Re: FW: Thoughts on seminar
- My thoughts entirely - and what I'm advising the Lib Dems to go for. The LVT
might also be subsumed within Income Tax and Corporation Tax systems, like
the Swedish Property/Wealth tax is. The attraction is that, like income tax,
it will not be so obvious to the payee and therefore won't attract such
If the 'homestead' allowance was only attached to owner-occupier (or shared
equity) homes, then the landlord (social or commercial) would have an
incentive to become more of a property management company than a land owner.
This would allow more people to share in the iniquities of landlordism! But
if we started the allowance high enough to keep most home-owners as winners,
we could freeze it so that it became a more genuine form of LVT. Also we
needn't have a pure land-value base at first (if the data isn;t there) but
could incentivise the supply of information about buildings etc, offering
100% tax rebates for all declared valuations of 'non-land' assets.
----- Original Message -----
From: "Wetzel Dave" <Davewetzel@...>
Cc: "'Kevin Cahill ( LLC) (CLTs)'" <ros@...>; "'Land Café ( lc1)
Sent: Monday, February 27, 2006 12:43 AM
Subject: RE: FW: Thoughts on seminar
Vice-chair, Transport for London
Sent: 27 February 2006 00:39
To: Wetzel Dave
Subject: Re: FW: Thoughts on seminar
Solid points and cogently made. Part of the answer is (1) to make LVT
progressive by including a "personal allowance" (like income tax) roughly
equal to the land value of an average home, (2) release more green belt
land for housing, and (3) extend the "right to buy" to the private rented
sector, on similar terms to those that apply in the public housing sector.
<Davewetzel@tfl.g To: "'Heather Wetzel (
hw h1 hw1 )'" <heather.wetzel@...>, "'Toby Lloyd
ov.uk> (GLA Hsg)'"
<toby.lloyd@...>, "'Fred Harrison (The Land Research Trust)'"
27/02/2006 00:11 cc:
Subject: FW: Thoughts on
Some serious thoughts from Kevin Cahill.
Vice-chair, Transport for London
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From: Globalnet mail uk [mailto:ros@...]
Sent: 26 February 2006 01:52
To: Wetzel Dave
Subject: Thoughts on seminar
Dave, Tony, Heather and everyone.
First, thank you. I am very glad I came early and heard so many of the
speakers, including Fred.
I still stand by what I said, especially having heard Heather on
I think LVT can work. The "But" is the same one Fred highlighted.
Homeowners. If you can sell it to them, you have it. But as currently
presented, its not going to sell and its not going to work either, so you
have two problems there.
Here are my thoughts following the seminar.
No one in freehold is going to understand the "rents we already pay to
landowners". The connection is too remote to work. The immediate result
always be confusion because they are not conscious of paying the rent you
refer to. Its indirect.
Secondly, going to your tube line analogy, the 'landowners' who benefited
from the tube extension were homeowners for the most part. Home owners are
not 'landowners' in the sense that you use it here however. Politically
are 70% of the population and consequently, they are 70% of the electorate.
And this is where the real problem occurs. That 70% are the democratic
majority, at least in theory. If you talk about spreading benefits around,
if you are not spreading the benefits to the majority of the community, ie
homeowners, who are you spreading them to ? To the 30% without freehold at
the moment ?
Defining the 70%, as Heather asked. Here is the logic. There are 24.9
million homes in the UK. 70% of those are in freehold possession by their
occupants (17.43 million homes). In law, the home is often held in the name
of just one parent, but divorce laws now mean that even if the spouse name
is not on the deeds, he or she has a de jure half share. I usually speak of
70% of the population having a stake in the freehold home, because in
circumstances children have a de facto stake by occupancy and are usually
the inheritors anyhow.
Underlying the current approach is a complete confusion of 'landowner' with
'homeowner' and LVT is un saleable on this basis because homeowners are not
landowners and the 70% will very rapidly work out that when you speak of
landowners and tax what you actually mean is them.
There is another major problem. Between 8000 BC and about 1900 AD between
95% and 99% of the human population owned nothing, not a bloody blade of
grass, and certainly not a single brick, and were in a state of poverty
comparable to India and Africa today. The only thing that changed that, and
changed it in the Anglo Saxon world in particular, was not wages, but home
ownership. We are prosperous because we have assets, not because we have
better wages. The asset 70% of the population have is a stake in a home.
fact that 70% of the population have opted for home ownership is the
majority in the community making a choice, a choice which has conferred
dramatic benefits on about 70% of the UK population and 16% of the
population in a very short space of time on the historic scale. If the
benefits conferred by homeowner ship are the economic fact that has
transformed the lot of the majority in the USA, UK, Irl etc, then it seems
to me logical to look at how we extend this transforming benefit to every
one that wants it. That means that you don't start hampering homeownership,
placing artificial constraints on it, and fiddling with it when you don't
understand its true function. Logically what you do is extend the
opportunity to own a home to the 30% not yet on the ladder in the UK. Not
everyone wants it, so there will always be a rented sector, but the choice
has to be there. And that means providing the opportunity for personal
homeownership, not building more council or other rented accommodation, and
placing allegedly socialist councils in the position of the landlords of
old, which is what the prioritising of rented homes does.
Now, the other point is that homeownership also happens to be the only
or factor that has ever worked to end poverty throughout all of human
history, and I have been there recently, guided by Jack Powelson, right
to 8000 BC. The whole of history is a record of total landlessness for 95%
to 99% of the human mass and of total poverty of that mass. But the human
mass is us and 70% of the mass in the UK are homeowners and are out of
poverty and into prosperity.
Homeownership in the west was not planned. It happened largely by accident.
And it was instinctively opposed by the landowners because it deprived them
of rent. But because they got a capital gain, they compromised, and anyhow,
very little land was involved. The left never understood what Maggie
Thatcher was doing when she ended mortgage tax relief. She was trying to
restore the landlords of old, and stop humanities relentless march towards
the possession of land via a home ,by limiting the advantages of home
ownership and making it difficult. And she succeeded, see below.
And I have to say this. The whole argument about a housing crisis and young
people not being able to get on the ladder was utterly fatuous. You build
houses on land. To solve high prices you put more land on the market. And
you give young people and everyone else the tax relief that the thriving
housing markets elsewhere have.Toby put up a figure of house building
requirements for the UK of 145,000 home a year. I have never seen a figure
that meant so little in my whole life. Its not from Barker, its not from
Whitehead. Where is it from ? But that aside, let me repeat something.
One of the key economic facts in each months economic statistics in the US
is housing starts. In the UK housing starts do not figure in the stats, at
all. Why ? The US built 2,230,000 homes last year for a population of 295
million people. We built 165,000 homes for 60 million people. The Irish
built 80,000 homes for 4 million people last year. What marks the US and
Ireland is that homebuyers get mortgage tax relief. Here is what the US
figure implies we should be building. (divide by 4.1 approx ) 543,000. The
Irish figure (multiply by 15) implies we should be building 1.2 million
houses. The Irish may be over building, and possibly even the Americans,
the scale of the discrepancy shouts out that in an alleged home owning
democracy the 145,000 figure is ludicrous. The young cant get on the
because we are not building enough homes, and because we are not building
enough homes prices go up. You don't have to be Einstein to figure out how
to solve the problem and its not by fiddling on the fringe, with low cost
housing, that is for sure. What is happening is that the Labour Government
has followed Thatcher into trying to recreate the rented sector, and
landlords, it does not matter a whit whether they are social or private
landlords. Every landlord is a barrier to another person owning their own
home. And a step backwards into a poverty ridden history. If social
landlordism worked, the Soviet Union would at least have worked
economically. It didn't.
So, what is LVT going to do for the 70% of UK households who will be paying
it ? And what is it going to do for business, already paying £13bn in UBR ?
If LVT is to work, it has to contribute towards the welfare of the
and that means improving the value of their sole assets, or at least making
sure that it isn't damaged. I did a survey amongst mainly homeowners with
mortgaged homes locally. They would all accept a 25% cut in the value of
their homes to see young people get a chance. But the whole point is that
there is no need for a cut to occur, and to impose a cut would I hope start
a revolution, because that would be the deserved response. Necessary pain
can be borne. Unnecessary pain wont be. Cutting the value of existing homes
would be economic incompetence of an extraordinary kind, because it is not
necessary and in any case would end the life of any government that did it.
Or else we would all be stupid. Politically, attacking the value of current
homes is a non starter. You'd never really guess why the Government is
holding the housing market at 145,000 and forcing underbuilding to occur ?
Let me put it this way. Tough on the kids, but if the government is seen to
damage the sole asset of the majority of 70% of the people, its not going
be around long, is it ? And what easier way to ensure asset value growth
stability but by limiting the number of houses built. Simple, really. The
key question really is when you talk about spreading benefits to the
community, who are you talking about. The 70% with homes, or the 30%
without. The Government certainly seem to believe in the status quo, even
the extent of being afraid to touch it and restore the building industry
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