Land Value Taxation Campaign

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How might LVT be implemented now?

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LVT - a ten point plan for introduction

  1. The next scheduled Business Rate revaluation should be a valuation of all land: land in residential use or with full planning consent for residential development; land in business uses or with consent for business use, agricultural land and vacant land, to be assessed on annual site rental values only, disregarding the value of all dwellings and other improvements.
  2. Initially, ie in year one of LVT, land in residential use should be subject to a locally determined land value charge set by the local authority and raising a similar amount to the present Council Tax. Land in commercial and agricultural use should be subject to a nationally determined land value charge set by Central Government, and raising a similar amount to the UBR. In successive years, the locally determined LVT charge levied on land in residential use should be phased out during a period of, at most, one parliament. At the same time, land in residential use to be subject to an increasing national charge, eventually at the same rate as land in business and agricultural use ie at a standard national rate of LVT.
  3. Billing and collection of the charge would be by the local authority using the existing administrative machinery.
  4. Services provided by local authorities to national standards should be fully funded from the national LVT fund; examples include classified roads, police and fire services, education and social services.
  5. Local authorities should in addition receive a capitation payment, paid from out of the national LVT fund, based on the number of residents, which they would be free to spend as they wished. This might be dependent on the age of the residents eg a higher payment might be made in respect of residents under 20 or over 70 years old.
  6. Local authorities should also receive a payment proportionate to the total land value within their area, which they would also be free to spend as they wished.
  7. The initial rate of LVT to be set so that the median taxpayer is paying much the same as at present, with roughly as many “winners” as “losers”. Because vacant and agricultural land would be included in the assessments, the extended tax base means that the total yield would be more than under the present system, permitting substantial cuts in other taxes. We would give priority to the raising of income tax thresholds, with the initial aim that this should be set at a level based on working a 35 hour week at the national minimum wage. It should be remembered that for the most part, the “losers” will be those who have held land out of use or who have poorly developed properties that have not been using the advantages of the site to full effect.
  8. Single occupancy relief to go. To the extent that pensions and benefits are index-linked and tied to housing costs, this ought largely to compensate for any possible increase in the property tax burden on the retired. It may, however, be necessary to review state pension arrangements to include a component related to the level of LVT. In general, however, a property tax based on site value assessment would impose less of a burden on single occupants than a tax based on the selling prices of houses and flats. Properties in single occupation tend to be flats and small houses in which the land value is a smaller proportion of the total property value than is the case with large residences suitable for families, and thus single occupants are taken care of as far as it is reasonable to do so.
  9. There will be a continuing need to keep under review which local services are paid for from the local fund and which from central government taxation and by direct charging.
  10. Valuation should take place annually based on statistical data. Substantive revaluation should take place every five years.
  11. PROPOSED LEGISLATION The form of site-value taxation which the Campaign advocates is substantially the same as was put forward in the London Rating (Site Values) Bill 1938-1939. If passed by Parliament, the Bill would have introduced this fiscal measure in the administrative County of London. In the event, it fell on a procedural technicality. Clearly the terms of the 1938-1939 Bill are indicative only, and would have to be updated and adapted to current conditions and, where applicable, would be worded to satisfy the requirements of Scots law and Northern Irish law.
Revised 6 February 2010
 

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