Land Value Taxation Campaign

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Frequently Asked Questions about Land Value Taxation

In this section of the web site we have a series of FAQs to help people further their understanding about the application and benefits of Land Value Tax.

If you have any questions at all why not contact us at the LVTC and ask - we can add the answers to this section.


Absurdest-ever argument against LVT

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Under Brighton prom #2
From the "Guardian's Comment is Free" website, this must surely deserve some sort of prize as the absurdest-ever argument against LVT

"So someone who earns £1million a year and owns no land (or lives in a small flat) pays no tax, and a pensioner on nothing but the state pension who happens to live in an average house in Battersea, inner London, that he bought for £200 in the 50s would pay loads of tax?"

One could also avoid LVT by living rough. If there was LVT, would the homeless people who are living under the sea front at Brighton be joined by millionaires who were avoiding the LVT they would have to pay if they remained in their houses in Kensington?

The fact that the commentator had to postulate an almost impossible situation supports the case beautifully.
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Would LVT really hit the homeowner?

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LVT advocates tend to hold back through fear of an angry reaction from homeowners, but consider this. Most land value is in land used for productive purposes, that is, land used for wealth creation other than agriculture. That must be so. The most productive land is not used for housing. But the value of land in commercial use is presently depressed by taxes that fall on business. The chief amongst these are taxes nominally paid by labour such as Income Tax, NI and PAYE, as well as VAT, but whose burden actually falls on employers, forming part of their labour costs and depressing their profits. Were these to be removed, business profits would rise sharply and with them, the ability of business to pay higher rents. A further factor depressing the price of land used for commercial purposes is that a significant proportion of land rental value is collected already, if inefficiently, through the Unified Business Rate (UBR), which would be superseded by LVT.

Thus, as existing taxes were phased out, the rental value of land in commercial use must rise sharply, and with it, provided that LVT is phased in gradually and valuations are frequent, the share of LVT collected on such land in relation to the total from all land.
 

How would the LVT liability be shared within a block of flats?

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This is best understood by first consider a simple example, such as a 10 storey block (with a lift) with one flat on each floor, each flat being identical in plan. At a first approximation the land value tax liability would be shared equally.
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How does planning zoning affect LVT valuation?

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When valuation is made for LVT assessments, it is assumed that each plot of land is in optimum use in accordance with the planning system. A criticism often made is that there can be uncertainty about what the planning authorities would allow. Such a criticism is valid only if valuations are based on selling prices, since market values take account of the possibility of planning consent in the future.
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Forestry would become uneconomic under LVT

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"The reason why such asset taxes are a bad idea is because there is no obvious reason why the mere possession of an illiquid asset should correspond with ability to pay on an annual or any other periodic basis. Consider planting a forest for commercial timber for example. Each year, the value of the timber goes up, but according to you the owner should have to pay a tax on the rental value of the land every year - though goodness knows how you intend to assess that - even though he won't have any income from that forest for 30 years when the timber is ready to fell with which to pay the tax!

It is interesting how arguments against LVT have to invoke the hardest of cases. Yet this objection can be answered in a way that actually demonstrates the case for LVT very nicely.

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How might LVT be implemented now?

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LVT - a ten point plan for introduction

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Is there an actual example of LVT legislation?

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The former London County Council introduced a Bill to the 1938-39 Session of Parliament for the implementation of site value rating, based on annual rental values, within the administrative county of London. It was of course rejected, though, interestingly, on a technicality. The drafting of this Bill comes close to what we would regard as the model for the collection of annual rental values for public revenue.

The London Rating (Site Values) Bill 1938.
 

How is land valued?

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Details of the practical techniques for land valuation are described in the reports produced by the surveyors who conducted two surveys in Whitstable, Kent, in 1964 and 1973. These days, the task would be simpler due the availability of computerised geographical information systems (GIS) which ease the task of number-crunching.
Report of 1964 survey
Report of 1973 survey
 

How much could LVT raise?

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This question "how much could a land value tax raise" is constantly put to us. We in the LVTC have always answered with a vague "enough", and then gone on to explain why we are vague on the subject. The question is in an inappropriate one. It is impossible to give a direct answer to the question because it depends on what existing taxes are removed.
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What would be the impact of LVT on pensioners?

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The Campaign needs to give further attention to the criticism that the introduction of LVT would force elderly people on small fixed incomes out of their homes. This comment we have received describes a not unusual situation...
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FAQs about LVT and the planning system

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How would LVT interact with the British planning system? The Campaign received a list of questions on this subject recently from a research student. The questions and our responses are published here as they are so often raised.
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