Land Value Taxation Campaign

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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.

Banking the rotten heart of capitalism?

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Will Hutton writes in the Observer about banking scandals as lying at the rotten heart of capitalism. That was two years ago but other commentators keep on saying much the same thing. We disagree. The rotten heart of capitalism is the private appropriation of the rent of land, something which Hutton and most other commentators never talk about. Without it, the banking scandals could not happen.

The standard banking model is the creation of money at no cost, for land purchase. The banks use this created money to purchase land which is then leased back to the "borrowers" for the duration of the loan. The "interest" paid by the borrowers is, mostly, nothing other then rent of land.

It is a smoke-and-mirrors business which makes it hard to see what is going on. But if the preconditions are not removed, no amount of bank regulation will prevent repeat performances.


The free market fallacy

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I came across this the other day.

"It is really very simple. Capital can be allocated by markets or by central planning committees. Despite the booms and busts, markets do it better. It may be that that the booms and busts are just inevitable."

 alt Why is there a refusal to recognise that there is more to it than this?

New Swedish commuter train to boost land values

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The new commuter train service between Göteborg, Sweden's second city, and Älvängen commenced last week. With new stations serving a suburban area which has previously had to rely on bus services, it will make commuting more attractive and open up new development opportunities. The scheme is part of a big infrastructure project which has involved the rebuilding of the route to Trollhättan, on the route to Oslo, as a high speed, double track main line.

Since the Swedish tax system includes a small element of land value taxation, some of the additional land value created by this investment will return to the community. But most of Sweden's taxes are raised through punitive levies on productive activity, resulting in a high level of unemployment especially within the 16 to 25 age group, and chronically short staffing in the shops and services where they could usefully be working. It could be so different if the punitive taxes were phased out and the land value tax was put on a proper rental basis. The regular revaluation would quickly sort things out, giving the government a more reliable source of revenue and reducing the cost of employment so that more people were working and less had to be paid out to keep the unemployed in welfare.

More welfare for landowners

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A nice little welfare handout for landowners was slipped almost unnoticed into the Chancellor's Autumn Statement last week. New developments will be exempt from empty property rates from next October: all newly built commercial property completed between 1 October 2013 and 30 September 2016 will be exempt from empty property rates for the first 18 months. This is described as "a victory for the property industry, which has campaigned for a change to empty rates for years."

Osborne praised the work of the working group of MPs, led by York Outer MP Julian Sturdy, in reviewing empty property rates. He said that empty rate relief for new development would "help the construction industry".

This is doubly strange.

The Internet is changing

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The internet is subtly changing. The Financial Times, the Daily Telegraph and the Times are now behind paywalls and give limited free access. The Guardian adopted a different strategy with free access and a comments page called "Comment is Free" (CIF), paid for out of advertising. The quality of the articles is middling-to-poor, and they are mostly written by the Guardian's old warhorses. Their views are 100% predictable.

For several years, however this has provided a useful forum for discussion and the exchange of views. But the Guardian has just altered the format of its CIF website and introduced what is called "threading". Responses are gathered together instead of being in chronological order. This seems to be unpopular - an overall look at the number of comments suggests that there are less than half the number there were before.

In addition to making navigation difficult, the threading system has led to fragmentation of discussions to the point of meaninglessness. The comments have degenerated into one-liners.


High speed rail - who will benefit?

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Pro-HS2 research group Greengauge 21 says it thinks the rest of the country will benefit more than London from the high-speed link.

Tax avoidance - Labour wants your opinion

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The Labour Party has climbed onto the bandwagon of concern about tax avoidance by issuing what it calls a "Challenge Paper" which tells us that "Labour believes addressing tax avoidance at both an individual and corporate level must be a priority. At home, this means making it plain to the Crown Dependencies that we will expect them to observe the letter and the spirit of the law and being prepared to legislate if necessary. Abroad it means leading on international action to crack down on practices that cause Britain to lose out.

There is nothing there about the possibility of changing the system so that it was not vulnerable to avoidance in the first place. The paper is available for consultation until 28 February 2013, with submissions going to the "Stability and Prosperity Policy Commission" as they prepare a detailed policy document on the issue for publication in March 2013. But since Labour is, or should be, well aware of the possibilities that exist for reconstructing the tax system rather than tinkering with it, this gets things off to a rotten start.

I tried to register on line to contribute my bit but never succeeded in getting past the registration hurdles, as the website was programmed to accept only UK postcodes. That does not inspire confidence either, but if you can be bothered, here is the link.

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