A Land Value Tax for Hastings!

By Robin Holtom 

A Land Value Tax (LVT) is a levy on the ownership of land. The amount should depend upon the ‘rental value’ of the land, ignoring buildings and other developments but taking account of its location and the use to which it may be put as set out by local planning policy. 

So an LVT would target in particular those landowners who ‘bank’ their land rather than using it, in the expectation that the value will increase. These are the people who provide the disservice that Churchill refers to – see side column – subsidised by the people who live and work on the surrounding land and whose labour and creativity is adding value to the land. 

Statue of Tom Paine at Thetford
CREDIT: Andrewself at English Wikipedia

How would it be raised?

By an annual tax based on the value of a piece of land. We are always reminded by estate agents that it is “location, location, location!” that decides the value of real estate. LVT does not penalise owners who use their land or improve it. It simply taxes the land itself. 

Who should implement it?

Ideally Hastings Borough Council, though the current attitude of central government to local authorities would need a major change first.

Who would benefit from it?

Those who would otherwise lose by land value increases. People whose rents have increased out of proportion to their incomes. Local people who cannot afford to buy a home in their own town. The community of people who have created the increase in property value by their work and creativity while landowners have been sleeping. People who work in restaurants, builders, retail and so on.

Who would lose by it?

Large companies who bank land. Second and third home owners. Greedy landlords and estate agents. The large number of people who have become used to buying houses or flats as an investment rather than as a home.  Airbnb properties which are used for part of the year only, which would help reduce the erosion of community in places such as Hastings Old Town and would also help local hospitality businesses.

What effect would a modern LVT have in Hastings and St Leonards?

1. It would correct some of the divisiveness and iniquities that follow from any and every property boom. 

2. It would prevent people keeping land unused in order to cash in on future property booms. 

3. It would put a brake on rent rises. 

4. It would reduce commuting costs both to individuals and the fuel costs to the planet of unnecessary commuting.

5. It would help resolve the current confusion in local planning policy whereby Regeneration morphs into Gentrification with the negative consequences this brings for local working people.

Statue of Winston Churchill at Woodford
CREDIT: Wiki commons

 At sufficiently high levels, LVT would cause real estate prices to fall by removing land rents that would otherwise become ‘capitalised’ into the price of real estate. It would also encourage landowners to sell or relinquish titles to locations that they are not using. Real estate bubbles cause people to direct their savings towards rent-seeking activities rather than other investments and therefore often contribute to recessions. 

LVT is less vulnerable to tax evasion than many other sources of government income, since land cannot be concealed or moved overseas and titles are easily identified, as they are registered publicly. 

Nevertheless, implementing an LVT would not be easy. Big landowners usually have plenty of political power. A broad group of taxpayers would need to support it. Proponents need to tailor their message to local economic circumstances if they are to succeed politically.

Further difficulties for change, which should not be underestimated, are embedded in the very language we use. “Landlord” for example suggests a mediaeval relationship of power and status between a property owner and tenant, not just a contract. Anachronistic language creates anachronistic relationships and laws. But it could work!

It is remarkable how politicians and thinkers from very different backgrounds, circumstances and political parties have advocated a Land Value Tax. Current advocates include Caroline Lucas and Andy Burnham.

• “Ground-rents and the ordinary rent of land are, therefore, perhaps, the species of revenue which can best bear to have a peculiar tax imposed upon them.” Adam Smith(1776)

• “Men did not make the earth. It is the value of the improvements only, and not the earth itself, that is individual property. Every proprietor owes to the community a ground rent for the land which he holds.” Tom Paine (1797)

• “Landlords grow rich in their sleep without working, risking or economising. The increase in the value of land, arising as it does from the efforts of an entire community, should belong to the community and not to the individual who might hold title.” John Stuart Mill (1848)

• “Roads are made, streets are made, services are improved, electric light turns night into day, water is brought from reservoirs a hundred miles off in the mountains – and all the while the landlord sits still. Every one of those improvements is effected by the labour and cost of other people and the taxpayers. To not one of those improvements does the land monopolist, as a land monopolist, contribute, and yet by every one of them the value of his land is enhanced. He renders no service to the community, he contributes nothing to the general welfare, he contributes nothing to the process from which his own enrichment is derived… The unearned increment on the land is reaped by the land monopolist in exact proportion, not to the service, but to the disservice done.” Winston Churchill (1909).

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