Reform of the planning system could benefit everyone 7 August 2020

A real New Deal 1 July 2020

“We’re not afraid to take them on!” Walk on 5 November 2019

Jeremy Corbyn launched the Labour Party General Election campaign with a call to challenge vested interests. “We’re not afraid to take them on!” is a brave statement because although those he singled out—dodgy landlords, tax dodgers, bad bosses, greedy bankers, media barons—represent only a tiny minority of citizens, they wield disproportionate power and influence, not only over the way we are governed but also over what we are told and what we believe.

In no sphere is the difference between the Few and the Many as stark as it is in the matter of land. Land accounts for over 50% of net UK wealth and two-thirds of it—40 million acres—is owned by 0.36% of the population while 26 million households share about three million acres and the other 15 million (and rising) households own none at all. And many of all these are constrained multigenerational households because the kids cannot afford to set up on their own. Corbyn singled out the Duke of Westminster as a “dodgy landlord” but this is the least of it. Far more socially damaging than the way he treats his tenants is how he benefits from the corrupt system established by his ancestors and their cronies in order to appropriate our wealth. For example, if Hugh Grosvenor had been liable for 40% Inheritance Tax on the £9 billion estate he inherited in 2016, he would have had to sell some of his assets, as we have to when death duties come around. His bill was actually of the order of £100,000 (about 0.001%) or less than a couple of month’s rent for one of his many houses in Mayfair. By controlling the legal and fiscal systems over the centuries and moulding them in their own interests, the Grosvenors and their ilk have been able to perpetuate their wealth and preserve their “elite” status, in many cases ever since the original “Gros Veneur” (Fat Hunter) and fellow warlords invaded Britain nearly a millennium ago. Ironically, the landed toffs on their sprawling estates have a lot of unwelcome new neighbours benefiting from the fiscal framework they so carefully created for themselves over the centuries, notably foreign criminals and speculators who have grown rich from financialisation of the economy, both groups being major “investors” in land in the United Kingdom.

The most impressive aspect of how landowners have managed to rig the game in their own favour is how they succeeded in shifting the entire burden of taxation off wealth and unearned income onto productive activities like work, trade, enterprise and investment, despite the observable economic damage that this inflicts. Anthony Molloy, Chair of the Labour Land Campaign says, “For years, vested interests successfully suppressed even any discussion of the central economic role of the UK’s most fundamental asset, its land. But the lid is coming off the box and it can’t be long now before we the people recognise that taxing wealth makes sense, and that land wealth is the easiest to tax. As evidenced by the dishonest, hysterical “Garden Tax” response to the 2017 Labour Party manifesto, massive forces will be mustered by the Few to oppose any form of land value taxation and we should be afraid. But with the Many having so much to gain, let’s walk on through the storm, there’s golden sky at the end.”

Lifting the Veil 5 June 2019

Land for the Few: lifting the veil

This week’s Labour Party report on Land for the Many[1] is the most concrete evidence yet that the veil of silence drawn so successfully over the repository of 51% of net wealth in the United Kingdom[2] is at last being lifted.

Land was originally written out of economic theory with the shift from classical to neoclassical economics in the late 19th century: instead of the three distinct classical factors of production, namely labour, capital and land, the last two were conflated: this is a very unhappy marriage because there are irreconcilable differences between the respective characteristics and economic roles of land and capital, but it is a very convenient one for landowners when it comes to government policy-making, especially fiscal policy. Even in classical economics, close reading of Adam Smith shows that, while his treatments of labour and capital are perfectly internally consistent, his treatment of land contains contradictions: cynics have suggested that he was obliged to obfuscate certain aspects of the real role of land because his sponsor was the Duke of Buccleuch who was at that time (and still is today!) the biggest landowner in the country. It would indeed be ironic if the father of economic science and free-market philosophy was nobbled by a vested interest when he was inventing the discipline.

This shift in economic theory paralleled a gradual shift in fiscal policy from feudal times when most state funding derived from taxes on land. With property-owning restrictions on who could vote and sit in the increasingly powerful Parliament, the tax burden was steadily shifted onto labour (Income Tax) and other economically productive activities (taxes on sales and profits). Our taxation system has been created by landowners and today, property taxes account for only a tiny part of government revenue.

From 1906, a new force emerged in parliamentary democracy that was to become the Labour Party, the main economic plank of which was to shift taxation back onto land wealth. In power, they passed the 1931 Finance Act which instigated a land value tax but, before this could be levied, a Tory-dominated administration took over, stopped the preliminary valuation process and revoked the Act. All talk of taxing land wealth then disappeared from the discourse of the country’s main socialist party until the 2017 election manifesto compiled under the leadership of Jeremy Corbyn and John McDonnell.

Anthony Molloy, Chair of the Labour Land Campaign, welcomes this report, “The sub-title—Changing the way our fundamental asset is used, owned and governed—bears witness to the commitment of the reinvigorated Labour party to repair the dysfunctional UK land market that has been engineered over centuries to benefit a few very rich citizens at the expense of the many.”

[1] http://labour.org.uk/wp-content/uploads/2019/06/12081_19-Land-for-the-Many.pdf

[2] Office for National Statistics. 2018. The UK national balance sheet estimates: 2018

Sleight of hand

18 April 2019

It was recently reported that Council Tax debt has soared by 40% in 6 years and now stands at over £3 billion. In England 305 people have been jailed for non-payment – many of them too poor to pay.

This is not surprising as Council Tax is the most regressive tax we have. The billionaire owner of a Westminster mansion pays almost the same as the tenant of a Weymouth bedsit. One such billionaire owner, American hedge fund manager Ken Griffin, who paid £95 million in January for a property near Buckingham Palace with a gym, pool and underground extension, will get a Council Tax bill of £1507.70 in 2019; this compares with the property tax of upwards of $1.6 million per annum he pays on his $238 million flat in Manhattan.

Tenants are squeezed by both increasing rents and rising Council Tax bills. With the planned total withdrawal of central government funding for local authority expenditure by next year there is only more misery to come. Yet private landlords receive over £10 billion in housing benefits. No other country imposes a property tax on someone who is not the owner

The reluctance of government to tackle the iniquity of the Council Tax is no doubt owing to the spectre of the Poll Tax riots which led to hasty implementation of a new hybrid property/poll tax. Since 1993, failure to revalue coupled with a four-fold rise in property prices has eroded the property component to such an extent that, in much of the UK, Council Tax has essentially become the unfair, massively unpopular Poll Tax it was supposed to replace: an impressive piece of sleight of hand indeed.

It should be recognised that landlords perform a service in providing decent buildings for people to live in and this requires an outlay of expenditure. However the bigger part of the rent received, certainly in London and the South East, is due to the value of the location and that has nothing to do with the actions of the owner.

Carol Wilcox, Secretary of the Labour Land Campaign, says, “There is only one way to fix the property tax system and that is a Land Value Tax which charges the owners for the benefit they receive from location. This would force out exploitative landlords and bring down house prices. Local authorities could then buy up rented properties with sitting tenants and acquire a secure revenue stream at the same time as cutting the massive housing benefit bill.”

Did you get your fair share?

17 October 2018

“In 2017, the UK’s net worth was estimated at £10.2 trillion; an average of £155,000 per person. Growth in the UK’s net worth was estimated at 5.1% between 2016 and 2017… much of this was from growth in the value of land” Office of National Statistics Statistical bulletin: UK national balance sheet estimates: 2018[1].

Does this mean that every man, woman and child in the country got £8,000 richer last year: £19,000 per average household of 2.4 people? “Did you get your fair share?” asks Anthony Molloy, Chair of the Labour Land Campaign. “It’s very unlikely that you did if you don’t own your home or any other land[2] because most of this uplift has been in land value.” While the year-on-year rise in the value of all assets other than land (essentially buildings on the land[3], bank deposits, stocks and pensions) was just 0.9%[4], net UK land wealth rose by 9.1%[5]. In fact, over 60% of the more-than-trebling of UK wealth since 1995 has been in land value which now accounts for 51% of the nation’s net worth, higher than in any other measured G7 country and well above the one-third it was in 1995.

The value of land is dependent on its proximity to jobs, schools, hospitals, transport, etc., namely things that are created by the community (in particular the state) rather than the landowner. And yet, as Winston Churchill put it, “… every benefit which is laboriously acquired by the community increases the land value and finds its way automatically into the landlord’s pocket”.

Is this a problem? To answer that, one has to compare the £450Bn rise in land value in 2016-2017 to the £1Tn earnings subject to Income Tax in the same period. If it were true that every UK household received nearly half as much in unearned wealth as it did in earned income, it might be a cause for celebration but the reality is very different: 70% of our green and pleasant land by area is owned by just 0.6% of UK citizens and non-citizens (much of it, bewilderingly, “off-shore”) and this proportion would probably be discovered to be even more skewed if anyone bothered compiling figures on the more pertinent parameter of land value. Anthony Molloy says, “That the current UK system carries no significant taxes on our most valuable asset bears witness to our history of restricting rights to vote and sit in Parliament to property owners. Our fiscal system was designed and implemented by landowners but we, the witlessly conniving people, are now choosing to further enrich them without their having to lift a finger at the same time as our real wages for honest, productive work are stagnating”.

And it is indeed a choice: the 2018 ONS figures can only provide grist to the mill for the growing movement towards shifting taxes off economically productive activity and onto unearned wealth: land value taxation is progressive in that the wealthy pay more than the less well-off; it is fair because landowners will contribute in proportionate measure towards the public infrastructure and services that help drive their rising land wealth and rental incomes; it is easy to collect and impossible to dodge; and taxing unearned wealth rather than work (or trade or enterprise or investment) is economically efficient in that it does not shrink the economy like taxes on economically productive activity.

[1] https://www.ons.gov.uk/economy/nationalaccounts/uksectoraccounts/bulletins/nationalbalancesheet/2018#growth-in-the-worth-of-household-land-accounts-for-much-of-the-growth-in-uk-net-worth

[2] Notably if your household is one of the 8.5 million (39% of all households) in rented accommodation

[3] The value of bricks-and-mortar rose by 2.2%

[4] Financial net worth actually dropped in 2016-2017

[5] Within the land market, the value of UK non-household-owned land rose faster (12.7%) than that of owner-occupied land (7.9%)

Land Value Taxation is about so much more than just solving the housing crisis

15 August 2018

The inexorable lifting of the veil—some might say conspiracy—of silence on the subject of land value taxation (LVT) over the last couple of years is long-awaited. Even the tiny ivory-towers minority who own so much of our green and pleasant land and who would be the only ones to lose out from the taxation of land wealth, have recently been forced to address the subject at last, from newspaper/land-owners like the Barclay brothers (Daily Telegraph/a Channel Island) and Viscount Rothermere (Daily Mail/half of Wiltshire) to politicians like Philip Hammond (beneficiary of property developer Castlemead—although to what extent we cannot know because he has refused to publish his tax returns). The fact that much of the discussion consists of misinformation (“The Garden Tax”) comes as no surprise but there is another, more fundamental issue: even sympathetic coverage is exclusively focusing on LVT as a way of solving the housing crisis. While it is true that LVT would help optimise use of one of our most precious resources and thereby go a long way towards mending the broken UK land and property market that imposes unreasonable housing costs on both buyers and tenants (especially the young), this remains a corollary benefit.

The core benefit of a wealth tax like LVT is that it is economically superior to other taxes that it could be used to replace. This is because it has no deadweight losses (the “excess burden of taxation”): VAT raises the price of goods and services, demand drops, factories shut down, jobs are lost and the economy shrinks; Income Tax and National Insurance Contributions make working less rewarding and marginal wage-earners join the ranks of the unemployed. It has been estimated that, taking all current taxes into account, every pound of revenue to the Treasury shrinks the overall economy by about one pound[1]. In contrast, LVT has no such unintended, knock-on effects; in fact, by optimising use of the key factor of production that is land, it would tend to stimulate economic growth.

In this context, the key question is “Which taxes should be replaced by economically efficient LVT?” All our current taxes have different weaknesses and can be ranked accordingly: sales tax (VAT) and poll tax (Council Tax[2]) are unfair; VAT is expensive and difficult to collect (even easy to defraud!); business tax (Corporation Tax) is easy to avoid; property tax (Business Rates) disincentivises improvement. But economists naturally focus on the extent to which any tax will shrink the economy—which any tax on work, production, trade, enterprise or investment (i.e. all of our current taxes) will do. The reason that almost all economists from across the political spectrum down the ages have agreed (rare enough in itself!) that LVT is the “least bad form of taxation[3]” is that it will not constrain economic activity.

Above and beyond repair of the broken UK land market, LVT has many other corollary benefits including the attenuation of wealth inequality, redress of geographical imbalance between prosperous and deprived regions (notably between North and South), revitalisation of local government and, in time, establishment of a virtuous cycle in which local public sector investment drives rising land values leading to increased revenue for further quality-of-life-enhancing public sector investment. Anthony Molloy, Chair of the Labour Land Campaign emphasises “While the direness of the housing crisis warrants radical and immediate action, it is important not to lose sight of the fact that LVT would also address many other intransigent problems facing the UK from widening equality gaps to low productivity.”

[1] Harrison, Fred (2016), Beyond Brexit: The Blueprint, London: Land Research Trust. NB: worryingly, in response to a Freedom of Information request, the Office of Budget Responsibility replied that they do not calculate these figures but this is an overestimate!

[2] When it was rushed in to replace the unpopular Community Charge, Council Tax was a hybrid property/poll tax and since then, the absence of revaluation has steadily eroded its property component: today, the owner of a multimillion pound Westminster mansion pays the same as the tenant of a Weymouth bedsit.

[3] Milton Friedman in a 1978 interview

Save the High Street – scrap Business Rates

13 August 2018

Since 2010 Corporation Tax has been reduced by 8%, the last drop courtesy of Chancellor Philip Hammond with a promise of more reductions to come. This does not seem to have been of much benefit to the retail sector. Philip Hammond scratches his head and says he will look at a tax on online retailers.

Pity he wasn’t listening to the British Retail Consortium spokesperson who had this to say: “Business rates are deterring investment in local communities, causing shop closures and job losses in hard-pressed communities, and preventing retailers from delivering what their customers want in an efficient and cost-effective way”.

Property taxes are easy pickings for Hammond – so long as they are on businesses, which don’t have a vote. The average collection rate for Business Rates is 98.1%: it’s difficult to hide a shop, office or factory.

Everyone knows that the most valuable properties in the UK are certain residential locations in London and the South East even though owner-occupied dwellings generate no income. There is a simple reason for this disparity: the owner of a mansion in Westminster pays no more than £1,421 a year property tax (Council Tax); the property tax (Business Rates) on House of Fraser’s Oxford Street store is £4.5 million. Price is inversely related to tax.

The problem with Business Rates is that the rateable values on which they are based include the building, which is the main working capital of retail businesses. And it is not only retail which suffers from this ill-thought-out tax: plant and machinery are also included in valuations so investment in capital (e.g. to enhance productivity or improve working conditions) can result in higher taxes for business. Why does the Chancellor want to disincentivise investment?

The sensible way to tax property is to assess only the location value – the land. Because businesses locate in the places where they can achieve the highest returns. According to the type of business, this may be the location with optimum footfall, good transport links, local attractions, etc.

But there is a second reason why Business Rates are so bad for business. Rateable values are supposed to be assessed every 5 years. Huge economic changes can occur in 5 years, let alone the 7 years which separated the last reassessments. The Chancellor is still trying to deal with the outrage which last year’s bills generated.

Valuing land is simple because the only factors that need to be considered are location and potential use consistent with prevailing planning regulations. In contrast, when valuing buildings, many additional factors have to be taken into account, including state of repair, what the buildings are being used for, how old they are, architectural merit and internal space. Experience in jurisdictions which assess land and building values separately is that land valuations take less time, cost less and generate fewer appeals.

Secretary of the Labour Land Campaign, Carol Wilcox, says “Scrap Business Rates, Mr Hammond, they are ruining businesses as diverse as shops and steelworks. Replace them with a tax on land value only – Land Value Tax. And ask the Valuation Office to keep a constant eye on land values so that annual bills reflect what is truly affordable.”

Tories at it again: misrepresenting land value tax as a “Garden Tax”. Economical with the truth, untruthful about the economy

23 March 2018

At Prime Minister’s questions yesterday, many must have been surprised to hear Theresa May revive the discredited characterisation of a land value tax (LVT) as a “tax on your home and your garden”. When last year, a very modest promise in the 2017 Labour Party Manifesto to “initiate a review into reforming council tax and business rates, and consider new options such as a land value tax” elicited a hysterical Conservative Party Press Release about the “Garden Tax”, retribution was swift. Among the most surprised yesterday must have been independent fact-checking charity FullFact[1] which originally ridiculed this misrepresentation within hours, concluding that not only “There’s no reason to assume enthusiastic gardeners would be badly hit by switching systems” but also “The idea will probably be on the table at some point, whichever party comes to power”.

When The Times, Daily Mail, Daily Telegraph, Daily Express, Daily Star and Sun all reproduced said Press Release more or less verbatim just before the election, they included cherry-picked figures from Labour Land Campaign (LLC) research to draw conclusions entirely at odds with those of the research itself. LLC made a series of complaints to the Independent Press Standards Organisation (IPSO) which resulted—after up to seven cycles of exchange with these publishers’ lawyers and enablers (no journalist was allowed anywhere near the process in any case)—in all six of these usual suspects having to publish retractions. These can be found on line[2]. But in the end, it is gratifying to hear the Daily Telegraph (the owners of which also own a whole Channel Island!) talking about “how a land value tax could be advantageously implemented to replace unfair, economically inefficient taxes”.

But why such a sustained, concerted attack on a reasonable promise to review a patently broken property tax system which sees, on the one hand the tenant of a £450 a month flat (Band A) in Weymouth paying just £100 a year less Council Tax than the owner of a £100 million mansion (Band H) in Mayfair and, on the other hand, the Confederation of British Industry—with the support of economists from across the political spectrum—describing the Business Rates system as “outmoded, clunky and regressive[3]“?

LLC Chair Anthony Molloy asks “Could the answer be that Boris Johnson and Philip Hammond—both quoted in the May 2017 Press Release—together with the aristocrats, developers and newspaper-owners who back their party and own so much of our green and pleasant land[4] are among the tiny but disproportionately powerful minority of citizens who would lose out if a fair, economically efficient LVT were judiciously introduced to replace patently unfair, economically disastrous taxes. Given how concentrated land wealth is in the UK, judicious implementation shouldn’t be too difficult—to ensure that there would be Many winners and Few losers.”

[4] Kevin Cahill: “the 16.8 million homeowners account for barely 4 per cent of land, and 70% of the country is owned by just 0.6 per cent of the population” In: Who Owns Britain (2001) published by Canongate

The Government could fix the housing crisis without threatening councils or developers

5 March 2018

Theresa May blames local authorities for not building more homes. Having already weakened them by eviscerating their funding stream she now proposes to take away their controls over local planning.

If a government wishes to incentivise an activity surely the worst thing they can do is to tax it. So why does Theresa May’s government persist in keeping intact two development land taxes – one of them introduced by the Tories, Section 106 Agreements (S106), and the other by Labour, the Community Infrastructure Levy (CIL).

Carol Wilcox, Secretary of the Labour Land Campaign, says: “It is these taxes which weaken local authorities’ control over planning and hand it to the big developers, with their access to expensive consultants. Even the small developer can go online and discover how to avoid S106s. It is doubtful whether any council has ever succeeded in squeezing out of developers the number of new affordable homes originally proposed. The objective of S106 and CIL is to provide a contribution towards the funding of new infrastructure and this too invariably falls short of original intentions.”

Sanctioning councils which fail to achieve the government’s housebuilding goals will result in a further erosion of their control over planning. On the contrary, councils need to be enabled to undertake real proactive planning rather than be subject to the desires of individuals and developers.

They already have the power to redesignate any land within their domain, for example for residential development. What they lack are the resources to fund infrastructure and compulsory purchase orders.

The Conservatives should be listening to their free-market-friendly think-tanks by scrapping all current property taxes – Business Rates, Council Tax, Stamp Duty Land Tax, S106, CIL and the Annual Tax on Enveloped Dwellings – and replacing them with a land value tax land (LVT). This would provide the funding for new infrastructure, as well as maintaining what is already there – a virtuous cycle where increased investment leads to higher land values and hence higher LVT revenues.

Furthermore, there would be no need for compulsory purchase orders because the increased land value created by higher permitted use, would impose an unaffordable LVT bill on current owners, who would be forced to sell at low prices. Councils would be able to buy whatever land they need to fulfill their housing needs.

The government has also blatantly adopted as their own Ed Miliband’s threat to land hoarders of ‘use it or lose it’. But LVT would much more effectively stop this activity as the tax would have to be paid whether the houses are built or not.

A Land Value Tax would help address the UK’s Housing Crisis

13 February 2018

A report published this week by the Campaign for the Protection of Rural England (CPRE) identified existing brownfield sites across England that would be enough to accommodate more than a million new homes, most in urban areas and many in the very places where the shortage of housing is most acute, notably London and the South East (over 260,00 and 130,000 possible homes respectively). More than half of these already have planning permission for residential use and, in any case, planning permission is usually granted easily and quickly for such sites that have already seen development in the past.

CPRE ask a good question: why all the pressure to ease up planning regulations to develop greenfield land, including the Green Belt, to address the housing crisis?

The Labour Land Campaign (LLC) asks a different good question: why have such valuable sites not already been developed at a time when housing is one of the most—if not the most—serious problems in the country? Surely with property prices higher than ever before, the incentive to build and sell homes must be greater than ever before. Unfortunately, the dysfunctional UK land market does not work like that. LLC President Dave Wetzel explains that “House prices have risen because land values have risen”. Any property price comprises two components, one for the building and another for the land it is built on. In the last twenty years, UK property prices tripled, mainly because in the same time frame, land prices went up five-fold. Wetzel continued, “And that explains why so much potentially useful land—notably brownfield land for which planning permission is so easy to obtain—lies derelict, especially in areas where the need is greatest so land values are rising most rapidly. Instead of building houses now on land they own, landowners will make far more money sitting on it while it appreciates in value, to build later or even just sell it on in the speculative land banking market”.

To answer the CPRE question, it is far more profitable to obtain planning permission for hitherto undeveloped, greenfield land: when agricultural land is reclassified as constructible, its value jumps—literally at the stroke of a pen—by a factor of at least 100 (and a great deal more in many places). All this windfall goes to whoever owns the land which is often either one of the UK’s Big Five building companies or one the handful of aristocrats who own a third of Britain (both of which groups are major contributors to the Conservative Party).

And to answer the LLC question, Dave Wetzel concludes, “Among its many other virtues, a land value tax—an annual levy on the value of land whether or not it is generating income—would undermine the speculative land banking business model, bring unused and underused land into socially beneficial use, help resolve the housing crisis, bring more jobs and economic activity to currently deprived regions, and even preserve the Green Belt.”

Not to mention the fact that revenue from a land value tax would make it possible to reduce or abolish any of our current taxes, all of which are either unfair, easy to evade or avoid or economically inefficient.

Who can be trusted to fix our broken housing market?

5 February 2018

Sajid Javid, Minister of Housing, Communities & Local Government, recognises that the root of the housing crisis is a broken market[1], especially the land market. The ratio of average house price to average income has not more than doubled in the last twenty years because building costs have risen or incomes have fallen: it is because land prices have gone up. Last November, the Minister called for affordable housing policy “to be less cautious, to be more aggressive, and to be more muscular”.

With some of the Conservative Party’s biggest donors being from the property world, will this government take a first step with Shadow Housing Minister John Healey’s simple call last week for reform of the 1961 Land Compensation Act which stipulates that, “for the purpose of assessing compensation in respect of a compulsory acquisition … account may be taken … of the prospect … of planning permission being granted”. This is the so-called “hope value”: the owner of brownfield land required for development can demand compensation at the post-development value. If, for example, this land were one hectare of agricultural land near Cambridge acquired in 2010, the landowner paid about £18,500 for it. When planning permission is granted for much-needed new housing in Silicon Fen, this landowner is entitled to compensation of £2.9 million, a 160-fold return at the stroke of a pen in the local planning office. The landowner has done nothing to earn this windfall. Indeed, nobody—neither landowner, council, developer nor builder—has yet done anything apart from sign a few pieces of paper and transfer a great deal of cash. Sterile, economically destructive speculation, pure and simple.

This Act clearly creates an aberrant situation with serious social consequences for the many and obscene returns for a few—and this obviously cries out for reform. But Carol Wilcox, Secretary of the Labour Land Campaign asks “Why stop there? Hope value is just the most egregious tip of a massive iceberg of wrongness in our unstable land market, established and legislated for over the centuries by landowners for their own benefit. It is less than one hundred years ago that the right to vote and sit in Parliament was extended to those who do not own land. Landowners harvesting enormous returns without having to do anything at all is not confined to changes in permitted use: it pervades and distorts the entire land market. If public investment improves your area with a good school or a new transport link, your landlord will put your rent up, and he may well be one of the handful of aristocrats who own a third of Britain.”

A more profound approach to repairing the broken land market and solving the housing crisis would be a land value tax (LVT), an annual levy on the value of all land (conditioned by its location and permitted use) irrespective of any improvements made on it, past or present. LVT is fair in the sense that those who are most able to will pay the most. But it is also fair in that the few who reap the lion’s share of rewards from a state-sponsored system that perpetuates their privilege, contribute the most towards maintaining it—what could be seen as a charge for benefits received rather than a tax.

[1] DHCLG Report, February 2017, Fixing our Broken Housing Market [www.gov.uk/government/uploads/system/uploads/attachment_data/file/590463/Fixing_our_broken_housing_market_-_accessible_version.pdf]

Welcome to the campaign, Tony

4 December 2017

To anyone who understands land value taxation (LVT), Tony Blair’s endorsement will come as no surprise. Coverage in the media has it that it “will be seen by some as a shift to the left[1]” but it is no such thing. Anthony Molloy, Chair of the Labour Land Campaign, explains, “LVT is not left wing or right wing; it just makes sense. Left and right are about how much you tax; LVT is about what you tax.” What is true is that parties of the right the world over like the Conservative Party in the United Kingdom dread any discussion of the only economically efficient form of taxation, as witnessed by Boris Johnson’s hysterical “Garden Tax” response to a very slight mention of LVT in the 2017 Labour Party Manifesto[2]. But this is no principled, ideological stance: it is just loyalty to the vested interests they represent, who provide their funding and, in many cases, who they are, namely the tiny minority of citizens who stand to lose by a switch of taxation onto wealth, in this case land wealth. Exactly how tiny this minority is can be gleaned from figures on land ownership in the United Kingdom: 70% of the country is owned by just 0.6 per cent of the population and, although the scandalous incompleteness of the Land Registry precludes any accurate estimate, this proportion in terms of land value as opposed to land area is likely to be even more extreme. This minority, albeit tiny in number, is formidable in terms of power. That is how—over the centuries since Anglo-Saxon times through the emergence of parliamentary democracy in the early 19th century—they managed to switch taxation off wealth and ownership of the means of production (notably land) onto work, production, enterprise and trade.

Almost unanimously, economists down the ages and from across the political spectrum—Adam Smith, Milton Friedman, Joseph Stiglitz, Martin Wolf, the Institute for Fiscal Studies, the Institute for Economic Affairs, etc.—have agreed with 19th century American political philosopher Henry George that “The tax upon land values is the most just and equal of all taxes. It falls only upon those who receive from society a peculiar and valuable benefit, and upon them in proportion to the benefit they receive. It is the taking by the community, for the use of the community, of that value which is the creation of the community.” But the main reason that economists like LVT is not fairness or that it cannot be avoided or even because it will help solve the housing crisis. It is because LVT, unlike all our current taxes, is economically efficient: it does not have what the Treasury calls “deadweight losses” and therefore does not distort market forces or shrink the economy.

And economic efficiency rather than fairness may well be why Tony Blair has come out so solidly in favour of such a radical switch in our fiscal system. Anthony Molloy continued “After two centuries of manipulation of the fiscal system for the few not the many, LVT’s day has come. More and more people and even some politicians are realising that using LVT to replace any of our current taxes will favour the majority of citizens, expand the tax base, attenuate inter-regional inequality and boost the economy. Business Rates and especially the grotesquely unfair Council Tax may be as good a place to start as any.”

[1] The Guardian [https://www.theguardian.com/politics/2017/dec/03/tony-blair-backs-labour-land-tax-solve-uk-housing-crisis]

[2] The Independent Press Standards Organisation required the publication of clarifications by six national newspapers that reproduced misleading information taken from a Conservative Party Press Release on this subject just before the election

When will we get a Chancellor who understands the economy?

23 November 2017

Yesterday, Philip Hammond proudly announced the abolition of stamp duty for many first-time buyers.

Elementary economics has it that, if the price of any commodity drops, e.g. if the government reduces the tax on it, demand for it will rise and a new equilibrium price will be established. If the supply of that commodity can respond quickly to increased demand, the new equilibrium price will be close to the lower price: this is true of flat-screen televisions and washing powder. But if the supply of that commodity cannot quickly respond to increased demand, the new equilibrium price will be close to the original price. Homes are not like flat-screen televisions or washing powder because their supply is relatively fixed, e.g. the Chancellor’s declared target is the building of 300,000 new homes a year “by the middle of the next decade” (although he did not announce anything concrete to suggest that this target might be achieved). As no extra new homes can be built in the short term, except for those who have exchanged contracts recently but not yet completed the deal, most first time buyers will face an increase in price from the sellers when they place their property on the market. Therefore, as was immediately pointed out yesterday by the Office of Budget Responsibility, the ultimate effect of this policy will not be to help first-time buyers get on the housing ladder but rather to further enrich those already on said ladder at the expense of the public purse. Yet another transfer of social wealth to landowners and yet another example of an economically poisonous tweak of the taxation system that apparently aims to help the less well-off in society but actually helps the wealthy. Is multimillionaire property magnate and landowner Philip Hammond really that economically illiterate?

The UK fiscal system, drawn up and voted in by landowners, is fundamentally geared to prejudice the interests of the landless and it is becoming increasingly clear that the time for tweaks is past: the tax regime needs root and branch reform by taking taxes off work, production, enterprise and investment, and switching them onto wealth and land. Dave Wetzel, President of the Labour Land Campaign says “Today’s land values have arisen from generations of public and private investment in transport, roads, schools, health care, sewerage systems, clean water, leisure facilities, shops, factories, warehouses, offices etc.—all paid for by the population as a whole as taxpayers, consumers and real investors. However, that wealth is sucked out of the productive economy through the monopoly ownership of land. On the one hand, a land value tax will fairly fall on the wealthiest in society, make property prices affordable and smooth out inter-regional inequality; on the other hand, reducing distortive and inefficient taxes will enhance productivity and competitiveness, and boost the British economy. One day a Chancellor of the Exchequer will try to make our taxes fair and unavoidable but yesterday the current incumbent perpetuated the corrupt system that favours himself, his landowning friends and the backers of his party. The Shadow Chancellor is more economically literate and is challenging the historical injustice that has deprived generations of workers and real investors a share in the wealth they create”.

Hammond’s silver bullet a land value tax? Probably not

21 November 2017

The Chancellor claims that this week’s budget will address the issue of homes being unaffordable for a growing number of people. He has said that he needs to understand why there is such a “huge gap between planning permissions granted and housing units built”. The answer is simple: speculation and hoarding inflate land prices leading to homes being made unaffordable as well as adding pressure for new builds on green land. Hammond has also said that there is no “silver bullet” to solve this crisis. If he gets the problem, he might find the silver bullet: the solution to making homes affordable is to introduce a land value tax to replace unfair, distortive, avoidable taxes.

The Labour Land Campaign (www.labourland.org) together with other organisations and individuals of all political persuasions recognise that the current tax regime not only shrinks the economy by penalising enterprise and constraining productivity but also encourages avoidance and evasion. Today’s land values have arisen from generations of public investment in transport, roads, schools, health care, sewage, clean water, leisure facilities, etc.—all paid for by the population as a whole as taxpayers, consumers and real investors. However, that wealth is sucked out of the productive economy through the monopoly ownership of land. A land value tax will not only help tackle the housing crisis but will also provide a sustainable, economically efficient source of income to pay for national and local public services by collecting land wealth that arises from such investments. Moreover, reducing distortive and inefficient taxes will enhance productivity and mitigate the North/South economic divide because new businesses will be encouraged to look to areas where land is cheap, poverty levels high and jobs scarce.

If the Chancellor can only answer his own question properly he could make housing affordable for so many at a stroke, at the same time as boosting productivity and attenuating regional inequality. This Chancellor may not want to see an answer that would alienate his party’s most loyal constituency, namely landowners, but the Shadow Chancellor knows it!

Help To Buy? More like Help To Sell

6 October 2017

In a week when the rhetoric of Theresa May and Philip Hammond has—somewhat desperately—been all about boosting the virtues of free markets, the few concrete policies announced in Manchester to “realise the British Dream” have been very much in the opposite direction, from caps on utility bills to—most desperately of all—an extra £10bn for their demonstrably counter-productive Help To Buy scheme.

A central tenet of economic theory is that that taxes and subsidies often distort market forces, i.e. undermine free markets. And David Cameron’s flagship Help To Buy scheme has provided ample, solid evidence of this: these subsidies are only available for new-build properties, the prices of which have risen faster than those in the market as a whole since the scheme was introduced—a pleasingly perfect illustration of market force distortion. According to Stockdale Securities analyst and Property Week columnist Alastair Stewart, “Help to Buy has inflated prices, failed to deliver new homes where they are most needed and could push buyers into negative equity if the housing market slumps”. But, although taxpayers and house-buyers are losing out, the margins and balance sheets of the big building companies are likely to benefit, with big share price rises posted on Monday morning within minutes of the announcement (Barratt, the UK’s largest housebuilder, up 3.6%, Persimmon up 3.4% and Taylor Wimpey up 2%).

Are Theresa May and Philip Hammond economically illiterate? Or is all the rhetoric about helping young people get on the mythical “housing ladder” so much smoke and mirrors to disguise yet another taxpayer-funded bung to a sector in crisis that is a major donor to the Conservative Party. Help To Buy or Help To Sell? Is that what she’s in this for?

The crisis in the house-building industry is the result of years of short-sighted policy-making having created a completely dysfunctional UK land market. Builders are caught up in a dangerous spiral of rising land prices and dwindling margins, largely as a result of the lucrative practice of speculative land banking. Landowners hold on to undeveloped land with a view to selling it on when its price has risen still further because of restricted supply coupled with rising demand. Thus house-builders are squeezed by rising land prices while land-bankers take all the unearned profit. The complication in this picture is that the big house-builders are some of the worst land-bankers.

Vice-Chair of the Labour Land Campaign Heather Wetzel says, “Until politicians realise that taxes are inversely related—and subsidies positively related—to land price, they cannot hope to correct the dysfunctional UK land market”. One way to remove the disincentive on housing construction is to penalise landowners who fail to develop precious land by taxing land value—whether the land is developed or not. A Land Value Tax (LVT) based on the true market value of land (i.e. its rental value which is dictated by market forces) rather than its inflated price in a distorted market, would quickly bring vast swathes of currently untaxed, undeveloped, banked land into productive use and stop land speculation. But far more fundamentally, LVT is the only form of taxation that does not distort market forces (because the supply of land is absolutely fixed) so it is economically efficient. Finally, it is fair: since most land value accrues from activities of the local community and public sector investment, paid for by all of us as taxpayers rather than any effort on the part of individual landowners, a LVT would put the onus of maintaining said community and paying for said investment on those who reap the most unearned income from it; and who are most able to pay.

Michael Gove: newly green or still mean?

22 July 2017

The Labour Land Campaign (LLC) has long called for a fundamental shift in what is taxed by replacing taxes on wages and productivity that depress the economy with an economically neutral Land Value Tax (LVT) on the unearned income that big landowners collect. Chair of LLC, Anthony Molloy is sceptical that when Michael Gove[1] calls for “a Green Brexit”, saying that “farmers must prove they deserve future subsidies after the UK leaves the European Union”, it means he understands how the £3 billion handed out every year in Common Agricultural Policy (CAP) subsidies benefits rich landowners to the detriment of small farmers, especially those on rented land. More likely, this is merely greenwash to disguise the fact that these much-resented, highly counter-productive hand-outs to the very wealthy are to be maintained in a post-CAP Britain.

The top 100 recipients of Single Payments[2] (the subsidy you get for simply owning the land which accounts for nearly three quarters of all CAP payments) receive more than the bottom 55,000 put together and include four offshore companies, 16 individuals on the Sunday Times Rich List, at least 20 aristocratic estates, Conservative MP Richard Drax[3], numerous donors to the Conservative Party and a Saudi prince.

LLC research has shown how such subsidies actually increase the value and therefore the price of land. Even the EU has long recognised that CAP subsidies soon capitalise into land value, raising rents for tenant farmers and making farmland more expensive to buy for young would-be farmers. Thus, some of the richest people in the country get the triple benefit of a hand-out on top of increased rents and rising asset value at the expense, not only of the taxpayer but also of those trying to make a living from farming.

Anthony Molloy went on to say “I hope the Secretary of State for Environment, Food and Rural Affairs has realised that not only should farming subsidies be earned but also that they should be designed to benefit farming and not be a hand-out to the wealthiest owners of farm land. LVT is a tool for ensuring all land is used efficiently and sparingly and if Michael Gove is serious about protecting the environment and enhancing rural life, then LVT will do just that. With LVT, farmers will only farm the land they need and will release the rest for new entrant farmers; and if land is unproductive, then it can be recovered for wildlife.”

Both rural and urban land should be used for homes, businesses, food production and recreation rather than as an investment by individuals and corporations. Real investment in public services and productive businesses—paid for by all of us as taxpayers, consumers and entrepreneurs—is what should generate land value. Not hand-outs.

[1] Is this Michael Gove the same one who, talking about greenfield sites in 2013, was “delighted by the release of more land for housing” [www.cps.org.uk/files/reports/original/130517122606-KeithJosephMemorialLecture.pdf]. And is this Michael Gove promising to maintain welfare payments for the very rich the same one who, in the same speech, welcomed his government’s slashing of welfare payments for the poor: “Instead of incentives for idleness and a culture of dependency, there are powerful incentives to work.”

[2] Greenpeace Energydesk [https://docs.google.com/spreadsheets/d/17JXyhterJZ2UI5Z7YYmON6nKrtTLIS3rPCPT4x-CkCk/edit#gid=1315968968]

[3] Another harsh critic of some types of welfare hand-out (talking about capping overall payments): “Many argue that the cap is far too high and, judging from the above figures, they have a good point” [www.richarddrax.com/news/welfare-reform-0]

Tragedies like the Grenfell Tower fire are a symptom of our corrupt tax system

17 June 2017

“Kensington is a tale of two cities: it is one of the wealthiest parts of this country but the ward where this took place is one of the poorest” Jeremy Corbyn

Pointing to the iniquity of land banking that is so visible if you wander through the streets of Kensington after dark, Corbyn also suggested that some of the many vacant, luxury properties in the area could be requisitioned to provide temporary homes for families who survived the horrific Grenfell Tower fire.

Our economy suffers from the prioritisation of preserving high incomes for the few at the expense of the safety and health of the many, not only in the construction of homes but also in the workplace, the National Health Service and public services in general. Apart from a few Labour, Liberal Democrat and Green Party MPs, most politicians are still ignoring why we have such disparity between those who create wealth and those who then appropriate it as their own.

In the throes of an unprecedented housing crisis, we allow desirable homes in Kensington and all over the UK to lie empty while their owners—developers and speculators from both the UK and overseas—are seizing the rise in land value generated by the community, i.e. by us taxpayers, consumers and genuine investors in productive enterprises and services. This ability of the few to exploit the many is a symptom of a rotten, corrupt and distorted tax system that has been drawn up to help the wealthiest individuals, families and corporations drain common wealth (notably land or location value) out of the productive economy.

Anthony Molloy, Chair of the Labour Land Campaign (LLC), said “Homes for the poorest in society are being built on the cheap as in big regeneration projects where planning permission is contingent on the provision of some percentage of ‘affordable’ homes—which are then built to lower standards than the homes for sale. And if ‘affordable’ means some substantial fraction of market rent, only those on high incomes will be able to live in places like Kensington anyway. Land speculation has forced up the price of land thus squeezing making homes and business premises unaffordable for a growing number of second-class citizens.”

LLC calls for a shift in taxes off wages and production and on to the unearned income big land owners take from their holdings despite the fact that the value of their asset is generated by the infrastructure and public services our taxes pay for. The Labour Party’s mild manifesto commitment to “initiate a review into reforming council tax and business rates, and consider new options such as a land value tax” scared Boris Johnson, Philip Hammond, Conservative Party Central Office and the right wing press—flunkies of the elites who have robbed ordinary people for generations of the natural resource wealth they create—into craven misrepresentation of LLC research[1]. Anthony Molloy continued “At least some of the UK’s land wealth should be reclaimed and used to maintain and develop our public services instead of being sucked out of our economy by speculators and rich families such as Grosvenor Estates and Duke of Northumberland. Jeremy Corbyn sees it, John McDonnell sees it, Caroline Lucas sees it, Vince Cable sees it: heartening evidence that some of our politicians are coming round to the realisation that people are more important than profits made by a greedy few who are prepared to put lives at risk.”

[1] “Land Value Tax: Scaremongering and Misinformation” – Labour Land Campaign Press Release – 31 May 2017 [http://www.labourland.org/press-releases-and-archive/]

Land Value Tax: Scaremongering and Misinformation

31 May 2017

Yesterday saw a clearly concerted attack in five newspapers[1] that largely determine the zeitgeist in British politics on a promise in the Labour Party Manifesto to “initiate a review into reforming council tax and business rates, and consider new options such as a land value tax”. Most of these articles present shamefully traduced Labour Land Campaign (LLC) research and misrepresents it as Labour Party policy. The Labour Land Campaign is a cross-party research and advocacy group—primarily membered by professionals in land-related occupations—that is unaffiliated with the Labour Party.

In remarkably similar wording (presumably lazily—or obsequiously—taken directly from a Conservative Party Press Release), Political Editors at the Daily Mail, the Daily Telegraph, the Daily Express, the Times and The Sun all misleadingly talk about a switch to Land Value Taxation (LVT) “trebling” most residents’ property tax bill—a policy that is ineptly dubbed a “Garden Tax” which highlights their misunderstanding of LVT; this all on the same day, fully a fortnight after publication of the Manifesto. In addition to turning in suspiciously similar copy, these journalists have another thing in common: they all work for very wealthy men who are big landowners[2].

Why such a disproportionately hostile response to such a mild proposal? Because it is the powerful Rothermeres and Barclays who constitute the tiny minority of citizens of this country who would lose out by the replacement of our current unfair and economically inefficient taxes like Council Tax and Business Rates with LVT. The wisdom of such a shift is recognised by economists from across the political spectrum[3] and the patent superiority of LVT is exactly why the tiny but all-powerful constituency of big landowners—who control the media either directly or indirectly—needs to suppress even any discussion of it. LLC Chair Anthony Molloy notes that “When a policy is being criticised, it is worth looking at who is doing the criticising. Nowhere is this more true than with LVT for which the few citizens who will lose out happen to direct not only the party of government but also—through their control of the media—the hearts and minds of many regular people who in fact stand to gain both individually and collectively by such a progressive change in fiscal policy.”

Three of these articles actively cite Labour Land Campaign research, disgracefully misrepresenting it in that all our evidence actually shows that most home-owners would pay less with LVT than with current property taxes—not to mention the 50% of households that rent who would pay no property tax at all.

Land value is generated from our public services and paid for by taxpayers all over the UK but uplift in land value is not shared by those taxpayers: it goes to the Rothermeres and Barclays who own so much of our green and pleasant land. LVT is a mechanism whereby land value generated from public and private investments will be used to maintain and develop public services.

LLC welcomes this evidence of the Labour Party’s commitment to governance For The Many, Not The Few.

[1] John Stevens (Deputy Political Editor) – Daily Mail: Labour’s secret for £4,000 “garden tax”: land and levy plot could treble the average council bill [http://www.dailymail.co.uk/news/article-4553476/Labour-s-secret-plans-4-000-garden-tax.html]

Gordon Rayner (Political Editor) – Daily Telegraph: Tax on homes ” to treble under Labour’s plans for a Land Value Tax” [http://www.telegraph.co.uk/news/2017/05/29/tax-homes-treble-labour-plans-land-value-tax/]

Steve Hawkes (Deputy Political Editor) – The Sun: Labour planning new “Garden Tax” which would see council Tax treble [www.thesun.co.uk/news/3676113/labour-planning-new-garden-tax-which-would-see-council-tax-treble/]

Anonymous – Daily Express: Imagine what Labour’s garden tax would mean

Anonymous – The Times: Labour tax on land ‘would slash house prices’

[2] Notably Viscount Rothermere (who “owns” half of Wiltshire amongst much else, although all this is patriotically registered off-shore) and the Barclay Brothers (a whole Channel Island).

[3] Institute of Economic Affairs: https://iea.org.uk/publications/research/wheels-of-fortune

Adam Smith Institute: https://www.adamsmith.org/policy

Institute of Fiscal Studies: https://www.ifs.org.uk/publications/mirrleesreview/

Land Value Tax: For The Many, Not The Few

17 May 2017

“We will initiate a review into reforming Council Tax and Business Rates and consider new options such as a land value tax”

It is seriously good news that the Labour Party is at last considering replacing two of the worst taxes on the books with a fairer, more progressive and economically efficient land value tax (page 86 of yesterday’s Manifesto).

Council Tax is hugely regressive with an effective rate of 30-40% (of annual rental value) in the cheapest areas compared with just 3-4% in the most expensive, e.g. the owner of a £200 million mansion in Westminster currently pays £100 less Council Tax than the tenant of a £345 per month flat in Weymouth!

After wages and rent, Business Rates are often the biggest expense for many companies, particularly SMEs, and they are deeply resented by such as John Cridland, Director-General of the Confederation of British Industry, as “outmoded, clunky and regressive“.

A Land Value Tax (LVT) is an annual levy on a site based on its value which will be conditioned by its location and optimum permitted use. This form of taxation that ignores any developments made on land has many advantages over property taxes like Council Tax and Business Rates: it encourages rather than discourages investment to improve property (e.g. to enhance housing stock or increase productivity); it will bring unexploited and under-exploited high-value land into productive use for residential or commercial purposes; it will particularly favour the development of low-value land bringing jobs, housing and economic activity to the places that need them most; and perhaps most crucially, it is paid by the landowner, the sector that reaps most of the benefit from local amenities and services (public transport systems, hospitals, schools, sewerage, rubbish collection, …) in the form of higher rents and property values. With LVT, those who can most afford to pay – pay the most; and those who benefit most from public sector investment contribute most towards it in fair, proportionate measure. This is in contrast to the current situation in which, when the Council regenerates a run-down neighbourhood, tenants and regular homeowners are hit with the double whammy of a hike in rent and/or higher taxes. Two things that both look like taxes except one of them goes entirely into private pockets.

The Labour Party should be congratulated for considering LVT to replace the local taxes on buildings and business equipment. For a democratic socialist party operating in a mixed economy, it would seem to be a natural policy as LVT is the fairest, most economically neutral tax (far superior to any of our current taxes on work, production, investment, enterprise and trade). As for the Conservatives, is it because their most important constituency is the wealthy (and specifically, big landowners) that they cannot even talk about what the most distinguished economists from across the political spectrum[1] recognise as the only form of taxation that does not distort market forces?

LVT is the very embodiment of governance For The Many, Not The Few and might even presage a brave example of Strong, Stable Leadership. The Labour Land Campaign welcomes Jeremy Corbyn’s recognition that “Wealth should belong to the majority and not the tiny minority… The British people know that they are the true wealth creators, held back by a system rigged for the wealth extractors.”

[1] Institute of Economic Affairs: https://iea.org.uk/publications/research/wheels-of-fortune

Adam Smith Institute: https://www.adamsmith.org/policy

Institute of Fiscal Studies: https://www.ifs.org.uk/publications/mirrleesreview/

Corbyn looking at a very good idea – replacing Business Rates with a Land Value Tax

27 April 2017

Addressing the Federation of Small Businesses last week, Jeremy Corbyn talked about replacing Business Rates with a Land Value Tax: “I’m interested in the idea… We are looking at it“.

After wages and rent, Business Rates are the biggest expense for many companies—particularly SMEs—by whom they are perceived as unfair (in that business is expected to bear a disproportionate part of the burden of paying for local services compared with residents): a typical opinion is that of John Cridland, Director-General of the CBI: Business Rates are “outmoded, clunky and regressive“.

A Land Value Tax (LVT) is an annual levy on a site based on its value which will be conditioned by its location and optimum permitted use. This form of taxation that ignores any improvements made to land has many advantages over property taxes like Business Rates: it encourages rather than discourages investment to improve commercial property (e.g. to increase productivity); it will bring unexploited and under-exploited high-value land into productive use; it will particularly favour the development of low-value land bringing jobs and economic activity to the places that need them most; and perhaps most crucially, it is paid by the landowner, the party that reaps most of the benefit from local amenities and services (public transport systems, hospitals, schools, sewerage, rubbish collection, …) in the form of higher rents. With LVT, those who can most afford to pay, pay the most and those who benefit most from public sector investment contribute most towards it in fair, proportionate measure. This is in contrast to the current situation in which, when the Council regenerates the run-down high street, local shops are hit with the double whammy of a hike in rent as well as higher Business Rates. Two things that both look like taxes except one of them goes into private pockets.

So, if LVT is so clearly superior to the current Business Rates system, why has it not been embraced by a “business-friendly” government that has been told about the advantages of such a switch by institutions as revered as the Institute of Fiscal Studies[1] and the Institute for Economic Affairs[2]? Because the Conservative Party has a far more loyal, longstanding constituency to placate, namely the small but disproportionately powerful minority who own most of our green and pleasant land and who would be the only ones to lose out with a switch to LVT. Corbyn put it well this week: “wealth that should belong to the majority and not the tiny minority… The British people know that they are the true wealth creators, held back by a system rigged for the wealth extractors.”

For the Labour Party, LVT would seem to be natural policy: strategically because it is the fairest tax; tactically, for a party that is often painted as economically irresponsible, because it is the only form of taxation that does not distort market forces; and practically because the Conservative Party cannot even talk about it.

Most citizens would benefit from the replacement of almost any of our current taxes on production, work, trade, enterprise and investment with a tax that is progressive, economically efficient, easy to collect and impossible to dodge. And Business Rates are a great place to start. There is even a cogent case that rental properties—effectively commercial land exploited to generate income like any other business—ought to be subject to LVT.

Labour Land Campaign Secretary Carol Wilcox says, “If politicians, the media and economists could only recognise how land value arises and who currently receives unearned income from it, part of it could then be collected through a reformed tax system, reducing economically counter-productive (literally!) taxes whilst increasing investment in our under-funded public services”

[1] https://www.ifs.org.uk/publications/5353

[2] https://iea.org.uk/blog/the-case-for-a-land-value-tax-0

Philip Hammond’s Ides of March

16 March 2017

With Tory backbenchers’ knives out after the budget, Philip Hammond’s climbdown highlights how complicated and unfair the UK tax system is. The issue of whether or not to increase National Insurance Contributions for self-employed workers points up how our tax system is overly complex, inefficient, avoidable for some and unfair for many; it penalises work, trade and entrepreneurship whilst rewarding those who enjoy unearned income.

The system is so fundamentally broken that the time for minor tweaks is long gone: it is not just the National Insurance scheme that needs reviewing but the whole system. That would provide an opportunity to realise that shifting taxes off work and production and on to the unearned incomes received by landowners through no effort of their own will not only be fair but will benefit the economy and encourage—rather than deter—investment in existing and new businesses. Because land values and taxes are inversely related, a shift to an annual Land Value Tax will make homes and business premises really affordable and will recycle the land wealth that accrues from public and private investments to provide a sustainable source of funding to maintain and develop our public services that are in such dire need of it.

Anthony Molloy, Chair of the Labour Land Campaign which argues for fair taxes, says “Let’s hope this current spat over raising National Insurance Contributions for self-employed workers—together with the negative impact on some businesses of belated Business Rates revaluations—makes MPs think about how hideously complicated and unfair our tax system is and how it could be reformed to address some of the most pressing problems in the British economy. An annual Land Value Tax fits the bill: it cannot be avoided or evaded; it will encourage work and entrepreneurial investment, thereby enhancing productivity; it will solve the unaffordable housing crisis; and it will level off inter-regional inequalities, notably the North-South economic divide.“

London leading the way to fixing a broken system

27 January 2017

With today’s publication of the London Finance Commission’s (LFC) report entitled “Devolution: a Capital Idea[1]” on top of Mayor of London Sadiq Khan’s positive response earlier in the week to the Greater London Authority (GLA) Planning Committee’s report “Tax Trial: a Land Value Tax (LVT) for London[2]”, there is welcome evidence that at last an important political centre has a leadership that is thinking seriously and radically how to repair a patently broken, unfair and economically inefficient taxation system. Both reports recommend investigating ways to capture the uplift in land values that accrues from public sector infrastructure investment and currently goes entirely into private landowners’ pockets; judiciously harvesting some of this unearned wealth back into the public purse could create a self-sustaining virtuous cycle of locally increasing land value driving further investment in a community at the same time as perennially raising the quality of life of all the community’s citizens. More concretely, both reports further recommend setting up a trial of “the operation of a land value tax pilot on undeveloped land”. If the trial proved successful, it could be rolled out across the capital on all land, then across the country and then across the world! It would not be the first time that London has led the way.

While a local LVT has only a fraction of the benefits of a national one (notably with respect to the kind of dire inter-regional disparities and inequities that characterise the United Kingdom), the LFC report emphasises the synergy to be gained from Mayors in cities all over the country working together on obtaining real devolution, i.e. genuine power over fiscal policy, especially when negotiating with a government that is stronger on rhetoric about devolving power to the regions than it is on seriously tackling inequality in all its forms.

Moreover, the LFC report does not address the key question of whether this land tax proposal would be an add-on or a replacement tax[3]. Rather than being a tax in the classic sense, LVT can be fairly characterised as a “payment for benefits received”; the benefits being driven by the whole community and the payment being received by the minority that owns most of the land. Thus, in addition to being fair in that those who are most able to pay will be paying the most and those who benefit most from public-sector investment will be contributing most towards it in fair and proportionate measure, LVT is economically neutral and does not distort market forces. While the introduction of LVT would have significant direct corollary benefits like solving the housing crisis in our major cities by bringing undeveloped and underexploited land into optimum use, its core virtue is that it can be used to replace other pernicious taxes on work, trade, investment, enterprise and productivity (Rule Number One of Taxation: The More You Tax It, The Less of It Will Get Done). In addition to being fair, progressive and economically efficient, LVT is impossible to dodge (you cannot put your Mayfair flat in the Cayman Islands); no other form of taxation combines all these virtues.

Dave Wetzel, President of the Labour Land Campaign who was the first Vice-Chair of Transport for London until 2008, says, “Whilst welcoming the Commission’s interest in an annual Land Value Tax, they need to understand that it is not just development sites that benefit from new and existing infrastructure but all land within the catchment area that derives unearned benefit and this is what LVT is designed to recover.”

[1] https://www.yumpu.com/en/document/view/56779094/devolution-a-capital-idea

[2] https://www.london.gov.uk/sites/default/files/final-draft-lvt-report.pdf

[3] Whereas the GLA report explicitly recommends replacing the three basic property taxes, i.e. Council Tax, Business Rates and Stamp Duty Land Tax

Only half of families own their own home – how do the other half live?

28 December 2016

We now know for certain that the comfortable assumption that 64 per cent of UK citizens own their own home is a myth (1). Comforting because, although homeownership has been in decline since 2005, it still seemed to confirm that two thirds of households were achieving their dream and were not dependent on the precarities of the rental sector.

A decent home is a basic human right and the sixth richest country in the world should have no difficulty in achieving this for everyone here. The Labour Land Campaign has for over 30 years sought to show how homes can become affordable for all whether to buy or rent. Our policy is based on the fact that:

House prices in desirable areas are substantially land value, which is created by the whole community through its economic activities and the locally provided public, and private, goods and services, including vital infrastructure paid for by general taxation. If the land value was shared by all those who create it the price of a home would be no higher than the building cost – even less if not new – just like second-hand cars.

The Labour Land Campaign calls for Council Tax to be abolished and replaced by Land Value Tax, which is paid by the owner, not the tenant.

At the moment the owner of a £200 million mansion pays £100 less Council Tax than the tenant of a £345 per month flat in Weymouth!

Labour Land Campaign Vice Chair, Heather Wetzel, writes: “My paper ‘Welfare for the Rich – who really receives the biggest subsidies in the UK?’ (2) shows how landlords have benefited inordinately from the increasing value of land. For many years I have sought to prove that homeownership in the UK has been overestimated and that many more people are dependent on the exploitative private rental market to maintain a roof over their heads. I am grateful to Lindsay Judge and Adam Corlett for researching this important subject.”

[1] http://www.resolutionfoundation.org/media/blog/only-half-of-families-own-their-own-home-how-do-the-other-half-live/

[2] http://www.labourland.org/wp-content/uploads/2015/10/Heather-Wetzel-Welfare-for-the-Rich-June-2015.pdf

Council Tax: a sticking plaster to staunch the social care haemorrhage

13 December 2016

The failure of the government to address the worsening crisis in social care in the Autumn statement attracted criticism from across the political spectrum with projections suggesting that 40% of current social care places could become non-viable in the medium term. Now, the belated response to the hue and cry is a proposal to increase social care funding by further increasing Council Tax. Of all our economically inefficient, unfair taxes, Council Tax—a hybrid property/poll tax—is deliberately and by Tory design one of the most regressive: a tenant in a flat almost anywhere in the country pays more than the owner of a similar flat in Westminster. Mark Wadsworth, Research Officer of the Labour Land Campaign (LLC) has shown that “across the country, Council Tax is hugely regressive with an effective rate of 30% or 40% [of annual rental value] in the cheapest areas compared with 3% or 4% in the most expensive”. It is a profoundly divisive idea to try to cure a fundamental, national problem like the expanding need for social care provision by raising the already unfair Council Tax. In addition to consolidating well-characterised inequality between the proportions of disposable income paid in tax by the poorest and the richest households within any given area and across the country, concrete figures from the King’s Fund think tank[1] show how this measure would further specifically exacerbate inequality in access to care services between prosperous areas with relatively low pensioner needs and deprived areas with high pensioner needs.

LLC President Dave Wetzel says “While all of our current taxes are either unfair, economically counter-productive, easy to avoid or all of the above, Council Tax takes the biscuit when it comes to making those who can least afford it pay the most. The history of the Council Tax is a prime example of how tax policy in Britain has been mismanaged: from its hasty introduction in 1991 to plug the gap left by popular rejection of the Community Charge, through the inexorably worsening geographical and social unfairness of this tax as a result of failure to revalue the base in England ever since. And the mismanagement now goes on with yet another sticking plaster, this one to cover up central government’s abdication of its responsibility to adequately fund social care spending, passing the buck to local authorities that have already seen their own funding cut by 40% since 2010.”

The Labour Land Campaign advocates replacing current taxes on work, production, trade, investment and enterprise with economically neutral taxation on land value and therefore wealth and unearned income. When Britain gets a government that is more interested in establishing a fair, efficient taxation system than it is in consolidating the position of a narrow constituency of disproportionately powerful vested interests, getting rid of Council Tax may be a good place to start.

[1] King’s Fund Report: “How serious are the pressures in social care?” [www.kingsfund.org.uk/projects/verdict/how-serious-are-pressures-social-care]

Failure “… to build an economy that works for everyone” (Philip Hammond, 23 November 2016, 12h32)

24 November 2016

In his Autumn Statement, the Chancellor talked about “tackling the three major weaknesses in our economy, namely: the productivity gap; the housing challenge; and the damaging imbalance in economic growth and prosperity across our country”. He went on to announce a series of sticking plaster measures that leave in place a corrupt tax system that: is anathema to productivity; has led to a sustained drop in house-building (especially of affordable housing) over more than fifty years; and favours rich over poor as well as the more prosperous parts of the country over the most deprived.

Taxing work (Income Tax, National Insurance Contributions), trade (Value Added Tax), private sector investment (Business Rates) and enterprise (Corporation Tax) makes goods and services more expensive and less competitive, and thereby reduces productivity; the housing crisis has been driven by the existence of strong incentives for landowners to restrict supply to a minimum and thereby guarantee rising prices for their scarce asset; regressive taxes (Council Tax, VAT) disproportionately fall on the less well-off, and taxes penalising private-sector, yield-bearing investment that are indiscriminately levied on prosperous and deprived areas alike (Business Rates) reinforce geographical inequality. These taxes account for some 85% of Treasury revenue.

Anthony Molloy, Chair of the tax-reform pressure group Labour Land Campaign, says “Until we tax the right things the poorest will continue to subsidise the richest. We need a reformed tax system that is fair, transparent and cannot be evaded.” He explained that, as our economy has grown over generations, so owners of land have demanded more and more unearned income from those using their asset for production, services and homes. He continues “land wealth largely accrues from public services paid for by all taxpayers with no input from land owners. By reducing negative taxes that compromise trade and investment, and replacing them with an annual Land Value Tax (LVT) that collects the economic rent of land which properly belongs to all, we will see: enhanced competitiveness and thus productivity; an end to land speculation, the development of idle and under-used land, and resolution of the housing crisis; and a fairer system in which not only is more of the tax burden borne by those who can afford it most but also one that encourages regeneration of the most deprived parts of the country, instead of holding it back.“

Rather than helping the intended beneficiaries, many of the measures announced today such as subsidies for builders, transport infrastructure and Business Rates will immediately capitalise into land value, thereby further the enriching the wealthy and exacerbating the problem at the root of the housing crisis which is over-priced land; history shows that all government grants and subsidies inexorably find their way into the pockets of land owners.

If Philip Hammond were serious about making the economy work for everyone, the underlying causes of low productivity, the housing crisis and growing inequality would have been ‘tackled’ in this year’s Autumn Statement. But then, his party has powerful vested interests to keep happy (the wealthy and specifically landowners) and, according to his declaration of interests in 2016, “I am a beneficiary of a trust which owns a controlling interest in Castlemead Ltd., a company engaged in construction, house building and property development.”

How would Land Value Based Fiscal Reform contribute towards good, secure, affordable housing?

1 November 2016

Abstract for the “Commons Rent for The Common Good” Conference from Peter Smith

In the face of a deep and ever worsening housing crisis there is widespread frustration at the failure to increase the rate of house building to address the imbalance of supply and demand. A large part of the problem is that the profits of the development industry are intrinsically linked to inflated land values which are boosted by artificial scarcity. It is not in the interests of developers to flood the market with new builds as this would have a price-suppressing effect and hit their bottom line.

At present it is all too common for land owners to sit on development sites and demand an unrealistically high price from others who want to bring them forward, or otherwise demand that local authorities lift the obligation to build sub-market-rate, affordable homes in order to make schemes more profitable. The viability discussion, a circular argument over the relationship between site value and planning obligations, can be typified as a stand-off between the developer and the planning authority with the latter commonly lowering its affordable housing requirement in the hope that this will result in stalled sites being taken forward.

Land value based fiscal reform would strike at the root of the problem by fundamentally shifting the balance in favour of productive land use, rewarding the industrious and penalising the speculator. It would do this by introducing a modest annual cost on the land owner regardless of whether land is used productively or not. In return, one-off costs that developers currently face such as Community Infrastructure Levy and Stamp Duty Land Tax on development land could be eliminated in a revenue neutral way. These existing taxes are not paid by those holding land idle but are only levied once the decision is made to sell or develop the site. The revenue neutral fiscal shift could be extended further to eliminate other taxes on house building companies and construction workers including VAT, corporation tax, income tax and national insurance. Reducing these harmful taxes would lower the cost of development.

The net result would be a saving for those who proceed quickly with development and mounting costs for those who do not. The reform would prove to be an effective antidote to unproductive land banking and speculative behaviour which drives up the cost of land. Stalled sites together with underused and derelict land in both the public and private sectors would be unlocked and the build-out of development schemes would be accelerated. The surge of available land would have the effect of lowering its price, enabling new developers, including smaller house builders, self-builders and housing associations to join established volume house builders in providing a plentiful supply of affordable housing as well as creating additional jobs in the construction industry.

The fiscal shift would also result in a more efficient use of the existing housing stock. Bringing empty homes back into use would be rewarded and an incentive would be created for existing households to downsize where possible. Not only would this mean a greater number of larger homes coming onto the market but it would also reduce the requirement for greenfield land to facilitate urban expansion.

Thousands of hectares of land would be freed up and millions of new homes would be delivered across the country. Housing supply would increase to meet demand causing a fall in house prices as well as lower rents. At the same time the fiscal shift would mean higher after-tax incomes and greater spending power for the majority of people which would make homes more affordable to the population at large. Furthermore, the end to scarcity that increased supply would bring would result in better quality housing and a more equal relationship between landlords and tenants, reducing the insecurity of tenure and poor conditions currently experienced by many in the private rented sector. In essence, land value based fiscal reform would tackle the monopolisation of land which lies at the heart of our current housing crisis.

Reclaiming the terrain of economic efficiency for the left

11 September 2016

Motion submitted for debate at the Labour Party Conference

Conference notes:

Neoliberal doctrine has driven economic policy in developed countries and has been forced upon many developing economies leading to a drop in living standards for all but the very wealthiest throughout most of the world. The claimed purpose of these policies is NOT to consolidate the dominant position of either developed countries and transnational corporations or the wealthiest individuals and companies. They just happen to do both these things! A cornerstone of neoliberal doctrine is the trickle-down argument that: the market knows best; taxes on labour, enterprise and sales distort market forces; reducing taxation will free up the market and lead to increased prosperity for all. Because taxes and land values are inversely related, all tax reductions eventually end up capitalised in land values, a distortion of the market that disproportionately hurts the poor who do not own property. Only one form of taxation is perfectly economically neutral: land value taxation (LVT). LVT is a levy on the value of land (conditioned by its proximity to jobs and services, its fertility, etc.), irrespective of any buildings or improvements on it. Big land owners and their political parties abhor LVT—what Milton Friedman called “the least bad form of taxation”—because they constitute the small minority of citizens who would lose out by its introduction.

Conference believes that Labour should replace taxes that have perverse market-distorting effects with economically efficient LVT.

Homes for Londoners: land value and taxation

29 August 2016

Some 100 days after an election dubbed a referendum on housing, our new Mayor of London has established the Homes for Londoners board. If Boris Johnson did not hide it, this board would do well to read this year’s report[1] by the GLA Planning Committee on how to address the housing crisis in the capital. In addition to a very pithy exposition of the virtues, challenges and history of Land Value Taxation (LVT), he will find the conclusion that, “The time has come to test it out. The conditions are right”. He will also find therein concrete recommendations that, as soon as the new Mayor takes office, he should cost replacing Council Tax, Business Rates and Stamp Duty with a LVT, and set up a trial in a specific area of London with a view to subsequent roll-out across the capital.

Last week the Mayor announced that he would try to force the release of tracts of urban waste land owned by Transport for London (TfL) coupled with a commitment to the construction of housing for regular Londoners. The very frank response from Tory transport spokesman Keith Prince AM was, “Selling TfL’s land with a massive 50 per cent affordable housing requirement ensures it will be sold for well under market value”. Well, yes, that’s the point: speculative market values are killing London by driving out the young and strangling the diversity and vibrancy that make our capital so great. If only Londoners could also get their hands on all the undeveloped land in their city which is being banked by private companies and which accounts for the majority of those bleak, off-putting, Trespassers Will be Prosecuted plots one sees everywhere.

Some may find it puzzling that there is so much undeveloped land in areas one would have thought eminently desirable—and profitable—like Greenwich and Southwark (and, if truth be told, anywhere in Greater London at all). The problem is that, as long as the price of land rises at the rate it has been in the last twenty years in London, a landowner can make more money doing nothing than by developing his asset for productive use. The solution is to tax land. LVT would stop dead the kind of speculation that leaves so much of London’s most precious natural resource fenced off, sad-looking and of no use to anyone. While rising land prices are due to inflation of the property market by the banks, rising land values are largely the result of public sector investment (not only homes for ordinary people but also schools, hospitals, sewerage systems, policemen, tube trains, etc.) so revenue from a land value tax could also drive a virtuous cycle in which public sector investment, as well as enhancing Londoners’ quality of life, further drives up land values and thereby increases revenue for the public purse … for further investment …

Landowners not only tend to be richer than tenants but they–along with the banks–are also the main beneficiaries of rising land values which is why Anthony Molloy, Chair of the Labour Land Campaign, says, “Taxing land would therefore not only ensure that those who are most able to pay will pay the most but also that those who benefit the most from public sector investment contribute most towards it, in fair measure.”

Sadiq Khan was elected on a mandate to solve London’s most critical challenge, its housing crisis. A good departure point would be the GLA Planning Committee Report.

[1] “Tax trial. A Land Value Tax for London”, 22 February 2016 [https://www.london.gov.uk/sites/default/files/final-draft-lvt-report.pdf]

Letter to the Guardian by Dave Wetzel, President of the Labour Land Campaign, in response to an article entitled “ What’s needed to tackle Britain’s homelessness scandal

21 August 2016

The letter from Labour MPs and others on the need to address homelessness misses one crucial policy: we cannot build new homes without access to land. Before the government and others begin to build more homes they will need to acquire land, and in the face of this increase in demand, landowners will naturally increase the price of land, meaning the cost of these new homes will escalate. The answer is to remember that land is not a manufactured good but a free gift of nature. Housing policy needs to acknowledge that land speculation (the hoarding of land out of use) is the underlying cause of the high cost of homes. An annual land value tax would kill land speculation in its tracks and provide government with the funds to build more homes.

The housing crisis is not about bricks and mortar … it’s about land: tax it

2 August 2016

“House prices have become detached from people’s earnings” Matthew Whittaker, chief economist at the Resolution Foundation

The Resolution Foundation’s well-timed and eye-opening analysis illustrates the extent to which property prices have risen disproportionately to wages since the early 2000s. Even Theresa May, in her coronation speech, drew attention to the “injustice [that], if you’re young, you’ll find it harder than ever before to own your own home”. Outside the pages of the Daily Mail, the zeitgeist has shifted towards a recognition that high property prices are incompatible with a balanced, fair economy.

But it is important to recognise that the component that has gone through the roof is not bricks and mortar, it is land. Bricks and mortar depreciate so if the same house costs more than it did twenty years ago, it is because the land that it is on has gone up in value. The reasons for this are many and various but the solution is clear: tax the value of land to capture this unearned capital gain.

A land value tax is levied on the part of the value of a property that stems from the size, planning permissions and location of its land, irrespective of the value of buildings and other improvements on it. Land value may be most of the property price (Mayfair) or very little of it (Port Talbot).

Land value taxation would solve the housing crisis in our major cities by:

bringing property prices down (both because future taxes will have be taken into account in the selling price and because vast swathes of underexploited land will be forced on to the market);

removing the incentive to leave useful land undeveloped;

encouraging landowners, landlords and home-owners to improve their asset to ensure that it is put to its optimal use and generates as much income or joy as it can;

driving the regeneration of deprived areas where land value is currently low.

This is in contrast to the perverse effects of our current property tax system: if a home-owner improves his property to improve quality of life, he will have to pay higher Council Tax; if a businesswoman invests in her premises to enhance productivity, she will have to pay higher business rates.

Taxing land has many other virtues: it is fair and progressive; it is easy and cheap to collect; it is impossible to dodge; and most importantly, it is economically efficient, meaning that it does not distort market forces. Anthony Molloy of the Labour Land Campaign says, “if a land value tax were to replace any of our current perverse taxes that penalise work, business, investment and trade, the market would be freer to do what markets do best”. Surely an argument that ought to appeal to the woman who has stepped into Margaret Thatcher’s shoes.

Unfortunately, she, like her predecessor, is going to have to sacrifice the economic efficiency that her Party has laid claim to for the last thirty years in order to appease the tiny minority of vested interests—notable among them the banks, big building companies, property developers, speculators and, of course, the big landowners—who represent the core constituency of the Tory political machine—and who fund it.

Land value taxation: giving the lie to One-Nation Tories

14 July 2016

“The government I lead will be not driven by the interests of the privileged few”

Theresa May gave the now-traditional, One-Nation Tory, “Party-of-the-Workers” nod to the unwashed on her coronation yesterday. Presumably it was not written by Steve Hilton or Stewart Pearson but their spirit was in it: the spirit of spin devoid of ideology in cynical denial of their party’s dedication and indebtdedness to the powerful and wealthy vested interests that have been controlling fiscal policy for centuries in Britain since the days of Rotten Boroughs and Corn Laws.

More recently, the Tory Party has enthusiastically embraced the neoliberal agenda: shrink government, liberalise trade and deregulate to make production more profitable and boost growth. An End Of History argument that has proven bizarrely seductive to voters despite the corollary effects of such policies being a drop in living standards for all but the most wealthy and the creation of a dangerously alienated underclass.

The claimed virtue of market fundamentalism is to optimise economic efficiency and create wealth that will trickle down throughout all strata of society. In no way are these policies expressly designed either to further the narrow interests of the Tory Party’s traditional core constituency who fund them, namely the wealthy and, in particular, the land-owning class: they just happen to do this!

A key element in the neoliberal agenda is to reduce taxes to enhance economic efficiency: the underlying economic principle is that taxation reduces profitability and therefore cuts out potentially viable producers thereby inhibiting economic activity and preventing growth. While this is true of all of our current taxes, it is not true of land value tax which, being taken from economic rent (producer surplus), does not distort market forces. The cornerstone of market fundamentalism is that the market knows best and any distortion of market forces will have perverse effects. So, if economic efficiency is the guiding principle of the Conservative Party, why do they not advocate the only form of taxation that is not economically inefficient—land value taxation—what their guru Milton Friedman called “the least bad form of taxation”?

Claiming back the terrain

30 June 2016

Since the 1970’s, economic efficiency has been a terrain claimed by the right: shrink government, liberalise trade and abolish regulations to make production more profitable and boost growth. An argument that has proven seductive to voters in democratic countries despite the corollary effects of such policies being a drop in living standards for all but the most wealthy and the creation of a dangerously alienated underclass. Right-wing political parties have won power with this message across the world, transforming the most powerful economies to create a uniformly neoliberal globe from Europe through the Americas to China; the so-called End of History. And, at least until the financial crash of 2008 indicated that the End of History had perhaps not arrived just yet, few opposition parties in these countries dared to question the foundations and validity of the neoliberal doctrine, even when they were in power, preferring to revisit old domestic battles between workers and bosses or resort to the age-old, ever-reliable strategy of blaming foreigners and immigrants.

The claim is that the purpose of market fundamentalism is to optimise economic efficiency and create wealth that will trickle down throughout all strata of all societies. In no way are these policies expressly designed either to further the narrow interests of the developed countries that impose them or consolidate the position of the wealthy who constitute the traditional core constituency—and also fund—the political parties that promote them; they just happen to do both these things!

A key element in the neoliberal agenda is to reduce taxes to enhance economic efficiency; as implemented according to the Washington Consensus, the focus has been on tariffs, taxes on income (especially higher incomes) and taxes on business. The underlying economic principle is that taxation reduces profitability and therefore cuts out potentially viable producers thereby inhibiting economic activity and preventing growth. While this is true of tariffs, income tax and corporation tax—or any other of our current taxes—it is not true of land value tax which, being taken from economic rent (producer surplus), does not distort market forces. The cornerstone of market fundamentalism is that the market knows best and any distortion of market forces will have perverse effects. So, if economic efficiency is their guiding principle, why do those on the right not advocate the only form of taxation that is not economically inefficient; what their guru Milton Friedman called “the least bad form of taxation”? You know the answer: fiscal policy the world over has been managed by the wealthy minority—in particular the land-owning class—to consolidate their own advantage.

So when it comes to communicating about land value taxation to counter the predictable arguments of the tiny, overweeningly powerful minority of individuals and institutions who would be the only ones to lose 