Land Value Taxation Campaign

  • Increase font size
  • Default font size
  • Decrease font size
Home Blog

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.


London offices most expensive in world

E-mail Print PDF
London's West End is the world's most expensive office market once again after regaining its crown from Hong Kong's Central Business District (CBD), according to research published in Cushman & Wakefield's Office Space Across the World 2013.

The report from the international property consultants highlights the scarcity of quality space in London which has increased competition and consequently inflated office rents by 2% in the West End to make them the most expensive in the world.

"As a truly global city, London's appeal continues unabated. In conjunction with a scarcity of good quality stock, prime rents have increased over the year," said Digby Flower, Cushman & Wakefield's Head of London Markets. He added: "Equally importantly we expect rents to grow further as we get into recovery mode."

Hong Kong's CBD drops down into second place, while the Zona Sul area of Rio de Janeiro climbs from 8th last year and powers into the top three most expensive office locations in the world as a result of a 43% rental increase compared to 2011.

A related London phenomenon is the high-end shopping boom.

Read more...
 

A Land Value Tax for England

E-mail Print PDF
Rights campaigner Andy Wightman has written A Land Value Tax for England, which presents the case concisely. My only criticism is that he refers to "annual rental values" and then talks about an initial rate of around 2%, which is presumably 2% of the selling price, and therefore about 30% of rental value. Apart from the need to go over these figures, this can be recommended. It is not altogether clear if he is aware that existing taxes cut into the potential land value tax base. It is not something that needs to be spelled out in what is an introductory document as it is a difficult concept to grasp, but it means that the replacement of existing taxes by LVT sets in train a benign fiscal cycle which is precisely what a heavily indebted government needs to get out of its troubles.
 

We predicted right five years ago

E-mail Print PDF
We have been warning about inflation since 2008. We argued then that the policies that were being put into place would not work. And they haven't. Like a gambling addict on a fruit machine, those in charge of policy keep on feeding money in, hoping that the jackpot will arrive. Only there is no jackpot.
Read more...
 

Fiscal emergency declared in Detroit

E-mail Print PDF


An article in the FT today reports that "The governor of Michigan declared a fiscal emergency in Detroit on Friday, clearing the way for the appointment of an outside manager with broad powers to oversee the finances of the debt-ridden city. The emergency manager could recommend a bankruptcy filing if he or she found the city's fiscal problems were insurmountable. If Detroit took such a step, it would be the largest municipal bankruptcy in US history."

The article is illustrated by the photograph above, with vacant derelict land and skyscrapers behind. It tells its own story.
Read more...
 

Helicopter money and the supply-side blockage

E-mail Print PDF
Jessops, Central Milton Keynes

The camera retailing chain Jessops is one of a list of big name retailers which has closed in recent months. 187 stores have shut, with over 1300 people losing their jobs. What is left of the company will now become a mail order firm operating from a warehouse in Leicester, which takes the company back to its starting point. Jessops big expansion took place in the 1970s and it is, like many other of the big casualties, a victim of technical change. Digital cameras are now much of a muchness. People buy their cameras and share their pictures on the internet and view them on-screen. These changes have meant that Jessops has become an irrelevancy.

PROPERTY MARKET ISN'T WORKING
None of this would matter very much if the vacant premises were quickly recycled and put to a new use. Re-letting would give work for shopfitters even before the first customer came through the doors. But as we know, most of the vacant premises will not be brought into use quickly.
Read more...
 

VAT cut boosted eating out

E-mail Print PDF

It is unusual for economics experiments to be carried out, from which firm conclusions can be drawn. A recent one in Sweden involved the reduction of Value Added Tax for restaurants from 25% to 12% on 1 January 2012. Analysis of the results by the national statistical bureau SCB show that the monthly sales volumes for November 2012 were 7.2% higher than in November 2011. Café sales were up by 11.3%, and restaurants serving lunch and evening meals saw an increase of 10.2%. Adjusted for calendar differences and general price increases, the increase amounts to a 6.5% growth, against the general trend in the Swedish economy with a growth rate of just 1%.

Commenting on these figures, the local Metro newspaper reported that the number of employees in the restaurant sector had risen by 5,000 over the 12 month period. Interestingly, the tax cut had not led to immediate price cuts, though prices had stabilised. This suggests that restaurants had been able to charge the same prices as their customers were accustomed to paying but had been able to absorb rising costs due to inflation and other causes.

The EU commission has, unsurprisingly, questioned the effectiveness of the tax cuts in creating jobs but it takes no penetrating analysis to work out that tax cuts will eventually result in lower prices and that, consequently, more people will eat out in restaurants. Which these figures only go to confirm.

There will be knock-on effects too. Restaurants will become more profitable, and this will feed through into rents. In due course, some of this can be recaptured through the property tax. If the property tax was an LVT, at a substantial rate, most of the extra value would be recaptured as public revenue, demonstrating the general principle that since all taxes are at the expense of land rental value, a tax on the rental value of land could replace all existing taxes.
 

Banking the rotten heart of capitalism?

E-mail Print PDF
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.

Read more...
 


Page 9 of 34

We use cookies to improve our website and your experience when using it. Cookies used for the essential operation of the site have already been set. To find out more about the cookies we use and how to delete them, see our Privacy Policy.

I accept cookies from this site

EU Cookie Directive Plugin Information