LVT - a really bad idea?

[usernamealreadytaken]

The New Poll Tax - from the Labour Manifesto

"We will initiate a review into reforming council tax and business rates and consider new options such as a land value tax, to ensure local government has sustainable funding for the long term."

The suggestion is that the LVT would be around 3%pa. That gives a very real possibility of some in the South East being liable for bills of in excess of £9000-£15000 per year or more, for living in fairly modest homes. That's pretty much a NMW worker's entire salary in LVT. I also read that pensioners would be exempt. Given that a great number of those with large houses and gardens are likely to be pensioners, isn't this really just a tax on ordinary people who can least afford it?

But they assume everyone is happy to afford it. The tax payer is just a great big golden cow to be milked ad infinitum!

The suggestion by WHOM?

There was a beautiful article in the Telegraph brimming with completely invented figures and highly detailed speculation, with the single line at the bottom:

"A Labour spokesman said: 'This is desperate nonsense from the Tories. Labour has no such plans.'"

Nope. It's a really good idea.

Perking it's in the manifesto. Why would it be there if they had no such plans? Does that mean they have no such plans to implement anything else in the manifesto, or is it just by random selection?

they haven't mentioned any percentages and it is in the manifesto to the extent that they will consider LVT as an alternative to council tax and business rates. the figures in the torygraph don't correlate to anything proposed by labour in the manifesto

The suggestion is that the LVT would be around 3%pa. That gives a very real possibility of some in the South East being liable for bills of in excess of £9000-£15000 per year or more, for living in fairly modest homes. That's pretty much a NMW worker's entire salary in LVT. I also read that pensioners would be exempt. Given that a great number of those with large houses and gardens are likely to be pensioners, isn't this really just a tax on ordinary people who can least afford it*

but this suggestion isn't in the manifesto is it? there is no mention of a percentage

You haven't answer my question. Who is suggesting "3% pa"? Who is claiming pensioners would be exempt?

Is that in the manifesto?

Thanks to PP answering my Q before I could post it.

LVT in principle is a good thing. Council tax is a regressive tax, with those in lower value properties paying more (in proportion to their property value) than those in high value properties. This would be proportionate and so more fair.

The 3% figure has been plucked out of thin air, it has no basis in fact.

It may be that a different percentage would apply under different authorities, each would look at how much revenue they need to raise and the percentage set accordingly. This is not a profit making exercise, they're not going to bill more than is required.

The 3% figure comes from a paper published on www.labourland.org which John McDonnell is a member of.

@Bombardier25966 - strictly speaking, you're making an assumption that regressive is bad and other forms are good. Personally I think you're right, but it should be made explicit - the counterargument is that council tax, despite its name, is intended to be more of a charge than a tax, whereby people pay for the services they receive, and a house worth ten times as much does not consume ten times the council-provided services.

LVT tends to

• help those who aren't well off, because they distribute the tax burden more fairly than council tax (where the poor pay a disproportionately high amount).
• hit the super-rich, who can't avoid it by moving their land overseas - deal with the inequities of land ownership: 69% of the country is owned by 0.6% of the population!
• alleviate the housing crisis by hitting private landlords and those who are landbanking, encouraging them to sell the land for development
• help to kickstart development, because when designed properly, it encompasses a hefty tax on betterment (the rise in value that happens when a property gains planning permission, and which is totally unearned - the landowner does absolutely no work)

The 3% figure is scaremongering by the right wing press. Note that the Telegraph began their article on this by stating that it would hit 'middle class families' then gave a worked example from a property in Kensington and Chelsea - hardly within the reach of most teachers, doctors or civil servants!!

The same McDonnell who was recently in favour of a 100% tax rate?!

www.google.co.uk/amp/s/order-order.com/2016/11/18/shadow-chancellor-sold-100-top-rate-tax/amp/

As implied already, the substitution of LVT for other taxes will result in winners and losers. In particular, LVT is likely to penalise people living in areas where the value of their properties had increased sharply over the years (due to rising land values), while their incomes had not grown proportionately, or perhaps had gone into decline if they had become pensioners or unemployed, or had been widowed. This could also apply to established businesses. However, this problem could be mitigated in a number of ways.
▪ First, people – and also businesses – could decide to increase the occupation of the premises, for example, by taking in lodgers or sub-letting, or to relocate to smaller properties or to areas where land values were lower. This, indeed, is one of the long-term benefits of LVT – it encourages the better use of land.
▪ Second, for residential properties, pensioners and others with low incomes could be allowed to defer the payment of LVT (either wholly or in part) until the property was sold or transferred. This would enable people to carry on living in their properties at no extra cost, and, if they so chose, to pay less tax than they do now. However, it is only fair that the tax plus interest should be paid eventually, because the increased value of their properties (that is the land on which they stand), as noted earlier, would have been created by the activities of the community as a whole, and not by those who happen to occupy the particular site. Meanwhile, local authorities could obtain the revenue that they otherwise would have received from low cost loans, using as collateral the stream of income that they would eventually receive.

The first point could have been written about the "bedroom tax". Not sure how this LVT is any fairer.

The second point is akin to the "dementia tax" which is receiving fierce objection.

Are Labour and the Conservatives really so different?

Labourland also says it is a tax in the unimproved value of the land - I.e the value of the land as it is without buildings, or arable use or anything else. This is not house price based.

Lvt is actually an efficient source of taxation as it targets the landowners (such as the duke of Westminster) rather than the occupiers of the land. The press are going to be hugely against it, because e.g Paul fuckwit Dacre owns a huge estate in Scotland. The lvt on that would be considerable.

This is the reality of a JC government. His massive profligacy will cost everyone massive amounts of money. We will all be hit and we will be all hit hard, start queuing for the food banks now.

That's a valid point @ThePants999.

@usernamealreadytaken, Labour Land are not the Labour Party (although they do have some common members) and they do not make policy. Can you point to their suggestion that LVT be set at 3% please? I have done a search on their website and cannot find it.

Unfortunately Lego, the IFS seems to think that applies equally to labour and the conservatives.

where does it say the IFS think that we're screwed either way? It still looks like a choice of bad (tory) to worse (labour) to me.

Artisan In order not to create a loophole that gives a property speculator any opportunity to keep valuable land (needed for homes, jobs, public services, leisure etc) out of use in order to avoid paying their proper share of LVT, it is essential for the “optimum permitted use value” to be used as the norm.

I'd assume that the "optimum permitted use value" would assume fully developed, rather than derelict land.

Bombardier this draft proposal www.labourland.org/wp-content/uploads/2015/09/JonesWilcoxLVTpaperFinal-V2.pdf

The statement from Labourland sets it out as I've said, User.

Here "First off, the value of every piece of land in this country should be assessed. By 'land' we mean the site alone, not counting any improvements on the site. Thus, the value of any buildings, crops, drainage or anything else which people have put on, or done to, the site would be ignored. Then, after the land has been valued, a tax should be fixed on the basis of that value. "

From the first page of the website.

Here's a link to the Mirrlees report by the IFS which also states it is the unimproved value of the land:
www.ifs.org.uk/uploads/mirrleesreview/design/ch16.pdf

If there is anything which supports your assertion (other than scaremongering in the Telegraph and Daily Mail) could you post it? I'd be interested to read it.

IFS view of the manifesto here

There is also a series of videos going through each element point by point.

Thanks for that user. It does state that the views are those of the authors, not the LLG. Also they suggest a rate of 0.85% for residential properties, the 3% is for commercial properties.

In summary, nowhere has the Labour Party suggested a 3% land value tax on home owners.

Artisan - that link doesn't even mention land value tax?