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
Yes yes, landlords will take a loss in your world. Every month. MAGIC.
You insist that people who don’t believe in your magic and don’t watch trash youtube propaganda are “foolish”.
Newsbot9
Guessing? I’m reading the study. You’re pushing MAGIC losses as good for landlords.
Newsbot9
2. The Landlord passes the LVT onto the tenant.
3. Under the proposal which doesn’t exist.
And the Landlord can’t afford to take the loss you’re telling him he is. You are saying he MUST take a loss under a LVT.
“Market Forces”? Ah yes, you can be homeless. Great alternative! There won’t BE cheaper places to live, especially as land passes into the hands of a few under your proposal, as you raise tax on the poor dramatically.
Newsbot9
No, energy efficiency isn’t the concern of the landlord, he’s not the one who pays it.
Your LVT WILL throw millions out of their homes, and Harrisburg’s social cleansing is a great example of it.
LVT is a revolution, right, and like all such it will kill a noticeable part of the population and eat it’s children. The bodies get stacked up, every time.
You are saying that there will be enough casualties to mean there’s a house for everyone, I see. That’s a lot of dead bodies. I don’t see mass murder as easy.
“Planning laws will also protect green gardens, etc.”
So property will have even larger mandatory tax bills, ensuring that many of the lower middle class will have to die as well.
To quote a certain webcomic…
“Murder, why is it always murder with you people. Can’t you take up knitting or something?”
JohnKLVT
Again…Economics IS NOT a science. Look at the youtube vids to put you right.