Land Value Tax is not a new concept it has been around since at least the nineteenth centaury. But thanks to the influential think tank the Bow Group it’s back on the agenda. Their proposal is that four separate taxes council tax, inheritance tax, capital gains tax on property sales and the TV licence fee be scrapped and a new single rate property levy introduced.
This from yesterday’s Times:
“Under the “land value tax” wealthy homeowners in London and the South East would see their annual bills rise, and would pay more than the rest of the country. But the authors of the report say that it would remove the one-off burden of inheritance tax now faced by thousands of middle-income families in the South East.
The cheapest 20 per cent of properties, worth £70,000 or less, would be exempt from the tax entirely, meaning that thousands of low-income homeowners would pay no levy.
According to the Land Registry, the average house price in London is about £307,000 while in the North of England it is £129,000. The average land value tax on a residential property in London would be £2,370 per year, slightly more than the current council tax bill plus TV licence fee, but only £590 per year in the North, a significant reduction. The tax on a £1m property would be £9,300.”
Land value tax has many attractive advantages. It is simple, and arguably fair; it taxes the most important form of wealth: property. But perhaps it’s greatest advantage is that it encourages efficient use of land and property. Author of the report Mark Wadsworth says that it would encourage older couples and single pensioners living in large homes to move into smaller properties, freeing up larger homes for young families. What he proposes is technically a property rather than a land tax, and some argue that what we really need is a tax that encourages better use of land. But either way It would also surely create a huge incentive for owners to make use of empty property.