Land Value Taxation Campaign

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Land rent for public revenue

Oxbridge College riches

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An ill-informed article in The Guardian draws attention to the "riches" held by Oxbridge colleges - £21 billion, according the report, "Guardian study reveals how wealth of nearly 70 colleges is held in estates, endowments and artworks". The mischief and disinformation is the aggregation of estates, buildings and artworks under the title of "assets". The buildings, being hundreds of years old and scheduled ancient monuments, are more of a liability than an asset. The artworks and other historic artifacts, whilst they might fetch vast sums at auction, are also liabilities which are costly to conserve and insure, and generate no streams of revenue. That leaves the estates. The colleges occupy valuable city-centre sites, but since they could not be redeveloped for commericial or residential use and are encumbered by historic buildings, their value is also trivial.

It is a pity that the authors of the study missed the main point. The wealthiest of the colleges have valuable land holdings. St John's College, which tops the Oxford list, owns most of north Oxford. This was originally poor quality grazing land, but was developed for housing in the 1870s, when Oxford dons were allowed to marry. The properties were sold on 99 year leases, probably at a modest price. However, this is now prime residential real estate. Other colleges have been steadily buying up land in the city centres for centuries and are also holders of what has become, but was not originally, valuable real estate yielding solid rental income. You would never guess this from the Guardian's article.

Now the mischief is this. Any economics tutor who drew attention to the economics theories developed by Henry George would quickly get a tap on the shoulder from his bursar, telling him to lay off the subject. In fact, they would probably never have been appointed if their views were known. Thirty years ago, there was a junior Oxford fellow who was quite keen on promoting LVT and often used to tout the idea. Gradually, he said less and less, and now he is an Oxford professor he says nothing at all on the subject. So the chances of anyone going to Oxford and coming out with a sound knowledge of the role of land in the economy are minimal. Since this includes most of those who become senior members of the government, whichever party is in power, it means that their toolbox is bereft of effective policies.

Postscript A subsequent Guardian article has drawn attention to the Oxbridge college landholdings. That's more like it. The article was not open for comments.

 

Saudi catches VAT meme

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Saudi Arabia is the latest country to catch the VAT meme. The country introduced it at a rate of 5% on 1st January. They ought to know better. Land value tax is a traditional form of Islamic tax. It is known as Kharaj, and though originally intended for agricultural land there is no reason why it should not be applied to urban land, worth many times more than agricultural land. The Saudis should go for it.

As has been pointed out previously, VAT interposes a tariff barrier at the precise point where supply and demand meet. If the addition of value is taxed, then less value will be added. Wealth is created by adding value. That makes VAT the worst conceivable of all taxes. Whoever has given the Saudi government this advice should be punished. If it happens in the traditional way that absolute monarchs punished those who gave them bad advice, it should help to discourage the others. One wonders if sales are even permitted under Sharia law.

 

LVT, the virtual world and a missed opportunity?

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We regularly get told that land is no longer important in the world of the virtual economy, and that companies such as Apple and Google would get away with paying next to nothing.

Yet people are still living in real houses, consuming real food and real energy, wearing real clothes, driving real cars, travelling in real trains and aircraft, purchasing real electronic goods made in real factories using raw materials grown on the real surface of the planet or dug out of real holes in the ground. How does virtualisation change any of that?

There is another angle to this, too. I have been involved with land value tax campaign organisations for over forty years and am in contact with others, in particular in the USA. Apple has been around for most of that time; Google has been big for at least fifteen years.

The land value tax movement is not mainstream as it was in the years up to 1939, but it is not unknown, yet no organisation within the movement has ever been approached by these or any other technology companies. If it was to the advantage of Apple, Google, etc, they would have a vested interest in promoting what we are doing. Why, then, have they never come forward with offers of assistance?

It is also the case that there are some pretty smart people within the land value tax movement who would themselves have realised that, if LVT was so good for companies which operate in cyberspace, they would want to support our work; they would surely have tapped them for funds, which would certainly have been forthcoming. Have we all missed a trick?

 

A Georgist EU?

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What would a Georgist European Union look like?

  • Member countries raise the bulk of their public revenue from an ad valorem tax on the rental value of land.
  • Contributions to the EU central fund in proportion to each country's aggregate land rental value.
  • No tariffs charged on imports to or within the Single Market area.
  • No restrictions on imports to the Single Market area, subject only to the country of origin, and contents being clearly marked, unless there is a major issue of public safety.
  • No sales taxes within the Single Market area (with the possible exceptions of alcohol and tobacco).
  • CAP scrapped.
  • VAT scrapped.

I would settle for a ten year transition period.

 

The dead loss of VAT

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As the Brexit process unfolds, one of the problems that has come to attention is the difficulties it will cause in VAT administration on imports from the EU. The obvious conclusion is not being drawn. The UK now has a golden opportunity to get rid of a regressive and troublesome tax. It would be difficult to conceive of any tax more damaging than VAT, because it applies precisely at the point where supply meets demand.

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