Land Value Tax
Over 40 years ago I became a socialist when I understood how the world is run in the interests of those with wealth - I considered this to be unfair.
Land Value Tax is the most important tool I have met in those 40 years to correct this unfairness - and it requiries a tiny amount of history to understand why.
History is rent
Land is stolen or purchased then used to extract rent from those who do the work.
The Norsemen (Vikings) raided France from the 8th century onwards, stealing land, settling down and establishing their hierarchies - the weakest worked, the strongest lived off rent.
Our country was stolen by a bunch of murderous Norman thugs who crossed the channel with William the Bastard in 1066. William put all land in his own name which is why the whole country is still legally "owned" by "the crown" and why you don't "own" your home when you purchase it - you are free to hold it - you have purchased the "freehold".
I say "bunch of murderous Norman thugs" advisedly because they certainly weren't "ye chivalrous knights of olde" of fiction. These were marauding gangs of thugs who wandered all over Europe stealing anything they could lay their hands on (with a good bit or rape and pillage on the side) and killing anyone who got in the way. Not a pleasant bunch.
William was quick to place family and supporters into positions of power within the church which rapidly, became the largest landlord in the country - making its living from rent - tithes charged against those who did the work.
Landlord and churchman have marched together through English history living off the backs of those who do the work.
English history is full of conflict over the right to live off rent. Tenants are forced to fight for landlords so those landlords can continue to extract rent. You slaughter people in battle so you can continue to be exploited by your landLord.
Two examples in Derbyshire
Gernon de Montfichet extracted rent from peasants in Montfiquet in Calvados, Normandy.
After waving his hatchet around at the Battle of Hastings he was rewarded with land and his family became the Cavendishes, the Dukes Of Devonshire, the owners of Chatsworth House - they still live off rent.
Ways of seeing
I love visiting Chatsworth and walking in the grounds. I love looking down on it in the Derwent Valley - I even take business contacts from abroad to see it. It's a knock-out!
However, like many, I see things in two ways. I see the beauty of the landscape, the stunning buildings and the beautiful artifacts inside the house and in the grounds.
I also see the labour of the peasants who paid/pay the rent. I see the labour of the miners who dug the coal to pay for it all. I see the vastly different living conditions of those who worked and those who took the rent. I see the skills of the designers, labourers and artisans who built the house, landscaped the grounds and created the artifacts.
How many acres did the Cavendishes plough themselves? How many bricks did they lay themselves? How many artifacts did they create themselves? How much work did they do themselves? They take and they spend - and that's about it.
The best they can say is "we look after it and manage it, we hold it in trust for posterity" - well, their land agents and others do the managing - and the "trust" part is simply a way to avoid tax!
I see the bloody conflicts between landowners and tenants in which the Cavendish family played such a major part, including the Great Revolt of 1381 and the many agricultural and industrial revolts and rebellions since - many crushed by the Cavendishes.
I see labour. I see 1,000 years of rent. I see exploitation. I see one group living an idle life of leisure, while another, the majority, do the work and pay for everything.
It's not jealousy (many of us have made money!) - it's simply a way of seeing the reality behind the surface veneer of aristocratic society. Scratch that veneer, or threaten their wealth, and they may turn very nasty indeed.
Robert de Candos extracted rent from peasants in Candos in Normandy.
After waving his sword around at the Battle of Hastings he was rewarded with land and his family became the Chandos-Poles, owners of Radbourne Hall - they still live off rent.
1,000 years of rent - no wonder you can spend three or four days a week "riding to hounds" or popping down to your Chelsea pied-à-terre for a bit of shopping therapy.
Where is wealth now?
You've made your money, or inherited your money, you've bought your country estate, city pad, bling cars, bling watches, bling jewellery, designer this, designer that, helicopter, private jet and yacht (the nouveau riche are such show-offs - they have no "class"!) - so what do you do with the rest? You certainly don't want to pay tax on it - heaven forbid!
Land is considered to be a safe-haven for the wealthy, especially if ownership can be hidden behind a trust registered in a tax haven. The beauty of land is there is no tax on it!
James Dyson put his excess wealth into land, over 30,000 acres of it, making him the second largest landowner in the country after the crown. He makes £1.6 million each year from taxpayers via grants from the Common Agricultural Policy and he takes rent from tenants.
I am not picking on Dyson - he is just one of many newly wealthy. The old money, the 600 aristocratic families descended from those who used violence to steal the land in 1066, have doubled their wealth in the last ten years and are now more wealthy than they were at the peak of Empire under Queen Victoria!
LVT to the rescue ...
Land Value Tax is:
It isn't a tax on land, gardens, homes or buildings, it is a tax on the value of land. Value depends on where it is and what it can be used for.
Important: LVT is not a "Land Tax" - we continue to hear politicians, even Labour polticians, making this mistake.
A Land Tax would be a tax based on land area - no matter where it is or what it is worth. Land Value Tax is what is says on the tin - a tax on land value.
Those with a lot of expensive land will pay most - they can afford it.
The current system is unfair - Council Tax payers in South Derbyshire pay over twice as much as those in Kensington and Chelsea.
- Easy to collect.
LVT is paid by the freeholder, not by tenants. Freeholders are listed in the Land Registry.
All land that has changed hands since 1862, about 25 million titles, 86% of all land in England and Wales, is listed on the Land Registry. Freeholders will have six months to register the remainder before LVT is implemented.
- Impossible to avoid.
You can't hide land in a safety deposit box or in a tax haven.
- A replacement - not a new tax.
LVT is not a new tax - in fact the total "tax take" of government can remain exactly the same as it is now.
LVT will replace existing taxes, particulary regressive ones that fall unfairly on those with the lowest incomes. Initially it would replace all property taxes including the unfair Council Tax and the Business Rates that are destroying our town centres.
Many of us would like to go further and use it to replace other taxes, like VAT which is a tax on sales, and therefore a tax on manufacturing, and which falls most heavily on those on lower incomes.
These attributes make LVT unique amongst taxes - which is why the tiny minority with most wealth will hate it because their expensive tax lawyers won't be able to find ways round it - as long as we also get rid of trusts and the use of tax havens.
The impact of LVT
As well as being simple, fair, easy to collect and impossible to avoid, LVT will have a massive impact on society.
- Land will become less desirable to the wealthy, so its price will fall bringing down the cost of land for farming and development.
- Those living off rent will find much of that rent taken up in tax - they will either have to work the land themselves (I would love to see Peregrine "Stoker" Cavendish on a tractor!) or sell some of it to those who will work it.
They will have a problem if they try to put up the rents - it will become uneconomic for tenants to make a living and landlords will get no rent at all! The market decides.
- Unused land, with planning permission, will be taxed based on what the developer paid for it - so it becomes uneconomic to sit on a landbank waiting for prices to go up - so more homes will be built.
- Land in highly developed areas, like the South East, will become more expensive because of where it is - this will encourage business development outside the South East bringing more jobs to the regions.
- We, society, increase the value of land by granting planning permission. The land owner makes a windfall profit by doing nothing. LVT claws back some of that windfall.
LVT in a nutshell
- LVT is a nationally determined percentage tax on the open market value of all land.
- LVT is not a tax on buildings or gardens - it is based on land value only.
- "Open market value" is what someone would pay for the land if it was sold.
- Land value depends on where it is and what it may be used for.
- You can't change the location of land, or hide it in a tax haven.
- The planning process determines what land may be used for.
- Farmland in Lincolnshire has a higher market value than farmland in Snowdonia.
- Building land in central London has a higher market value than building land in Doncaster.
- LVT is not a new tax, it will replace existing taxes.
- Intially LVT will replace all property taxes - including Council Tax.
- LVT is paid by the land owner (the freeholder) not tenants.
- LVT is collected nationally but distributed to Local Authorities based on local needs.