Re: From Tax Land Not People: Article by Dave Wetzel, President L abour Land Campaign
- Congratulations and thanks to the many people who participated and helped
with our stall and seminar at the Regenex Conference on Wednesday and
We had loads of enquiries and Anthony sold many books on the land question.
- - - - - - - - - -
Alan Reid in Edinburgh has started "Tax Land Not People" which is a new
Alan describes "Tax Land Not People" as a frame of mind / a way of looking
at the world in which we live.
He says: "We all have different takes on the land question and how to
resolve it at a time when it has never been quite so urgent to do so.
So no website. No collective view. Just 'thinkers' from all ends of the
political spectrum working towards a common goal....even if we can't all
quite agree where the goal posts should be placed!
Below follows the first of our occasional articles. This one from Dave
Wetzel, the very distinquished President of the Labour Land Campaign."
Land Wealth for the People
Dave Wetzel, President of the Labour Land Campaign
Economists and politicians concentrate their energies on trying to remedy
various basic flaws in the body politic.
On the one hand, solutions are sought for poverty, unemployment, run-down
inner city areas, homelessness and poor housing.
At the same time citizens complain of high tax rates.
Tax avoidance and evasion have become an art form, a major industry,
squandering the energies of skilled accountants, lawyers and bankers as they
use every possible device to ensure their clients keep their own tax
liabilities to a minimum whilst expecting others to make their full
Our Government does nothing to rectify an economy which rewards sloth and
penalises hard work and enterprise.
A major transport planning company with over 50 staff recently moved from
freehold premises in Paddington which they had occupied for over 30 years.
The unearned increase in property value was enormous.
(Remember in this context "property value" really means "land or site
value"; buildings deteriorate over time, bricks, roof tiles, floor boards,
windows do not escalate in value - it is the site or land value which we see
Consequently, this firm earned more from their trade on property value than
they had earned gross profits as a trading organisation over 30 years!
What does this mean?
It means that we reward inactivity more than enterprise. The owner of a land
site can earn more from their rents and unearned capital value increase than
the tenant or occupier - who is creating wealth - can earn in profits!
Land and empty buildings are often held out of use while the price
appreciates. The owner incurs no penalty and is not disbenefited; they pay
no taxes on empty land and buildings and can always borrow finance using the
rising property value as collateral.
Often, the empty building will be vandalised with broken windows, graffitti
and other neighbourhood disfugurements etc
But as the owner lives far away they are not disturbed.
However, locally, the neighbours of this site have to put up with a ruined
environment, rubbish being dumped, vandalism and graffiti which spill over
onto occupied properties nearby, a venue for drugs and criminal behaviour
and generally a run-down atmosphere in their neighbourhood.
Every empty site in urban environments is denying the community jobs, homes
and/or leisure activities. This artificial shortage of space where people
wish to live or work leads to higher land prices and the people and firms
that can not afford to locate in towns and cities move into the countryside,
thus creating urban sprawl.
I'm not suggesting that the countryside should become a museum with no new
I do suggest, however, that growth should be to enhance local village and
countryside economies, providing homes and jobs for young people who wish to
stay in the locality.
It should not be for, not second homes for town dwellers to keep empty for
most of the year whilst enjoying the investment potential and inflating
rural house prices so as to or forcing essential workers to adopt long
commutes because it is only these homes far from in the townsurban sprawl
where they work, that they can afford to buy.
No action is needed by landowners for their land to increases in value. It
is the community activity around a site, good schools, the health service,
refuse collection, water on tap, sewerage, electricity or gas supplies, the
local pub and shops, transport availability and good roads which gives land
Taxpayers contribute to the cost of building new railways like the Jubilee
Line Extension which cost £3.5bn, and yet landowners, within 1,000 yards of
the eleven new stations have benefited to the tune of £13bn increase in
their land value.
And it is not just public activity which increases land values. When, in
1931, Henry Ford built a new factory on a 500-acre site on the banks of the
River Thames near the small village of Dagenham in Essex, he provided a
massive unearned bonus to local landowners in the area as demand soared for
sites for homes for these new workers and for the services they'd require.
Is there an alternative?
The UK Government has failed miserably to address this problem - but a
simple solution is at hand. If all land were valued for its optimum
permitted use, and an annual rate applied, then not only could the
Government use this new source of unearned income to reduce or replace those
taxes which damage businesses and destroy jobs, but landowners would have a
direct incentive to put their land to good use, thus creating the homes and
jobs we need.
This policy is known as Annual Land Value Tax (LVT)., This tax is not an
additional burden on the economy. It utilises the rents we already pay to
landowners, and the rental income forgone by land speculation on empty
sites. It allows Governments to reduce punitive taxes on businesses and
individuals and restores to the community that wealth which the community,
not landowners, creates.
Because LVT encourages the owners of empty urban sites to put their sites to
use, the extension of urban sprawl for commuting purposes would cease and
most people would live closer to their jobs. The income from Annual LVT
could also pay for those future projects (such as new rail lines), which
lead in themselves to higher land prices, thus creating a win-win situation.
Together with Tony Benn MP, the Labour Land Campaign in 1985 promoted a Bill
in Parliament which if enacted, land value would have created a "land
dividend" paid to every person, man, woman and child in the UK. This land
dividend could be enough to replace all means-tested benefits, giving
students, pensioners, unemployed people and people with disabilities a
minimum living wage without any of the bureaucratic costs, debts and
indignities that the present system entails.
The side effects of Annual LVT include the reduction in the cost of land.
Both homes and business premises will become more affordable and the Bank of
England could reduce interest rates as the housing price bubble is
controlled by fiscal means. Marginal firms would be able to expand, start-up
businesses would more easily flourish, the unused sites beyond the
South-East would bear a lower tax burden and regeneration would take place
in a natural and harmonious way.
With cheaper land and a sustainable income (using Site Value Rating - the
local form of LVT), local authorities would be able to afford to provide
more community and youth facilities, sport would thrive, wild-life sites
could grow, city farms be encouraged and formal and informal parks and
playgrounds could be provided.
As Annual LVT can not be avoided (you can't take land to the Cayman Isles in
a briefcase!) it is cheap to collect so that not only do we reduce the costs
of collection but the army of accountants and lawyers employed in tax
avoidance could utilise their undoubted skills in more productive
Will UK politicians ever consider adopting?
Of course, timid UK politicians will never adopt this challenging policy
which is already proving its benefits in places like Hong Kong and
Harrisburg, the Capital of Pennsylvania in the USA? .
At least in the interests of the vast majority of the population and society
as a whole, they should seriously consider LVT as part of an important
debate on how we manage the public finances better.
Or will we will have to wait for a new breed of real leaders to step onto
the national stage before fairness and economic efficiency is allowed to
replace the narrow vested interests of the British Aristocracy and greedy
Tel: 020 7126 4200
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