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The LVTC blog, by Henry Law

The comments in the LVTC Blog are a personal view of our Hon. Secretary Henry Law and do not necessarily reflect the official policy of the Campaign.

This is a place for personal observations and comments on politics, economics, current affairs, on-going discussions on the potential for LVT to remedy some of the current ills, and the impact on Society of any of the above. 

Please read and enjoy, and feel free to respond to Henry if you have any thing you would like to add.


Fee trade area

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The Single Market is described as a free trade area. In reality, is very expensive. It means that if you want to trade with me, even if we are next-door neighbours, we can only do so legally over a 20% high tariff wall between us - Value Added Tax. In some EU countries, the internal tariff wall is even higher - 25% in Sweden. That is not much of a free trade area. Fee trade area, more like.

Green and Brown are neighbours. Green does gardening work for Brown at an agreed price of £200. Brown services Green's car for an agreed price of £200. There are three possibilities.

  1. They exchange their services and no money changes hands.
  2. They pay cash to each other.
  3. They bill each other and add 20% VAT.

If VAT is not a tariff barrier against legal trade, then what do you call it? What do you think they will do in practice? You could of course say the same about income tax. Why would Green pay Brown taxable wages when he could just pay cash under the table?

VAT and Income Tax are a pair of poisonous fruits.

 

The symbiosis of Marxism and Neoliberalism

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The current problems with social democratic parties world-wide stems ultimately from an ideological failure. Insofar as contemporary socialism has any ideology at all, it is Marxist. There is a fundamental flaw with Marx which is these days not widely known and understood. He conflates land and capital. They are separate entities.

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The Grosvenor Estate

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The death of the Duke of Westminster has drawn attention to the fact that the estate is not liable for inheritance tax as it is vested in a trust. This has led to indignant comments and charges of tax avoidance.

The Grosvenor Estate is one of several owned by aristocratic families, which together encompass a large area of Central London. The pattern of land ownership in Central London has hardly changed since 1700.

Their managers of these estates have done a good job in preserving the attractive character of at least part of the capital, protecting it from rapacious developers and local authorities who between them have ruined the London skyline.

However, it is important to remember that this land would be almost worthless if it were not for the infrastructure paid for and maintained day and night at the expense of the taxpayer, without which London could not function. In principle, it does not matter who owns land as long as those owners pay their contribution towards the cost of the services which sustain their rental income stream - ie a land value tax close to the full market rental value. From this perspective, breaking up these estates would in itself solve nothing. The land value tax is in principle just a service charge.

In practice, land ownership brings political influence. Wise owners would use that influence to secure legislation which was for the greater good. If they do not, sooner or later there will be a price to be paid.

 

Protection racketeering

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I have just been engaged in a correspondence in the FT. I argued that Brexit needs to begin by getting ourselves outside a tariff wall. I was challenged with this comment

"The EU's tariff wall is what is protecting us. Countries like the US can decimate the British wheat farmers. Japan can decimate the UK car industries (by switching the production back to Japan from the UK) and the US can do the same. New Zealand can destroy the British sheep and dairy farmers. You wouldn't remove your firewall from your computer. Why should the UK remove our EU's tariff wall?"

My response was

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Low-hanging Brexit fruit

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Exit from the EU opens up the possiblity of some quick wins, sometimes referred to as "low-hanging fruit".

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Protectionism debunked

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I came across this today in a newspaper discussion group.

"You misunderstand (bet that's not the first time someone has said that to you!) the tariffs you refer to protect the jobs of EU workers"

I responded as follows. "Yes I am well aware that is the aim but it has the opposite effect in the long run. It is one reason why unemployment is so high across the EU. It has not worked, has it?"

otherwise the markets would be flooded with products made at a cheaper cost.

"Great!

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Experts are sometimes worth listening to

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 "Macroeconomics is in a state of great confusion. The profession is deeply divided. Far from there being a body of knowledge which is generally accepted, almost every position is extremely contentious. Public discussion of economics has no coherent rationale, and governments, notwithstanding their emphatic rhetoric, cannot give a credible explanation of how it is that their policies fail to achieve the results they seek."

Wynne Godley, Professor of Economics, University of Cambridge, writing in the Financial Times in 1983.

 

 


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