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On this page:
- This is a Garden Tax - what about people with large gardens?
- Greedy landowners and corrupt valuers will fiddle the system.
- What about a widow living on a fixed income in a big house?
- You can't tax non-doms.
- LAs will fiddle the system.
- It encourages inefficiency and high spending.
- The government will rig the system.
- Making land values public is an invasion of privacy.
- It will be impossible, we don't know who owns much of England!
- It's too complicated, it's impossible to value all the land in the country.
- It will be far more than Council Tax!
- Taxing agricultural land will put up food prices.
- It will lead to over development.
- There will be endless appeals against land values.
This is a Garden Tax - what about people with large gardens?
"Garden tax" is a scare tactic pushed by the tax avoiding, landowning, non-domicile owners of The Daily Mail (Lord Rothermere), The Daily Telegraph (The Barclay Brothers), The Times (Rupert Murdoch) and The Sun (Rupert Murdoch).
LVT has nothing to do with gardens - LVT is a tax on land value, not a tax on homes, buildings or gardens!
You are not going to be charged extra because you have a big garden - LVT is not a new tax on top of Council Tax - it replaces it. However, if you do have a big garden, and you apply for and get planning permisison for a four bedroom house on it, then of course the value of that land will go up! It doesn't take a genius to figure that out!
You can build what you like on your land (subject to planning permission) and what you build will not change the value of the land. Of course, planning permission for a mansion will make the land worth more than planning permission for a cottage - simply because someone ("the market") would be willing to pay more for the land with such permission.
Greedy landowners and corrupt valuers will fiddle the system.
You mean just as they fiddle the existing tax system?
There will always be people who want to avoid their social responsibilities, who want to use the facilities provided by society without paying for them - no doubt The Sun would call them "scum".
You can't hide land in a tax haven, or bury it in a tax fiddle "to promote the British film industry" - and the freeholder pays the LVT - not a tenant or agent.
The Valuation Office Agency (VOA) has been valuing property, including land, since 1862 - it isn't a case of nudge, nudge, wink, wink, say no more!
A Geographic Information System (GIS) on the Internet will make it very easy for anyone to see when a piece of land is grossly under-valued.
Society will lock up fiddlers and confiscate their assets - so you have to be pretty stupid (or "Tim, nice but dim") to risk losing your land just to fiddle your tax bill!
What about a widow living on a fixed income in a big house?
This is a popular argument used by The Daily Telegraph and Daily Mail - usually with emotive language: "war widow" or "widow of a fallen hero". It's not the widow's fault she's alone in a large house in Chelsea or the countryside.
The widow is currently paying Council Tax so at least part, if not all, of the LVT can be afforded.
Those in homes on land with a high market value may choose to downsize - but LVT doesn't force them to.
Where the full amount of LVT cannot be found, the remainder can be delayed and recovered from the value of the land when it is sold or passed on. It becomes a "lien" (like a debt with interest) recorded in the Land Registry. Local authorities can borrow to make up for the relatively small number of such liens.
You can't tax non-doms.
Yes we can!
The freeholder may be outside UK tax jurisdiction but the land isn't. You can park your tacky and tasteless fibreglass superyacht in Monaco but you can't move land! As my mother used to say: "some people are so common!"
Unpaid LVT becomes a lien (a debt with punitive interest) on the property until it is next sold or transferred.
Should the value of the lien exceed the value of the property it will be sold to recover the LVT due.
Please see the article LVT: the most simple and elegant of taxes for more details.
LAs will fiddle the system.
Efficient and low spending Local Authorities (LAs) will resent "subsidising" inefficient and high spending LAs so they will maximise their budgets to "get our fair share".
Most LA spending is on services determined by national legislation but demand for those services will vary between LAs. For example:
- LAs in rural areas have higher spending on roads - because they have more of them!
- LAs in rural areas have higher spending on bin collection - because communites are widespread.
- LAs in areas of deprivation have higher spending on social and other services relating to poverty and low incomes.
- LAs with more old people have higher spending on residential and nursing homes.
Which services are required by law, and how much funding is provided to meet local demand, is for negotiation between LAs and national government.
Non-statutory spending would be subject to the agreement of local taxpayers (through elections) and would be funded by a local supplement to the national LVT rate. The supplement would be collected nationally along with the standard LVT and returned directly to the LA.
It encourages inefficiency and high spending.
There is no incentive for Local Authorities (LAs) to be efficient if their costs are paid from a national tax with a common rate. LAs cease to be accountable to local tax payers and they have no incentive to be efficient.
The case is quite the opposite.
The services provided by LAs are determined by national legislation and funding for them is determined by negotiation between LAs and government.
There is every incentive for efficiency - savings go towards reducing any local LVT supplement (see above).
The government will rig the system.
A government, influenced and funded by people paying more under LVT, may attempt to shift funding from national LVT to local supplements.
For example: local road maintenance could cease to be a legal requirement so funding would have to come from local supplements. This would be great news for compact, and wealthy, urban LAs such as Westminster and bring us back to the unfair system we have now.
See above for details of the statutoray and supplementary parts of Local Authority spending.
This would probably be resolved in the same way that persuaded Margaret Thatcher to drop the Poll Tax.
Making land values public is an invasion of privacy.
No it isn't.
The value of all land and property transactions is recorded by a public body, the Land Registry.
This information is available online to anyone.
A terraced house in London:
A terraced house in Derby:
It will be impossible, we don't know who owns much of England!
Correct - we don't know who owns land which has not changed hands since 1862 because landowners ensured there is no compulsory registration of land.
Landowners will have six months to register their land before the scheme comes into force. This gives them plenty of time to dig out the deeds and register them. Land remaining unregistered after six months will be transferred to local authority ownership to replace some of the community farms we have lost over recent decades.
It's too complicated, it's impossible to value all the land in the country.
Complicated it isn't.
It does what it says on the tin - it's a simple percentage tax on the market value of land. Those who advise on tricks to avoid tax will have to find more socially useful jobs to do.
Land is valued as soon as it is sold - the value is recorded on the Land Registry. Over time this builds up a pattern of land values across the country and modern Geographic Information Systems (GIS) can make this information available to us all on the Internet.
Other land can be valued by people who have been doing the job since 1868 - members of the Royal Institute of Chartered Surveyors (RICS).
Land values change year-on-year - during the agricultural slump of the 1930s land values dropped but these days they tend to rise - partly because so many people see land as a reliable investment. LVT may alter that since land will become less attractive to hedge funds, fat cats and speculators once they have to pay tax on it. This may reduce land prices which will in turn reduce the cost of new houses, which may or may not be a good thing. The market decides.
It ain't rocket science!
Click the image below then scroll down to see an example of land values in Ebensburg PA, USA.
It will be far more than Council Tax!
No it won't.
The level set for LVT will depend entirely on which taxes it replaces and what the income will be used for.
Obviously it will be less if it is used exclusively to replace Council Tax - simply because the tax base has been increased to include land that has never been taxed before.
Those who have avoided paying tax for hundreds of years will now have to contribute towards their social responsibilities - so expect loud squawks from major landowners - and they carry a lot of clout, especially in the Tory party.
The current system means that those in South Derbyhire pay over twice as much Council Tax as those in Kensington and Chelsea - for homes in the same tax band. LVT will level that out so everyone pays the same percentage based on the value of freehold land. Yes, more valuable land will pay more than the same amount of less valuable land - but that seems perfectly fair - those who can afford most, pay most - who could possibly object to that? Those who don't like it should follow the advice of Norman Tebbit in relation to bicycles!
If it is coupled with measures to remove tax loopholes and fiddles used for tax avoidance (trusts, tax havens etc.) it could be even less.
However, it might be better to consider which other taxes it could replace since many taxes impose a much larger burden on those with low incomes than on those with higher incomes.
Taxing agricultural land will put up food prices.
Farming is a business as well as a lifestyle.
Businesses are in competition with one another - the strong survive and the weak go to the wall.
Landowners pay LVT, not tenants, and if landowners try to pass on the cost of LVT to their tenants they may shoot themselves in the foot. Agricultural rents, like all rents, depend on what people are willing to pay and a tenant who cannot make an income ceases to be a tenant and the landowner makes nothing.
Of course, if landowners wish to work for a living, instead of living off the labour of others, they may indeed make money - as long as they use their land profitably.
LVT has nothing to do with whatever else society wishes to do with rural land - after all, the English countryside is one of our greatest assets enjoyed by millions. What society agrees to pay to maintain the countryside is a separate discussion.
It will lead to over development.
No it won't.
The argument goes that since LVT is paid on all land it encourages the best use of that land. "Best use" is interpreted as "most profitable" so every acre of land will be used for highly profitable housing.
This is nonsense.
Society grants permission for use through the planning process. You can't turn your large garden, or your vast estate, into housing unless you have planning permission - which you are unlikely to get!
It also comes as a surprise to many people (especially those who go out of their way to avoid paying tax) that profit isn't everything! Some people are motivated by things other than money.
"Best use" means the best that can be done given what the land has permission to be used for. Farmers have been making these decision for centuries, they are far brighter than most people give them credit for and, while a good income is obviously important, many of them love their job, love their animals, love the land they work and want to create a pleasant environment in which to live.
Of course, those large landowners who live off the the labour of their tenants and who take no active interest in what is going on, may well try to maximise their profits - so LVT taxes them for sitting on their backsides and the planning system determines what they can do with the land.
There will be endless appeals against land values.
Of course there will be an appeals procedure - that's only fair.
However, the experience of other countries is that the number of appeals is extremely low and falls dramatically as the system beds in and people become used to it.
The yardstick is simple: "what would it sell for if it came on the market now - given what it can be used for?"