When the Labour Party included a paragraph in its manifesto for the UK’s 2017 election stating that it would “initiate a review into reforming council tax and business rates and consider new options such as a land value tax”, the mere suggestion of a land value tax (LVT) was unsurprisingly derided by Conservatives and the right-wing press as “Marxist” ideology. Of course, this is nonsense, as Chris Game explains in his article “Land Value (or Garden) Tax – more Adam Smith than Marx”.
Some of my fellow LVT advocates have suggested to me that one of our most important tasks is to convince people on the right of the benefits of land value taxation – no easy task given the way the idea is frequently attacked and distorted by the right-wing press and conservative politicians.
However, there are several politicians, economists, journalists and think tanks on the conservative and libertarian right who have supported the idea. I thought it might be handy to put together a collection of articles, along with extracts, and videos supporting LVT from a right-wing perspective that can be shown to sceptics on the right, as well as perhaps to give us an insight into the arguments that may be useful in trying to convince such people.
I’ve focused on people on the right who happen to be LVT supporters here, rather than LVT supporters who happen to be right-wing. I’ve also chosen to stick to more modern times, rather than go back to the days of Adam Smith (although Smith’s views are included in the article on Geo-libertarianism). A couple of the sources do not exactly provide ringing endorsements for full taxation of all land, but do at least accept some aspects of LVT. If anyone spots something that I’ve missed then please let me know. Links to all sources provided.
Nick Boles (Conservative MP, 2010-)
“In current circumstances, one of the most pernicious taxes is national insurance as it punishes employers for taking on new people and, because we have a fairly free market in labour, reduces people’s take-home pay just as surely, though a little more indirectly, than income tax. But if we want to cut this tax on jobs and wages, we need an alternative source of revenue that is reasonably easy to collect and which is less damaging in its effects on people’s incentives to invest, expand and hire new people…
[A land value tax] would deter speculative land banks and would encourage property owners to develop brownfield sites and put rundown areas of inner cities back to good use. Over the longer term, it would lower the price of development land and help us get off that quintessentially British rollercoaster of house price booms and busts…
Using the proceeds of a targeted Land Value Tax to cut the national insurance tax on jobs might give the British economy the crucial leg-up it needs.”
David Curry (Conservative MP, 1987 – 2010)
“What puzzles me is why, if he really wants a radically energised planning system and is prepared to have a huge fight to get one, Mr Brown has not gone for the much bolder option – a tax on the value of the site itself. This tax would take the form of an annual charge on the value of a site, levied according to its status in the local plan, whether or not it was developed. Its advocates claim that it would bring idle land into the best use for it, leading to an increase in supply and a decline in price.
Rather than capturing planning gain on one site at one moment, a land value tax would also recover value from neighbouring sites that had benefited from the development. Local authorities would collect more tax by the mere act of designating (or zoning) suitable land for industrial or residential development, thereby increasing its value even if no development took place. Landowners would have no incentive to hold sites back from development. Councils, by contrast, would have an incentive actively to pursue re-zoning.”
Conservatives for Liberty
“One of these policies could be the replacement of council tax and stamp duty land tax (SDLT) with a new and simpler land value tax (LVT) on the unimproved value of all UK land. As derelict land in close proximity to urban infrastructure such as roads and railways is more valuable than Greenfield land with little nearby infrastructure, the redevelopment of poorly-utilised inner city land by its owners over new Greenfield sites would be encouraged by the LVT.
Consequently, the LVT would significantly assist in the prevention of undesired urban sprawl and the preservation of rural settings; making its introduction an effective replacement to green belts.
The elimination of SDLT would help to stimulate the UK property market; something that will need to occur if we are to encourage more housing development in the UK. Another added bonus is that the LVT would be very difficult to evade. This is because British land cannot be physically moved beyond the jurisdiction of UK tax authorities.”
Samuel Brittan (Thatcherite journalist)
“Yet, far from being an outrageous Bolshevik idea, the case for a land tax is one of the oldest and least disputed propositions in economic thought…
The basic point is that the supply of land, with rare exceptions such as reclamation in the Netherlands, is fixed. But because of its scarcity owners can command an income over and above the normal return to the enterprises placed upon it.”
David Cowan (Conservative activist, Tory Reform Group)
“The introduction of a LVT ought to be viewed as the most legitimate way to raise new revenue.
For too long, landowners and speculators have been able to reap sizeable economic outputs from rising land values, though contributing little economic input. One example being how the construction of the Jubilee line sent surrounding land values shooting up to £10 billion, to the benefit of landowners, while taxpayers still had to foot the bill….
Properties of all shapes and sizes are already overtaxed by the likes of council tax, business rates, stamp duty land tax, planning charges, and landfill tax. If these taxes were to remain then LVT would be burdening people with further unwelcome costs.
Instead, LVT should replace those property taxes – either entirely or at the very least mostly…
The LVT would not harm enterprise. It would boost productivity, discourage urban sprawl, could replace the plethora of punitive property taxes, and would be relatively simple to administer and collect.”
Adam Smith Institute (ASI)
“Reform business rates and council tax into a pure Land Value Tax on unimproved land values so that capital investment is not taxed.”
“The ASI wants business rates to be stopped from taxing capital. Its reasoning is as follows: business rates tax property values, so they effectively tax both the land a property is built on, and what sits on top of the land (bricks, mortar, machinery).
“Taxing land values is a relatively good way of raising revenue, because it does not discourage production. But taxing property discourages construction, improvements and investments in new machinery,” it says.”
Ben Southwood (ASI)
“Tax unimproved land values, not transactions. Stamp duty land tax destroys huge amounts of economic value and prevents allocative efficiency—it should be abolished. Council tax and business rates disincentivise improvement and bias buildings toward certain uses—they should be first merged, and then levied only on unimproved values.”
Sam Bowman (ASI)
“If and when they do revalue business rates, there’s a disincentive to anybody who is a business or is a land owner to improve the property that they’re on, and we don’t want that. What we want is them to only be paying the value of the land, and to try and get as much as possible from that land, by building as much on that property or the most profitable thing they possibly can. We’d get that with a land value tax, we don’t really get that really from business rates.”
“A good rule of thumb is that if you tax something, you get less of it, which is why taxes on capital are such a bad idea. But since there’s a fixed supply of land, taxing the value of land doesn’t get you less of anything. Nice one.”
“It’s a bit silly to call this a ‘garden tax’, since council tax valuations already include gardens. Unless the Tories are proposing to exempt gardens when we calculate how much a property is worth, they too favour a ‘garden tax’.”
Tim Worstall (ASI, Forbes)
“One reason to like this tax – as Milton Friedman pointed out – is that it’s the least distortionary tax there is. No one is making land anymore, so we’re not going to reduce the supply of it by taxing it. That is true of everything else – tax apple consumption and people eat fewer apples, tax incomes and some work less, tax profits and people set up fewer businesses. But land is in fixed supply, so we’re not getting less as a result of gaining our necessary tax revenue from it…
It’s also right that everyone should pay it. Yea even those horny handed sons of the soil, the farmers. Land that’s on top of some Dale is worth spit and so would pay near nothing, someone using Surrey to grow turnips probably should be encouraged to make better use of it.
For, yes, having to pay tax on the value of the land does indeed mean that people will have to allocate the land to a use which will producing a decent return on that value. This is why the OECD has insisted that “repeated taxation on property”, by which they mean the LVT, makes the economy more efficient, unlike all other taxes.”
“How much economic activity doesn’t take place because of the imposition of different types of taxes?
Repeated taxes on property, that is business rates, have the lowest deadweight costs of any form of tax. The only one that could be better is a proper land value tax.”
“As Henry George pointed out to us all the art of land value taxation is to tax the unimproved value of said land. Another way to say the same thing is that we’re trying to tax the value that society adds to the land, not what the owner has added themselves. Land in the centre of London has a higher value than much land elsewhere just because it is surrounded by London. It seems reasonable enough that some of that value created by London should be taxed to pay for London.”
“That is, business rates are a crude proxy for a land value tax and as a crude proxy they’re not quite good enough. What we want instead is a proper land value tax, one that taxes the undeveloped value of that specific plot of land, that value being determined by all the other development that has taken place around it. What is actually developed upon that plot should not be taxed in the slightest. In that manner the retailer, the occupier, will not be bearing any of the cost of the rates, the developer will not be yet the landlord of the land itself will be carrying the full burden.”
“For a reasonable analysis of how zoning (or in the UK, planning permission) works is that those who currently own houses in desirable, low population areas, vote to get the zoning policies which keep those areas low population at no financial cost to themselves. The point of land value taxation being to insist that they carry that cost of excluding others from building houses in such desirable areas.”
“Business rates are not perfect as they rely upon the rentable value of the building, not the land it is upon. But they are the closest we’ve got to a good tax, a land value tax…
If you happen to be trading in a property hot spot (and, indeed, your brilliant business may have contributed to the success of that place, as in Southwold and Port Isaac, areas with notably good independent shops that will be hit by rate hikes), or big brands have arrived and now surround your enterprise, then your valuation goes up and you find yourself catapulted out of the small business relief zone.
Yes, that’s the point. There’s a limited supply of land in those hot spots, taxing that land is the least distortionary tax that we have. It’s a good tax. And note what is being taxed – that the other people around that property are adding value to it.
But the revaluation works for the online retail giants. According to CVS analysis, the nine Amazon distribution centres in England and Wales will be able to knock £148,000 off their property tax liabilities this year (despite annual sales in excess of £6bn). Similarly, fashion retailer Boohoo gets 13% knocked off the bill for its distribution centre in Burnley; so it goes on.
Quite so, this is what we want to happen. There’s a limited demand for chi chi shopfronts in Burnley and there’s lots of land. Thus we tax the use of low value land more lightly than the use of high value land.”
“However, we also know that different taxes have different deadweight costs… We even know a rough order of ranking of those deadweight costs. Transactions taxes have vast deadweight costs: at least one official report on the financial transactions tax (the report from the EU itself) tells us that that tax would make the whole economy so much smaller that it would actually lose tax revenue by being levied. Lower than that are wealth taxes (a once off wealth tax that no one knows is coming does not, but a regular one does), then capital and corporation taxes, then income taxes, then with still lower deadweight costs consumption taxes (like a VAT or sales tax) and then finally, at the bottom, we find that repeated taxes on non-movable property can even have positive deadweights. And that last can also be called a land value tax.”
Institute of Economic Affairs (IEA)
“For the Institute of Economic Affairs (IEA), this is the solution: Property taxation should be completely overhauled, with the long-term aim of abolishing council tax, business rates and stamp duty, and replacing them with a Land Value Tax on commercial land and a tax on imputed rent for residential property.”
“If properly constituted, a tax on location value may cause disproportionately little economic damage, because land cannot be hidden or taken overseas to avoid the tax and owners cannot respond to the tax by producing less value in its location”
“The move away from existing property taxes and towards a land value tax and a tax on the imputed rent from owner-occupied housing (or a housing consumption tax) would create a tax system much more conducive to growth. Existing taxes on business property would be abolished and homeowners would no longer suffer stamp duty when they moved to take a more productive job. The tax on imputed rent would end the bias against rented property that exists in the UK tax system and a land value tax is well understood by economists to be one of the least growth-inhibiting taxes available.”
“The tax has attracted many proponents because it is as close as possible to an ideal tax – it is efficient (does not alter economic activity), equitable (the richer tend to have more land than the poor) and has revenue raising potential (the tax is difficult to avoid or evade). It also recognises land as a precious finite resource. More importantly, if implemented properly it can potentially seed economic growth, lead to greater productivity and even energise house building (as well as helping stabilise the cycle in land prices).”
Kristian Niemietz (IEA)
“Now imagine local authorities had to finance all of their expenditure from their own tax revenue, and imagine a large chunk of that revenue came from, say, a local Land Value Tax (LVT). They would then have a strong incentive to grant planning permission more liberally, because this would be an easy way to broaden their tax base. That is the way to solve the housing crisis – not subsidising developers, and not subsidising homeownership.”
“Sensible tax changes would strengthen incentives to permit development by giving local authorities ‘skin in the game’. This could be achieved by, for example, replacing council tax, stamp duty, business rates and (property-related) capital gains taxes with a local Land Value Tax (LVT). Local authorities would retain 100 per cent of LVT revenue. This would encourage tax competition for residents, and it would allow local authorities to capture a part of the ‘planning gain’ (the increase in land value when planning permission is granted).”
“Likewise, the question of the private ownership of land is not one of whether private persons can possess or control or even trade claims on the use of land. The question is whether I can truly own land the way that I can truly own a spear.
I say: No. But what I mean by that is quite narrow, as with the airspace. You can own buildings – because buildings are created with labour and other non-land property… But you cannot (normally?) own the space (the “land”) in which the buildings and the soil sit because, as with the airspace, no property or labour has contributed to its creation…
In a previous piece, I argued against wealth taxes. But the reasoning of this post suggests that land taxes are not wealth taxes, for land cannot be part of a private citizen’s property. The land is owned (if by anyone) by the Crown. So the Crown might legitimately charge a fee for its use. I do not think such a charge should even be described as a “tax”. It is more like a usage fee.”
“In theory, the cost of paying the tax wouldn’t be passed on to tenants, but it would capture the “‘undeserved’ gains landowners make on the investment of others, such as the government improving nearby transport links.”
One could also argue that it would be an excellent way of discouraging the excesses of the British property market.”
“There’s a sense in which all taxes are antagonistic to free enterprise – and yet we need taxes… So the question is, which are the least bad taxes? In my opinion the least bad tax is the property tax on the unimproved value of land, the Henry George argument from many, many years ago.”
“Governments can collect taxes best on things that don’t move. Land is an ideal basis for taxation because you can’t take it away.”
David Nolan (founder of the Libertarian Party)
“What kind of taxation is least harmful?….My own preference is for a single tax on land, with landholders doing their own valuation; you’d state the price at which you’d be willing to sell your land, and pay taxes on that amount. Anyone (including the tax collector) who wanted to buy it at that price could do so. This is simple, fair, and minimizes government snooping into our lives and business.”
Various Libertarian sites
“English Common Law is based on natural relations within society, and not arbitrary decrees and statutes, and so it can be seen that the right to assess landed property for a land-related payment is merely a recognition in our law that land ownership cannot be absolute, that land anywhere in the world existed before any human society was formed, that the land that we live on forms a common social resource, and so it not genuinely “ownable” by anyone in any country, society or time period…
The original land grants made to Norman nobles could only be made in the context of English Common Law, which provided for exactions to be made by the Crown. It is clear that a common social resource—the land—a resource that naturally exists, is not the product of investment or the application of human skill and is generally not something that more can be produced of—has become monopolised by a few…
It is right therefore that the state attempt to extract as large a proportion as possible of the economic rent derived from possession of land, minerals, forestry and fishery resources, and the electromagnetic spectrum, and land taxation should be seen in this light. Given the fact that land is a common social resource, it is doubtful whether the word “taxation” is correctly applied to a land levy. What we are talking about here is not taxation of income or profits or the restriction of economic activity, but a levy that is based on the fact that no original ownership of the common resources ever existed.”
“The term “geo-libertarianism” was coined by economist Fred E. Foldvary. The “geo” in “geo-libertarian” stands for Georgist. Georgism is the economic belief that people should keep what they work for, but the benefits of land ownership should belong to the community as a whole. Thus, they support a land value tax (or LVT for short). Straight away, you probably see that this view is at odds with the common libertarian idea of property being an extension of the individual. Georgism stresses the idea of community, and libertarianism stresses individualism. However, these views don’t necessarily to contradict each other if the community exists to protect the rights of the individual…
One of the first Americans to identify as a libertarian was also a Georgist. His name was Albert Jay Nock. Milton Friedman also referred to the land value tax as the “least bad tax.” David Nolan (the founder of the Libertarian Party and the creator of the Nolan chart) claimed that a single tax on land was the “least harmful” kind of taxation.”
“The moral argument starts from the same place as John Locke’s famous discussion of property, with the claim that each individual is the sole rightful owner of his body and labor. Because George accepted Locke’s idea of self-ownership, he argued that most forms of taxation are unjust – essentially a form of theft. If you own your labor, and you choose to sell your labor to somebody else, no third party – including government – can legitimately demand that you give them a portion of the income you’ve received. To do so would be, in effect, to steal your labor.
But natural resources are not the product of anyone’s labor. They simply exist, on their own, as a free gift of nature. And because nobody created them, nobody has any better claim on the raw value of those resources than anybody else…
Natural resources, George thought, belong to humanity as a whole, and not to any particular person. A tax on the unimproved value of those resources is therefore one way in which humanity as a whole can reclaim what has been unjustly monopolized by a few, and do so moreover without violating individuals’ self-ownership.”