The Labour group behind the party’s plans for a ‘garden tax’ has boasted that it will help trigger a house price crash, it can be revealed today.

Jeremy Corbyn’s manifesto includes a proposal to replace council tax and business rates with a levy based on land value, rather than property prices.

But yesterday it emerged that the Labour Land Campaign, which drew up the blueprint for the charge, bragged about how it would create a slump in the housing market. The group, which is backed by Shadow Chancellor John McDonnell, described tumbling house prices as a ‘collateral benefit’ of the policy.

A briefing paper for Labour members said: ‘LVT [land value tax] will lower property prices for two reasons – on the one hand because the LVT that a buyer will have to pay in the future will directly affect the current market price and on the other hand because, following implementation, the release of under-utilised land on to the market will increase supply.’

Jeremy Corbyn’s manifesto includes a proposal to replace council tax and business rates with a levy based on land value, rather than property prices

The campaign group said falling house prices would allow people who do not yet own homes on to the property market.

‘Lower property prices would make house ownership possible for a whole new group of people - it might not be inaccurate to say for a whole new generation,’ the document said. ‘Whether or not you personally will benefit from lower house prices – which as a rule depends on your place on or off the famous Property Ladder – the drop may in time be compensated by increasing economic activity at both local and national levels.’

It also cheered how the tax could have a huge effect on lenders, which some experts have claimed could even lead to another banking crisis. It said: ‘The big losers would be the banks. 85 per cent of bank lending activity is in the residential housing market.’

Other documents reveal how the Labour Land Campaign, which has been arguing for the tax since the 1980s, rejoiced when member Mr McDonnell was appointed Shadow Chancellor by Jeremy Corbyn.

According to the group’s 2015 annual report, Mr McDonnell gave assurances in a meeting held at the party’s conference that year that he would implement their controversial proposal.

The group has been arguing for the tax since the 1980s and rejoiced when member Mr McDonnell was appointed Shadow Chancellor by Jeremy Corbyn

‘Perhaps the highlight of the year was that one of our members, John McDonnell MP, is now the Shadow Chancellor of the Exchequer,’ the report said. ‘Carol Wilcox, our secretary, met him at the Labour Party Conference, and he said: “We’re going to get LVT”.’

On its website, the Left-wing group states its mission as ‘to share land wealth through Land Value Taxation’. It adds: ‘No human being has made land, and the value of a piece of land derives from such things as natural fertility, mineral deposits and its position in relation to public utilities, natural harbours, communications and population.

‘A tax on land values is a fair tax, because the person who owns land derives benefit from something which he or she has not made.’

The group’s 2014 annual report shows how the policy was previously rejected by Labour ministers concerned that it would be too bureaucratic.

'MARXIST' ECONOMISTS WHO CAME OUT TO BACK CORBYN A group of economists who lined up to back Jeremy Corbyn’s tax-and-spend manifesto included prominent Marxist theorists, it emerged yesterday. More than 120 academics wrote to the Guardian newspaper this week to claim that Labour’s economic proposals are ‘fiscally responsible and based on sound estimations’. In contrast, they warned that Theresa May’s ‘calls for continued austerity’ would ‘slow the economy’ at the ‘crucial juncture’ of Brexit. But an analysis by the Tories found many of the signatories are Marxist theorists. Shadow Chancellor John McDonnell has previously described himself as a Marxist, and has cited Marx’s Das Kapital as a source of inspiration. Among the hard-Left economists are Professor Ben Fine, from the University of London’s SOAS, who wrote a book called Marx’s Capital. He also edited The Elgar Companion to Marxist Economics. Signatory Alfredo Saad Filho has written the books The Value of Marx: Political Economy for Contemporary Capitalism, and Anti-Capitalism: a Marxist Introduction. Other signatories who have spoken at Marxist conferences or contributed to books about Marxism include Dr Deborah Johnston – who was published in The Elgar Companion to Marxist Economics – and Dr Elisa Van Waeyenberge, both from SOAS. The list also includes Oxford University geography professor Danny Dorling, who wrote a report in February accusing the Tories of killing 30,000 people thanks to their efficiency programme. Treasury minister Simon Kirby said: ‘This is proof that Jeremy Corbyn and John McDonnell’s dangerous plans for Britain’s economy are the stuff of dreams for Marxists. But they would be a nightmare for ordinary working families who will be hit with higher taxes and see their jobs destroyed.’ Advertisement

Labour’s plan for a land value tax is buried in the costings document that accompanies the party’s manifesto. It lets slip that it would hold a ‘review into reforming council tax and business rates and consider new options such as a land value tax, to ensure local government has sustainable funding for the long term’.

The Tories claim the cost of the 3 per cent annual levy for an average home would be £3,837 – more than three times the £1,185 council tax they pay now, based on the assumption that land value is about 55 per cent of a house price.

The plans have been criticised by Tory local government minister Andrew Percy

Further analysis from the Conservatives last night claimed that the average tax on the country’s 5.5million semi-detached homes would be £4,181, on the 2.4million bungalows it would £4,633 and on the 3.5million detached homes it would be £6,808 a year. Tory local government minister Andrew Percy said: ‘No matter where you live or what type of home you live in, Jeremy Corbyn’s garden tax will clobber you.

‘Nobody will escape as Jeremy Corbyn taxes your home and garden to fund his reckless spending pledges. It’s clear his magic money tree is at the bottom of every garden in the country. Only a vote for Theresa May and the Conservatives on Thursday will stop this.’

Mr McDonnell has previously said the levy would be a ‘radical alternative to austerity’ and will ‘raise the funds we need’.

In addition to being hit by the garden tax, the average household would lose £750 a year under the tax and benefit plans in Labour’s manifesto, analysis by the Institute for Fiscal Studies shows.

The IFS figures do not include any knock-on effect for families of Labour’s plans to put up corporation tax.