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RE: Report to the UK Prime Minister

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  • Wetzel Dave
    Paul, Many thanks for your welcome amendment - Meanwhile we recommend that the government undertakes and publishes a feasibility study into the implementation
    Message 1 of 1 , Apr 1, 2005
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      Paul,
      Many thanks for your welcome amendment -
      "Meanwhile we recommend that the government undertakes and publishes a
      feasibility study into the implementation of a Land Value Tax on all land
      taking into account the draft framework set out in Appendix 16".
      to be honest - I could not expect more at this stage, and am extremely
      grateful to you.
      Would the attached paper "Steps to implement LVT" be OK for the basis of
      your Appendix 16?
      If so, I'll polish it up.

      As for your further questions:

      1. You have more confidence in the market and economists than I have.
      Landlords are for ever trying to increase their rents. RSLs are no better
      than private. LAs move them up every year. I have supported poor families
      appealing against rent increases by a private landlord at the rent tribunal
      and won. Should there be an appeal to the tribunal against an increase of
      rent due to LVT?
      YES, why not?

      2. How do rent payers pay for the local services and infrastructure if they
      are not paying SVT or LVT?
      The rent charged by their landlord already reflects the value of local
      services and infrastructure.
      Look at estate agent's windows for flats/houses to let and note how often
      they mention local services and amenities such as "view of the river",
      "close to park", "trains 30 minutes to Victoria", "quiet road" etc. etc.

      Hence, the rent already reflects the value of the site.

      Imagine a Borough with no police, no fire service, no street cleaning, no
      refuse collection, no parks, no schools, no doctors, no dentists, etc. etc
      and see who would wish to live there and how the rents demanded by landlords
      would fall.

      3. Are there Site Value Tax benefits and LVT benefits to replace Council
      Tax benefit? (This could be the answer to John Illingworth's "little old
      lady problem" with the benefit related to income - the crucial amount is
      that left after rent/mortgage and SV/LVT).

      With £830 "Homestead Allowance" should not really be necessary.
      nb My previous reply that mentioned "Stakeholders Allowance" should have
      read "Homestead Allowance" as this is the term currently used in parts of
      the USA.

      4. Who sets the rates? Who is in charge? Who provides a just balance between
      London, where there could be a large amount of land taxes collected measured
      per head than in Leeds or Newcastle upon Tyne? Who balances tax collected
      with local needs for public expenditure?

      A national LVT/LBL would provide the balance you seek.
      The payments made would reflect high land values in London and low land
      values in Leeds and elsewhere.

      The Chancellor of the Exchequer would set the rate.

      However, local taxes (commercial rates and council tax) could be replaced by
      local Site Value Rate (determined by the locally elected Councils) with
      equalisation grants across regions from the national LVT/LBL. The local
      people would democratically decide the tax/spending balance when they vote
      for different candidates offering different policies and different
      priorities.


      Dave

      Dave Wetzel; Vice-Chair; Transport for London.

      -----Original Message-----
      From: Paul Nicolson [mailto:zacchaeus2000@...]
      Sent: 01 April 2005 11:24
      To: Wetzel Dave
      Cc: John.Illingworth@...; toby.lloyd@...; Peter
      Ambrose
      Subject: LVT



      Dear Dave,

      Very many thanks for your comprehensive replies to my questions. Peter
      Ambrose and I would like to leave Recommendation 6 as it is but add,
      "Meanwhile we recommend that the government undertakes and publishes a
      feasibility study into the implementation of a Land Value Tax on all land
      taking into account the draft framework set out in Appendix 16". You/we
      would edit your responses to my questions as that framework. We need to get
      that done by the 19th April.

      I have some more questions!

      1. You have more confidence in the market and economists that I have.
      Landlords are for ever trying to increase their rents. RSLs are no better
      than private. LAs move them up every year. I have supported poor families
      appealing against rent increases by a private landlord at the rent tribunal
      and won. Should there be an appeal to the tribunal against an increase of
      rent due to LVT?

      2. How do rent payers pay for the local services and infrastucture if
      they are not paying SVT or LVT?

      3. Are there Site Value Tax benefits and LVT benefits to replace
      Council Tax benefit? (This could be the answer to John Illingworth's "little
      old lady problem" with the benefit related to income - the crucial amount is
      that left after rent/mortgage and SV/LVT).

      4. Who sets the rates? Who is in charge? Who provides a just balance
      between London, where there could be a large amount of land taxes collected
      measured per head than in Leeds or Newcastle upon Tyne? Who balances tax
      collected with local needs for public expenditure?

      I am enjoying learning about SVT and LVT. Most of the population, not to
      mention politicians, must be as ignorant as I. So the memo provides an
      opportunity for education. If you could find the time draft the necessary
      framework for Appendix 16 based on your answers to my questions that would
      be excellent.

      I am hoping we will have 1000 copies of the memo available for free
      distribution but would prefer 2000 - that depends on raising the money - the
      use of free copies will target MPs, Select Committees and Gov Officials.
      It will also be available to download from our website www.z2k.org
      <http://www.z2k.org>

      I find this discussion very interesting indeed and am grateful to you for
      the trouble you have taken.

      Best wishes,

      Paul

      Rev Paul Nicolson, Chairman,
      Zacchaeus 2000 Trust,
      93 Campbell Road,
      London N17 OAX
      website www.z2k.org <http://www.z2k.org>
      see also www.peanuts4benefits.co.uk <http://www.peanuts4benefits.co.uk>
      020 83765455
      0796 1177889

      ----- Original Message -----
      From: Wetzel <mailto:Davewetzel@...> Dave
      To: 'Paul Nicolson' <mailto:zacchaeus2000@...>
      Cc: 'Land Café ( lc1) ' <mailto:LandCafe@yahoogroups.com>
      Sent: Thursday, March 31, 2005 4:18 PM
      Subject: RE: Memo to PM on unaffordable housing - final draft

      Paul,
      My proposals for LVT are as follows:


      1. Does it apply to all private freeholders with a single property?
      YES.
      But each landowner would have a "Stakeholder Allowance" of say £830 (similar
      to the personal allowance that applies to income tax). i.e. All landowners
      would be excused payment for the first £830 of the LVT bill on ALL their
      land.
      For the Duke of Westminster this relief would be insignificant but it would
      greatly reduce household LVT bills for owner-occupiers.
      2. Does it apply to asset rich income, poor pensioners who own the freehold
      of their homes, or any other similar asset rich income poor household, like
      a redundant low paid freeholder unemployed and on benefit?
      YES.
      But see 1. above.
      Also consider that the income from LVT would be used to abolish other
      detrimental property taxes on buildings and (if set high enough) could
      reduce other taxes that hit the poorest hardest.
      In addition, by reducing land prices, LVT will enable marginal firms to
      expand into affordable premises, thus creating more employment - putting
      additional income into the pockets of the poorest families as well as
      reducing the Government's costs associated with unemployment or under
      employment.
      Because of the mechanism that economists call "marginal cost pricing" LVT
      will create greater efficiencies in the economy leading to a higher GDP and
      reduced costs. (e.g. With empty city/town sites brought into use unnecessary
      urban sprawl will be avoided reducing the need for long commuting - saving
      time for individuals and transport costs for society).
      3. Is there a relationship to council tax?
      The local form of LVT (called Site Value Rating) would replace Council Tax
      and business rates.
      4. Do local authorities and central government pay it on land they own?
      YES.
      Otherwise no incentive to use their land efficiently.
      Read the history of the Soviet system where land was held in common - but
      grossly abused and wasted - as the rental value of land was not collected.
      This all added to their production costs and helped destroy their
      inefficient system.
      5. Would a CLT or an LLP pay it?
      YES.
      Again, if not - no incentive to use their land efficiently. However, LVT
      requires the valuation of land based on its optimum permitted use. If the
      permitted use is of low rental value like low cost housing, organic farming
      or an urban community farm - then the land value is low and the LVT will be
      low.
      However, if we want, as a society, to subsidise any activity (even churches,
      charities or private schools) it would be far better to do that with a cash
      grant than to encourage the inefficient use of land by exemptions which
      maybe the rich could use to avoid paying their LVT obligations. (In USA some
      film stars buy large houses with huge grounds. They then purchase a few cows
      and claim a farming exemption!)
      Would Housing Associations pay it?
      YES.
      See previous answer.
      In addition Housing Associations have to acquire land at current market
      prices. Cheaper land arising from LVT see the next answer) would reduce
      Housing and CLT costs considerably.

      Why can't it be passed on to tenants in rent or to be paid by housing
      benefit?
      Most landowners already charge the full economic rent of their sites. If
      they could charge more they would - but nobody would be able to afford to
      occupy at the higher rent. Similarly, if they increase their rent demand by
      the amount of the tax, tenants would leave their premises empty. With the
      LVT obligation to pay regardless of occupancy, they would soon reduce their
      rental demand to find a tenant to provide an income with which to meet their
      LVT obligation.

      LVT will also reduce the land cost element of housing for three reasons:
      a) It will increase the supply of land where people need to USE it.
      Landowners will have a clear incentive to bring their land into use. Thus
      increasing the supply - which will reduce the price.
      b) LVT will drive out speculation. Nobody would hold onto empty or
      under-used land whilst paying the annual LVT. This reduces the hope value
      currently reflected in land prices. Investors would channel their wealth
      away from sterile land speculation into productive industry - thus providing
      workers with modern capital equipment (making our factories more efficient)
      and a requirement for more workers to staff the new factories etc. giving a
      positive improvement to GDP.
      b) Consider the Ricardo Theory of Rent. If land rent is taxed, then a
      potential purchaser will only be receiving a part-rent free site. This
      reduces the purchase price of the site in the same way that a leasehold site
      is worth less than a freehold site - (the only difference is that instead of
      the leasehold purchaser paying a part of the annual rental value to a
      landowner, the purchaser on all sites will be paying a part of the annual
      rental value to the Government in the form of LVT.

      I really welcome this discussion and thanks for considering my proposal so
      thoroughly.




      Dave
      Dave Wetzel; Vice-Chair; Transport for London.
      Windsor House. 42-50 Victoria Street. London. SW1H 0TL. UK
      Tel: 020 7941 4200
      Intl Tel: +44 207 941 4200

      PA: Vicky Jennings 020 7941 4081
      Windsor House is close to New Scotland Yard. Buses 11, 24, 148 and 211 pass
      the door. (507 passes close by).
      Nearest Tube: St. James's Park Underground station.
      Nearest mainline stations: Waterloo and Victoria (Both a walk or short bus
      ride).
      Public cycle parking available outside Windsor House.


      -----Original Message-----
      From: Paul Nicolson [mailto:zacchaeus2000@...]
      Sent: 30 March 2005 09:06
      To: Wetzel Dave
      Cc: Peter Ambrose; Toby.lloyd@...; chris cook
      Subject: Re: Memo to PM on unaffordable housing - final draft


      Dear Dave,

      Some questions about an LVT on all land.

      Does it apply to all private freeholders with a single property?
      Does it apply to asset rich income poor pensioners who own the freehold of
      their homes, or any other similar asset rich income poor household, like a
      redundant low paid freeholder unemployed and on benefit?
      Is there a relationship to council tax?
      Do local authorities and central government pay it on land they own?
      Would a CLT or an LLP pay it?
      Would Housing Associations pay it?
      Why can't it be passed on to tenants in rent or to be paid by housing
      benefit?

      As you have spotted we have moved your way but I have not got my mind round
      the advantages and disadvantages of LVT on ALL land. Hence the questions
      which you kindly offered to field, thank you.

      Best wishes,

      Paul

      Rev Paul Nicolson, Chairman,
      Zacchaeus 2000 Trust,
      93 Campbell Road,
      London N17 OAX
      website www.z2k.org <http://www.z2k.org>
      see also www.peanuts4benefits.co.uk <http://www.peanuts4benefits.co.uk>
      020 83765455
      0796 1177889

      ----- Original Message -----
      From: Wetzel Dave <mailto:Davewetzel@...>
      To: 'Paul Nicolson' <mailto:zacchaeus2000@...> ; Richard Best
      <mailto:richard.best@...> ; Peter Challen
      <mailto:101665.1247@...> ; Antonia Swinson
      <mailto:Antswin@...> ; Bill <mailto:bill@...> Dunster ;
      Bill Powell <mailto:whpowell@...> ; chris cook
      <mailto:cojock@...> ; Chris Goulden
      <mailto:chris.goulden@...> ; david <mailto:david.rogers@...>
      rodgers ; Iqbal Asaria <mailto:mia@...> ; Julie Jones
      <mailto:julie_jones@...> ; Leonora O'Shea
      <mailto:Leonora.O'Shea@...> ; Mark <mailto:markj.lon@...>
      Johnston ; Mark Thomas <mailto:m.thomas2@...> ; Richard Walker
      <mailto:walker.llc@...> ; Robina Rafferty
      <mailto:r.rafferty@...> ; Sophie Lindsay
      <mailto:sophie.lindsay@...> ; Stephen Hill
      <mailto:ca@...> ; Toby Lloyd
      <mailto:Toby.lloyd@...> ; john
      <mailto:j.veit-wilson@...> veit-wilson ; JR Bradshaw
      <mailto:jrb1@...> ; Jerry Morris <mailto:jerry.morris@...>
      ; Sue <mailto:s.middleton@...> Middleton ; dave.gordon@...
      <mailto:dave.gordon@...> ; Nicholas
      <mailto:nicholas.sagovsky@...> Sagovsky
      Sent: Tuesday, March 29, 2005 7:58 PM
      Subject: RE: Memo to PM on unaffordable housing - final draft

      Paul,
      Thanks for copying me in.

      Please note that house prices rise because the land value increases.
      Like a second-hand car the bricks and mortar devalue over time.
      (See article re Land value tax attached - I'd be happy to explain further).

      One suggested change to the policies you advocate:

      SUMMARY AND RECOMMENDATION
      Recommendation 6
      The tenure pattern of housing development in growth regions should be
      balanced and not dominated by speculative owner-occupied housing; the
      hoarding of land either before or after the receipt of planning permission
      by developers and speculators should be discouraged by an annual tax on the
      value of such land until it is developed.

      Could read:

      "Recommendation 6
      The tenure pattern of housing development in growth regions should be
      balanced and not dominated by speculative owner-occupied housing; the
      hoarding of land either before or after the receipt of planning permission
      by developers and speculators should be discouraged by an annual tax on the
      value of all land.

      This policy would not only deter land-hoarding and reduce tax avoidance and
      evasion but also allow non owner-occupiers to share in land wealth as the
      receipts could partly offset other taxes which not only damage our trade and
      GDP but equally seriously, fall disproportionately on families and
      individuals with lower incomes."

      Dave
      Dave Wetzel; Vice-Chair; Transport for London.
      Windsor House. 42-50 Victoria Street. London. SW1H 0TL. UK
      Tel: 020 7941 4200
      Intl Tel: +44 207 941 4200

      PA: Vicky Jennings 020 7941 4081
      Windsor House is close to New Scotland Yard. Buses 11, 24, 148 and 211 pass
      the door. (507 passes close by).
      Nearest Tube: St. James's Park Underground station.
      Nearest mainline stations: Waterloo and Victoria (Both a walk or short bus
      ride).
      Public cycle parking available outside Windsor House.


      -----Original Message-----
      From: Paul Nicolson [mailto:zacchaeus2000@...]
      Sent: 29 March 2005 13:48
      To: Richard Best; Peter Challen; Antonia Swinson; Bill Dunster; Bill Powell;
      chris cook; Chris Goulden; david rodgers; Iqbal Asaria; Julie Jones; Leonora
      O'Shea; Mark Johnston; Mark Thomas; Richard Walker; Robina Rafferty; Sophie
      Lindsay; Stephen Hill; Toby Lloyd; Wetzel Dave; john veit-wilson; JR
      Bradshaw; Jerry Morris; Sue Middleton; dave.gordon@...; Nicholas
      Sagovsky
      Subject: Memo to PM on unaffordable housing - final draft


      Dear all,

      I am attaching the final draft of the memorandum on unaffordable housing to
      be delivered to No 10, whoever is the PM, after the election is over. This
      is in confidence at this stage because we do not want it in circulation
      before the election is over. We would be very grateful if those of you who
      attended the housing seminar would check the appendices in which you have a
      particular interest.

      It is being prepared ready for print so we need any comments from you by
      Tuesday the 19th April at the latest to be finally ready for print by Friday
      22nd April. We expect Lord Morris of Manchester to send it to No 10 on the
      10th May.

      We would be very grateful for any help you can give with the costs of this
      exercise, which, considering the quality and quantity of the information
      that has been put together by Peter Ambrose, is by no means expensive at
      £11,500. We have raised £5000.

      With best wishes,

      Paul

      Commissioning Peter Ambrose including expenses 3000
      Making ready to print
      2500
      Printing 1000 copies (estimate)
      3500
      Z2K management an lobbying expenses
      2500
      Total
      11,500


      Rev Paul Nicolson, Chairman,
      Zacchaeus 2000 Trust,
      93 Campbell Road,
      London N17 OAX
      website www.z2k.org <http://www.z2k.org>
      see also www.peanuts4benefits.co.uk <http://www.peanuts4benefits.co.uk>
      020 83765455
      0796 1177889




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