Land Value Taxation Campaign

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Punishing the Republic of Ireland

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Few, if any, commentators have remarked that with a so-called hard border, the main victims will be inside the Republic, since the EU's rules will restrict the flow of goods INTO the Republic. If they have to come from Continental Europe, either they have to be driven across the congested roads of the Midlands and North Wales, or they will have to be shipped direct. The latter is going to be much more expensive than getting the goods from the UK.

Compare the distances.

Dublin to Rotterdam is 667 NM, sailing time 2 days, 3 hours
Dublin to Liverpool is 126 NM, sailing time 10 hours
Dun Laoghaire to Holyhead is 61 NM, sailing time 3 hours.

The differences will add very substantially to transport costs, which will add to the price of goods in the Republic. To make matters worse for those in the Republic - it has no large container port comparable to Southampton or Felixtowe. There is not the traffic to support one, so the economies of very large container vessels will not be achieved. One would have thought that Vradakar would have had his eye on the ball and was concerned about this. Seemingly not.

 

Fear of immigration

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The fear of immigration is explained by Ricardo's Law of Rent, which nobody understands any more. Incomers create a land shortage which tends towards higher rents and drives down wages. This is not a problem if a system of land value taxation (LVT) is in place, because

  1. the rising rents become buoyant source of public revenue to pay for infrastructure and services
  2. the immigrants add to the stock of wealth being produced.
  3. land and premises are always available at competitive rents, so that there is never a shortage of work opportunities or places to live.

Otherwise, immigration becomes a source of conflict, as the newcomers are competing for homes and jobs.

Here is a video which explains Ricardo's Law of Rent.

https://www.youtube.com/watch?v=yyv1xYDWAxk

The EU should have required both Freedom of Movement and LVT. The first without the second is a recipe for failure.

 

A Georgist EU?

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What if the EU had been constructed on Georgist principles, with the following conditions for membership?

Read more...
 

Vacant buildings law collapses

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Vacant buildings and sites used not to be subject rates, the UK national tax on business property. The Rating (Empty Properties) Act 2007 removed this exemption. We were sceptical about the legislation at the time and events have proved us right. Property owners have been trying to challenge the legislation and have now got their way. The owner of a building in Sunderland took the Valuation Office Agency to court. The case, Newbigin v Monk, went to the Court of Appeal in 2015 and then to the Supreme Court. The decision of this test case, announced on 1st March, was in favour of the owners.

Despite what the judges claim, we would argue that this pulls the rug from under the vacant rating legislation. It gives the green light to owners to leave buildings unoccupied and sites derelict, under the pretext that they are "under redevelopment". At first sight, one might expect that owners would be keen to avoid having sites vacant. Because of the way the land market and the banking system interact, however, it is often financially advantageous to hold premises and sites vacant, especially at the low points in the land price cycle; there are instances of sites which have been through two cycles whilst remaining vacant for the entire period, despite development consents. This promotes urban decay and ensures that economic recoveries will be retarded when the cycle begins to pick up.

The judges summarised the point at dispute as follows: "Does a commercial building which is in the course of redevelopment have to be valued for the purposes of rating as if it were still a useable office? That is the question raised in this appeal. An analogous question would arise if the building were a former hospital which was in the process of conversion into flats. Should it be valued as if it were still available for occupation as a hospital? The question is of general public importance to the law of rating and valuation."

The central issue in this appeal was whether the premises should be rated by having regard to the physical condition they were in on 6 January 2012 (the date of assessment) or whether para 2(1)(b) of Schedule 6 to the 1988 Act as amended by the Rating (Valuation) Act 1999 (“the 1999 Act”), requires a valuation officer to assume that "that immediately before the tenancy begins the hereditament is in a state of reasonable repair, but excluding from this assumption any repairs which a reasonable landlord would consider uneconomic. As the Act puts it: "Where the rateable value is determined with a view to making an alteration to a list which has been compiled (whether or not it is still in force) the matters mentioned (in sub-paragraph 7 below of the decision summary) shall be taken to be as they are assumed to be on the material day."

In making a judgement in favour of the landlord, the discussion specifically mentions the principle of rebus sic stantibus, referring to a series of cases as far back as Poplar Assessment Committee v Roberts [1922], and to the principles set out the Rating and Valuation Act 1925

The judges argue that their decision would not undermine the provisions of the Rating (Empty Properties) Act 2007, which increased the unoccupied business rate to make owners of unoccupied property liable for the same rate as those payable on occupied properties, since parliament had also introduced into the 1988 Act, in section 66A, an anti-avoidance power, which, to date, had not been used. The judges inferred that the practice before the Court of Appeal’s decision had not caused a serious problem and that the power could be exercised, if needed, for example to prevent avoidance by the partial implementation of a scheme of works and its deliberate non-completion.

In the light of the law as it is, this outcome was inevitable; the judges' decision was correct. It is what happens when valuations are based on anything other than site values only. Anti-avoidance powers just add another layer of uncertainty and provide endless scope for dispute; it remains to be seen whether they will ever be invoked.

The full details of the judgement are given here.

 

 

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.

 
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