between tax collector and land owner. So the highest possible tax the tax collector can take without harming the economy is the LVT, if they try to get more than that by taxing earned income, turnover, business profits etc, then the economy in their area will fail, so even if they tax those things, they will have to be sure to collect no more than the rental value of the land in their area.

    So a sane council would always have LVT, nice and simple and does not drive people away from the area – the site rental value is the open market measure of what people are prepared to pay to live in that area or set up business in that area.

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