Land Value Taxation Campaign

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Vested interests and economics theory

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The views expressed on this web site are almost never voiced by mainstream economists, politicians and journalists, even those who purport to be radical. Were they to do so they would be quickly silenced. One result is that there is no effective challenge to the Neoliberal project, now in full flood in Britain and the US. This lack of effectiveness manifests both as a failure to argue against neoliberalism from a philosophical and theoretical perspective, and a failure to construct alternative policies.

We in the LVT movement have been part of the problem too. It has taken most of us a long time to understand the true role of the contemporary banking system and its relationship to land. Banking has evolved into a machine for the capture of land rent, under the guise of interest payments. The banks are in reality landowners for the duration of the loans they make. This sleight of hand has deceived a lot of us.

Attention is thereby removed from the source of the problem. Thus, the present economic crisis is described as a banking crisis, but what the banks have really been doing is acting as land speculators. Most of the comments and all of the proposals currently in circulation consequently fail to address the underlying state of affairs.

This speech, "Veblen's Institutionalist Elaboration of Rent Theory", by Michael Hudson, digs down into the issue and is worth studying. It was given at the Veblen, Capitalism and Possibilities for a Rational Economic Order Conference, Istanbul, Turkey, June 6th, 2012.

LVT too much for farmers?

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Why do opponents of LVT wheel out the argument that farmers could not afford to pay LVT? This is taken from the latest statistics from DEFRA.

"General cropping and cereal farms had large increases in rent in 2010 and the prices now stand at £249 and £176 per hectare respectively. This may be due to the improvement in the profitability of arable farming." The main findings were
  • 2010 rent prices for Full Agricultural Tenancy (FAT) agreements have risen across all regions.
  • Cattle and sheep farms in less favoured areas (LFA) showed the largest FAT proportional increase (21%) from £52 in 2009 to £62 in 2010.
  • Average rent for dairy farms increased by 16% between 2009 and 2010 and now stands at £180 per hectare.
The idea that farmers could not pay an LVT is absurd.

Interview from Occupy London

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Robin Smith, interviewed from Occupy London, gives a complete explanation of what is wrong with the economy.

Compass gives no direction

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If you were to ask us what we would do in the present state of the economy, our reply would be that we would not have got into this mess in the first place. In the early 1990s, when the Labour Party was developing its policies, we urged its policymakers to implement the system of land value taxation which the Campaign was set up to promote.

Let us suppose that Labour had pursued our policies with vigour when it was elected in 1997. By around 2005, the government's finances would have been in a healthy state, debt would have been falling, and the welfare bill would have been shrinking as unemployment and benefits-dependency dwindled to the levels last experienced in the 1950s. The banking crisis would have largely passed Britain by, since there would have been no land price bubble-and-bust. Any impact from abroad, such as a drop in demand for exports, could have been taken care of by catching up on the country's backlog of repairs to its infrastructure, and by bringing forward new projects. Of course, those in the banking, insurance, and financial services businesses who had wanted to continue in the old ways, could still have invested and dealt in foreign government and corporate bonds and in dodgy derivatives. They might have caught a cold in the process, but the consequences would have been for them to bear.

What are the Liberal Democrats proposing?

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The LibDems' proposal for some sort of land value tax has attracted a little bit of coverage recently, but it is not clear exactly what is proposed. The root of the trouble seems to be that Liberal Democrats (and politicians generally) and press reporters and commentators have only a shallow understanding of LVT. It is not helpful that not all LVT supporters seem to have real depth of understanding either. The resultant lack of confidence results in hesitancy, insecurity, and the unwillingness to fight hard enough (or at all) against doctrinal perversions, compromises, concessions, and exemptions.

The only solution to the Greek financial crisis

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Perhaps the most constructive comment on the solution to the Greek debt crisis has come from Andrus Ansip, prime minister of Estonia. He is reported to have said, "If I may give my advice to Greece, it is that you have to cut public expenditure. You have to make structural reforms. And you have to create a really efficient taxation system." Whatever can he mean by a really efficient tax system?

Putting a price on the environment

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Wealden Meanders
A row has erupted over a report that attempted to put a value on the natural environment. The counter-argument is that the natural environment is priceless and that it is somehow sacrilegious to put a price on it. There is an important sense in which this is true, but in our present state of society, surely it is better to put a value on nature than to assume, as at present, that it is worthless?

Fudging the principles

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We have now had a chance to study and think about the report produced by the Parliamentary Treasury Committee, following its inquiry at the beginning of the year made under the title "Principles of Tax Policy". As we reported earlier, the case for land value taxation was presented by a large minority of the submissions and could hardly be ignored.

The report stated that

"the supporters of such a tax consider that it would tax economic rent rather than economic activity and would meet the OECD criterion that recurrent taxes on immovable property were the least harmful tax. However, as the Confederation of British Industry (CBI) notes, "the OECD acknowledges that it is politically difficult for governments to shift the tax base onto property." The Institute of Chartered Accountants for England and Wales (ICAEW) warned 'Our initial conclusion is that even if such a move were desirable economically and let alone whether it was politically acceptable, it would involve a major rebalancing of the UK tax system which would take time to achieve, and risks introducing considerable distortions and behavioural change

"Not only are there political difficulties: practical matter such as the way in which such values would be assessed and the extent to which such a tax should take account of the current or the potential use of land, would also need careful consideration. We also note concerns that 'While such a tax system would avoid distortions in economic behaviour, it would be highly unlikely to yield sufficient revenue to fund socially useful expenditure without producing substantial inequity.' "

The interesting thing about these objections is that not a single one of them is valid, as the Committee would have discovered if it had interviewed one of the LVT advocates, which it did not.

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