Campaigning for LVT - some thoughts

Saturday, 29 November 2008 00:00

There is a more interest in promoting LVT in the present state of the economy, and quite right too. But campaigners need to be very clear what they are promoting and why, and to be able to defend their position. I could not argue against some of the attacks that can be made against LVT on capital values and on no account should we be advocating Capital Value assessment.

After the Vale of White Horse results which set us back when the Scottish enquiry was in progress I would have thought we had learnt our lesson on that. Capital value assessment is impossible in the present volatile state of the market in land titles. Rental values are relatively stable as I know from personal experience from trying to let a flat. Another diversion are "threshold" or "homestead" allowances which sound like some nineteenth century American thing when you go out into the open prarie and put up a wooden house and hope some Indians don't complain about you stealing their land and come along and scalp you and your family.

If the assements are on annual values then the question of thresholds does not apply and the use of annual values also gets round the problem of questions over planning consents. Under annual values, if there is no consent for development then the best existing use value applies and there is no room for argument. Capital value assessment is the main reason why LVT went bad in Denmark and the property tax was taken off in Sweden, people were being asked to pay tax on a bubbled-up value, when annual values had stayed much the same. Why some people think there is a problem with levying LVT on rental values is a mystery. Everyone understands rent, because everyone has rented at some time, most commercial property is rented, so is much agricultural land and they is a buoyant market in residential lettings.

DON'T ADVOCATE CAPITAL VALUE ASSESSMENT. It introduces a confusion. LVT is not a tax on the price of land titles. It is a claim on a share of land value. The aim is to collect land rent for public revenue, and strictly speaking it is not a tax at all but a payment for benefits received. LVT on Capital Values quickly gets conflated into the concept of a Wealth Tax. With annual values there can be no question of thresholds. And why would there be a need for thresholds? Immediately the suggestion introduces an element of arbitrariness into the system, and after that it is downhill all the way. Compromise from the outset and the situation will never be put right later.

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