In the dying weeks of her premiership, Theresa May is reported to be feuding with her chancellor about whether he’ll let her buy herself a political legacy by spending billions on pet projects. At the same time those fighting for her job are engaged in an inevitable bribery competition: which of them can promise to cut taxes most, boost spending more or somehow manage to do both? Labour says it will ‘end austerity’ by turning on the spending taps if it gets into office. In the background to all of this political jostling is the eternal question: ‘But where’s the money supposed to come from?’ Well, in a report commissioned by the Labour Party, a radical but simple answer has been provided: tax land. It’s not a new idea: far from it. But has its time finally come?

The report Land for the Many has been written by a group chaired by George Monbiot, the environmental campaigner and Guardian columnist. It makes the case that the way we treat land is the source of many of our problems: the huge rise in house prices in recent decades, soaring rents, the collapse of wildlife and ecosystems, the loss of public space, the growth of inequalities, money-laundering and much besides. And it’s our failure to tax land that is at the root of everything else. Far from being the common inheritance on which the prosperity of everyone is built, land has become an asset for the rich to exploit as a tax shelter and for everyone else to suffer the consequences.

The result of the current tax regime is that when farm land comes on the market it is now much more likely to be bought by rich people looking for somewhere to put their money so that the taxman can’t get his hands on it than by farmers wanting to use it to grow food. Between 2011 and 2017 the proportion of agricultural land sold to farmers fell from 60% to 40%. George Monbiot cites evidence from the campaigning group Tax Justice UK that by owning agricultural land, 261 rich families dodged paying £208m in inheritance tax in 2015/16.

This increased demand for land as a tax shelter inevitably pushes up prices for the simple reason that the supply of land is fixed. As Mark Twain famously put it: “Buy land now… they ain’t making any more of it.” Agricultural land, once planning permission is given, can rise in value 250-fold. Since 1995 land values in Britain overall have increased by 412%. The land on which houses are built now accounts for 70% of the overall cost of houses and the value of land looks set to go on rising. That creates an incentive for developers who have bought land to hold onto it rather than make immediate use of the planning permission to build.

The attraction of land as a financial asset, because of its rising value and its tax status, means it now constitutes 51% of the UK’s net worth. That’s almost twice the proportion in Germany where so much more of the country’s net worth consists of productive assets.

The obvious way to tackle these harmful distortions, the report argues, is to tax land so that it can no longer be the shelter that creates them. And it’s not the only reason.

First, land can’t go anywhere. It cannot suddenly be hidden when Her Majesty’s Inspector of Taxes comes calling. If tax evasion and avoidance are the perennial problems of all governments trying to maximise their revenue, then taxing land is an obvious solution.

Secondly, Britain has become far too dependent on the City and the financial services industry as a source of tax revenue. That’s fine at times of boom when bankers fill the Treasury coffers, but when bust comes, as we saw after 2007, the tap gets turned off very quickly indeed. The result: government borrowing soars and governments of all parties then have to adopt austerity policies to get public finances back into some sort of order. But such volatility in revenue could be reduced if a land tax became part of the mix of taxation because the revenues from such a tax would be much more stable and predictable.

Yet another advantage is that much land is inherited, so taxing it would be a form of inheritance tax. The reason this appeals to those who advocate a land tax is that it means Britain would be able to lessen its dependence on the taxation of income. That means less tax on work and effort, something we should be encouraging not disincentivising through taxation. Currently 45% of tax revenue comes from the taxation of income.

And finally there is the obvious attraction of the vast figures involved. It’s estimated that the value of land in Britain is not far short of £5 trillion. That means that a 1% land tax would generate £50bn a year. That would finance substantial cuts in income tax, corporation tax or increased spending in social care, the NHS, or whatever your political priorities might be. A 2% tax could transform the entire landscape of our tax and spending system.

Of course there are plenty of problems attached to such a radical and simple idea. For one thing, taxing wealth (which is what a land tax is) always carries with it the problem of how to extract something liquid (the tax revenue) from something essentially illiquid (the asset, in this case land). It’s much easier to tax income because income comes in a liquid form in the first place. It’s true that land can produce income and so provide the funds to pay the land tax bill, but it may not do so in such a regular and predictable way.

There’s also the problem of how land should be valued so as to make an assessment of what the annual tax bill on it should be. Anyone familiar with the furious rows that have accompanied different forms of taxation of domestic property over the years knows how big a problem it can be. We’ve seen rows over rates through the poll tax and now the council tax. Governments have been seriously reluctant to revisit the issue of revaluation despite the fact that the values on which current council taxes are based are palpably out of date. But that would be a mere tea-party compared with the dissension that land valuations might cause.

And finally there is a huge political challenge entailed in the introduction of a land tax. Landowners, by simple virtue of their wealth, are a hugely powerful vested interest. Any government trying to threaten their privilege by means of a land tax could expect an almighty political battle.

But advocates of a land tax will say that’s exactly what we elect politicians to do: to stand up to vested interests on behalf of the general good. And if taxing land helped reverse some of the damaging consequences of the way we currently treat land, as well as provide a more stable, reliable and equitable taxation system, shouldn’t they at least give it a try?

Are they right? Let us know what you think.