1. We had a go at working out what the tax rates would be in a full-on LVT-only tax system, taking one part of Swindon at random. The conclusion was that the rates/sq yard/year for residential land in the six postcode sectors that make up the postcode district SN3 (which in turn is one of the six postcode districts which make up the postcode area Swindon) would be between £23 (for SN3 2..) and £38 (for SN3 1..).
2. There's another way of guesstimating the rates, which is to think up a figure for total required tax revenues (call it £300 billion), add on 20% to the rate so that there's a bit of wiggle room for giving exemptions/discounts to pensioners etc, then divide the resulting figure of £360 billion per year by the total amount of privately 'owned' developed land (whether residential or commercial) in the UK from the Generalised Land Use Database. If you pro-rate the figure up for the whole of the UK, this is about 2.4 million acres. This gives a mathematical average rate of £31/sq yard/year.
3. We can also download recent average selling prices for semi-detached houses in each of 350 local council areas from the BBC website (this only gives one figure for the whole of Scotland, so I bunged in an extra thirty lines to adjust for that), arrange them in order and re-work the rate for each area so that it is proportional to average selling prices.
4. The mathematical average (mean) of £31 is heavily skewed by a few very, very expensive areas in London and the relatively expensive areas in the South East/London generally. We find that the median rate is in fact £23 and Swindon is just above that, with a rate of £24. As it happens, Business Rates/sq yard of land in Swindon is a bit more than that anyway (as businesses would benefit from all other taxes being scrapped, I see no pressing need to reduce the LVT rate to lower than what Business Rates were).
5. Nationally, the lowest rate would be in Blaenau Gwent in Wales, at £12/sq yard/year and the rate for the top of the ninth decile would be £44/sq yard/year for Waltham Forest, which is one of the cheaper areas in Greater London.
6. I was halfway through repeating the original exercise for all the thirty or forty postcode sectors in Swindon, which took me about three-quarters of an hour (the rates in SN1 would be between £27 and £45 and the rates in SN2 would be between £18 and £32) but proceedings were interrupted because I had to go to a birthday party. More anon.
Put On Your Big Boy Pants, Maybe?
3 hours ago
17 comments:
I would be interested in your observations on this piece by Fred Harrison about a piece by Kevin Cahill.
Before Ithrow my lot in with the LVTers I'd like to think that you are not on the edge of schism.
DKMcG
Oops , no link
http://www.fredharrison.com/?p=198
DKMcG
DKMcG, we LVTers are perenially disappointed by Kevin Cahill's refusal to jump on board.
Fred H has got it spot on.
1. Of course the rates are primarily set by the market (see worked examples above). If we want politically motivated exemptions like for pensioners or churches, that is a separate issue.
2. For sure, LVT on average sized semi-detached or terraced would be from £3,000 per year up to £17,000 (for the ninth decile) BUT an average family (Mum, Dad, two kids) would also get about £11,000 in Citizen's Income, so no big deal really (health and education vouchers on top of that), and as Fred H says, no income tax, VAT etc.
3. The maximum LVT you could get from farmland would be in the order of £40/acre or something, total potential revenues £2 billion i.e. hardly worth collecting so for the time being it would remain untaxed (but they can whistle for their agricultural subsidies).
I'm a little new to this LVT malarky, but just to clarify, are you proposing the abolishen of *ALL* taxes replacing with the LVT?
B, yes, or more precisely, we'd abolish all taxes that relate to income, output or profits (income tax, national insurance, VAT and corporation tax etc) as well as all existing taxes that relate to land/buildings or wealth generally (council tax, business rates, capital gains tax, inheritance tax, TV licence fee, insurance premium tax, stamp duty etc).
I'd keep 'duties' in the narrower sense (fuel, booze, gambling, tobacco and drugs would be legalised and taxed as well, of course).
So the only 'taxes' would be those on 'rents' and state protected monopolies (in the wider sense) i.e. ground rents/land values, banking sector financial assets, cherished number plates, mining licences, radio spectrum, and a flat income tax of (say) 20% on state-protected rights like copyrights, patents etc.
OK, so my place of about 120sq/yds @an average of tax of say £25 a sq/yd per year would have me paying by my reckoning about £3k a year or about £60 a week, yes?
Sounds good in principal, but, there's always a but, how would this be enforced? Would homes be confiscated for non-payment for example?
B, is that a huge flat, or a very small house on a very small plot? Depending on where you live, it might well be £3,000 a year, net that off with your £3,500 Citizen's Income, job done.
How would it be enforced? How do we enforce PAYE, VAT, corp tax and the like?
"Are homes sometimes confiscated for non-payment of income tax?"
Yes.
"Would homes be confiscated for non-payment of LVT?"
Yes.
@DKMcG,
Don't worry about schism. There are advocates for LVT in all the major parties, so we cover the whole political spectrum from socialist to libertarian. However what we all have in common is that we think the current taxation regime is not just unfair. It's not just inefficient. It's stupid.
We may differ on how much tax should be raised, how it should spent, big gov, small gov, etc. but that actually doesn't matter since we're not trying to form a Georgist party or an LVT party. Instead we want to be in a position where every major party is pro-LVT. Just as they are all currently pro-VAT. And for that we need supporters of all political stripes.
So if you want to "throw in your lot" with us, just join the party of your choice and form (or become part of) their LVT pressure group.
All roads lead to swindon - f-ing hope not - so much time wanting to get away from the place when I was a young, a breath of fresh air when i did..
Hi Mark,
Excellent that you have now started to look at LVT by providing really world numbers to back the idea.
20% of LVT would be about 1% of the land selling price (assuming 5% yield), so that is quite ok.
Not sure about the idea of having a citizen (rsident) income and an open border with Europe though..
Anon, the maths is more circular than that. A tax of 20% per annum on the current selling price would amount to an 80% tax on the total annual rental value. But we don't know what the future selling prices will be...
"Not sure about the idea of having a citizen (resident) income and an open border with Europe though..."
That's for UK resident British Citizens only - if you have been here long enough and kept your nose clean, then after 5 or 10 years you get a passport, the right to vote, the right to a CI. Leaving the EU is of course a pre-requisite to this :-)
"But we don't know what the future selling prices will be..."
There's one of those "Yebbut" things I was on about earlier. I'm looking to buy in Spain around March. The practice There is to pay an official recorded price through the notary and a substantial payment under the table because of the incremental taxes on any profit over and above the rate of inflation.
B, yes, there will be under reporting of prices paid. So what?
It is relative values that matter, not absolute ones. If all selling prices in all areas are wildly understated, then we would still observe that houses in Kensington sell for ten times as much as those in Essex; and those in Essex sell for times as much as those in Blaenau Gwent.
Whether those prices are reported as £4 million, £400,000 and £40,000, or as £100,000; £10,000 and £1,000 is neither here nor.
Plus the good news is, you can only pay cash if you have cash - so this would prevent credit fuelled house price bubbles
Thanks for your comments ( and Derek too), I would like to understand LVT more thoroughly before promoting it to others , can you suggest a good primer for me to bone up on?
Thanks again , DKMcG
Anon, you just apply commonsense as you go along. I just crunch the numbers. If you want words, then Fraggle did a good summary a few months ago.
As to these supposed 'killer arguments against', rule number 1 is to say that pensioners would be exempt, rule two is that valuations are a doddle and rule three (if you are stuck) is just turn the question on its head and point out that the same applies to income tax in spades.
i.e. "LVT is nationalisation of land." Answer - "No it isn't. And even if it is, surely it's better than income tax or corporation tax which is nationalising labour."
In contrast to the Man from Pig Hill I lived only a short time in Swindon and a shorter time on the Walcott estate , that epicentre of awfulness according to this thread.
Part of the awfulness stemmed from the distance from the town centre which was too far to walk and too close to go by bus,contributing to a stranded feeling approaching soul-death.Once on the bus I spied a singularly well-dressed man striding along a Walcott roadside with the faraway eyes of somebody in a Caspar David Friedrich painting."That's the drummer from the college band " said my companion who DJed at the college (and ,in turn,influenced an impressionable young Mark Lamarr.)"That's Gilbert O' Sullivan" said somebody else.And so it turned out . From subsequent television ,he appeared to have grown out his hair.
But consulting the world wide intertubes before writing this I discovered that Ray O'Sullivan had indeed been the drummer in the College band along with the founder of Supertramp ,Rick Davies ).
Like Canvey Island another weird place ,which seems to have been over-run with jug bands according to Julien Temple's film,Swindon seems to have a very high concentration of soul energy and I really don't think its the best place to base a definitive study of British land values.
DBC, ta for anecdotal, but we're doing Swindon because Sobers made some outrageously inaccurate claims about relative house prices (which he has so far singularly failed to either back up with hard evidence or retract), and as luck would have it, Swindon is close to being a 'median' town, i.e. average house prices close to the UK average and there are rough bits, posh bits and everything in between.
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