Jenny Jones AM, leader of the Green Party on the London Assembly, argues the case for a land value tax to be at the heart of London’s economic recovery.
By Jenny Jones AM, leader of the Green Party on the London Assembly
Fairer, smarter taxes are needed for London to recover from the double-dip recession. Therefore I fully support the Mayor of London’s move to have another look at them with his London Finance Commission.
Earlier this week I asked its chair, Professor Tony Travers, whether he will look at putting a tax on rising land values as one way to promote useful economic activity in a more fair way.
You can watch our exchange below:
Land value taxation can get complicated to explain, but could potentially keep down house prices, finance major transport infrastructure projects and switch more of the burden of taxation onto unearned wealth.
The basic idea is very easily explained with an example.
The £15 billion Crossrail project is expected to benefit many businesses in London, so they were required to contribute to the cost. A Business Rate Supplement has been levied on businesses with a rateable value greater than £50,000, raising £4.1bn towards the cost.
But building this new railway line will also benefit land owners along its route, estimated at a minimum to be a £5.5bn windfall gain by property consultants GVA. Their land becomes more valuable when the line is built without their lifting a finger but, unlike businesses paying rates, these landowners get their windfall gain tax-free.
The Jubilee line extension to Stratford is an even more stark example. The £3.5bn cost to the public purse was dwarfed by the estimated £10bn plus in windfall gains to land owners in the area.
A land value tax would enable the Mayor and government to reinvest a proportion of these windfall gains into new infrastructure, ensuring everyone who benefits pays their fair share.
The Metropolitan Line was built in the 1930s using a similar principle. The company who built the line bought up land along its length for housing, and used the uplift in land values to pay for the line.
London desperately needs investment in its transport, energy and waste infrastructure. Fairness also demands we do something about these huge, unearned private gains to already-wealthy individuals and companies resulting from public investment.
There are many other strong economic arguments for land value taxation – putting a dampener on the housing market by making it a less attractive option for investors; giving developers with land banks and other owners of brownfield sites a strong incentive to develop; and possibly using the revenue to reduce business rates are just three that were raised in the debate with Professor Travers by myself and other London Assembly Members.
Land value taxation could reshape London’s economy to promote useful economic activity, generate revenue for investment and fairly distribute the benefits. It’s popular with economists of all colours and stripes, and was endorsed by the Institute for Fiscal Studies’ Mirlees Review.
So it’s a shame Travers thinks the proposal is unlikely to make it into the London Finance Commission’s final recommendations. While he “definitely won’t not look at it”, he suggested it wouldn’t get buy-in from all political parties and so would be a non-starter. I hope this week’s debate will have helped convince more Assembly Members it’s a viable option and I urge them to raise it with their parties.
86 Responses to “A land value tax should be at the heart of London’s economic recovery”
Newsbot9
Ah right, you dismiss a valid concern with “UR LIAR”.
I am pointing out that if you make it economically efficient for people to live in two adjoining houses to keep the “household” income down and minimise tax, then many middle class people will do so!
The effect on the POOR will be different, of course, and a realistic LVT won’t cause the situation above, because it’s completely different from the actually proposed LVT’s in studies and position papers!
A LVT’s effect will depend entirely on the level at which it is set, of course. Moreover, you are making the mistake of seeing the housing market in the UK as supply-driven. It’s demand-driven, there is a critical shortage of houses!
You are unable to realise that I am talking about two completely different scenarios, and your instantness that anyone, then use a Toff’s sighoff. Well, that explains THAT then!
Mark Wadsworth
JohnLVT, you are making a bold and valiant attempt here, but I think that Newsbot is what we would refer to as a “total lying idiot” and that we are wasting our time. Forget about being polite any more and pay him or her back in kind, teh glvoes are off.
Newsbot9
Of course you want to “help” me. Certainly – give me the DOI’s of the relevant *scientific* studies.
What I won’t do, unless you’re paying me, is watching videos you youtube, wasting hours when I’m a fast reader and learn primarily from textual sources anyway. Scientific papers, for anything scientific like economics.
(Oh, and if I watched all the links sent to me, I wouldn’t have time for anything else – literally.)
Newsbot9
Ah yes, suggestions of drug use, a typical social darwinist’s totalitarian cry.
LVT on Farmland would be set FAR higher in the proposals I’ve seen. So, when the farmer is facing a £25,000 or higher bill…
Rents cannot be lower than tax. This is quite simple, and what you’re ignoring. People cannot afford to make a loss by not passing the tax on!
You keep ignoring the published proposals, since evidently you prefer to work in a world of your own imagination. I work in the real world.
Newsbot9
Yes yes, you keep claiming that concerns are the same as supporting freeloading landowners, when you’re trying to concentrate land ownership with a few.
People won’t keep loss-making land, as you are claiming they will.