3 thoughts on “Would a Land Value Tax (LVT) get Britain building?”

  1. Posted 09/12/2017 at 17:18 | Permalink

    No tax will ever be perfectly implemented, but even the crudest LVT is better than those taxes you mention, or as my of the other taxes and charges related to land, buildings or construction.

    Even a perfectly implemented SDLT, CGT, council tax , business rates etc has bad effects, the drawbacks are inherent.

  2. Posted 11/12/2017 at 00:58 | Permalink

    Like the payment of wages, the LVT is compensation for opportunity loss. In the case of LVT, for being excluded from valuable natural resources. Not paying wages or LVT is not only unjust, but means that excessive inequalities and misallocation of resources are baked into our society and our economy. (That the state might collect and spend/redistribute that compensation on our behalf is a separate issue. Some might prefer different mechanism).

    A 100% LVT would mean that freeholders pay the same housing expenditure as renters on a pro rata basis (thereby increasing total expenditure and reducing demand). This level playing field would therefore eliminate the over consumption/supply our current dysfunctional market suffers from. However, while the LVT would reduce supply, it would increase turnover allowing resources to become optimally allocated.

    It is the distribution of land values among society that gives rise to excessive inequalities. Affordability issues for some groups are merely symptomatic of this. The LVT shares these values equally, reducing “land inequality” to zero, thus solving these issues instantly (as well as creating a true meritocracy). The selling price of land and rental incomes derived from it would drop to near zero, while the re-distributional effects would increase disposable incomes of typical working households by over £10K pa. Improving affordability for those households by a factor >3.5 as measured by ratio of discretionary incomes to prices. So housing becomes optimally affordable for those households.

    Thirdly, and perhaps most importantly, aggregated land rents are the best measure we have of the efficient allocation of resources in our economy. The higher the better. If LVT were to become its main source of revenue, the states role would change from being a passive recipient of taxes to a full market participant. In order to maximise its rental income, it would have to strike the correct balance of rules, regulations and laws that puts labour and capital to where it is most needed(agglomeration) while preserving and enhancing our shared environment.

  3. Posted 11/12/2017 at 13:53 | Permalink

    One of the unsung problems of releasing land already available in principle for residential development is building regulations compelling a partial social housing quota.
    No one will buy a house on a new build estate where their next door neighbour is a potential social welfare recipient.
    Which is why many sites remain undeveloped.

    Godfrey Bloom
    Mises Instiute UK

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