Form the IEA 'blog:
Paul Perrin: [blah waffle, poor widows, confuses LVT with planning laws, invents numbers out of thin air, doesn't have a clue about anything, whine, moan]
Roy Langston: @ Paul Perrin: Your objections to LVT are unfounded, if not fanciful or dishonest, as already explained -- and as all objections to LVT have always been, and always will be.
If planning permission raises the value of your land, your LVT is not going up "through no fault of your own," but because you have consciously and deliberately decided to deprive others of their liberty to use the land nature put there, and the associated access to the opportunities, amenities, services and infrastructure government and the community have made available there.
It is crucial to understand exactly what a land title is: not rightful ownership of the fruits of one's labor, but merely a legal privilege of depriving others of their liberty to use the land that was already there, ready to use, with no help from the owner or anyone else.
Where a change in planning permission results in a permitted use that no longer matches existing improvements, the assessed land value would be reduced by the cost of buying and demolishing the existing improvements, as any prospective user wanting to engage in the new use would have to shoulder that cost before he could use the land.
All land would be taxed NOT as if it were already improved to the maximum extent possible, but the SAME as if it were to be used in its most profitable permitted use. That is what taxing its "unimproved" value means: taxing the value someone is WILLING TO PAY to use (and normally improve) the land for that purpose.
Or to give a real life example, if a site has a little 2-bed bungalow on it, and the owner knows that if he replaced it with a four-bed detached house, the extra rental value (over and above the cost of demolishing the old house and building and maintaining the new one) would be another £10,000, when he applies for planning permission for his 4-bed, he will of course negotiate with the local council in advance; if they ask for an extra £12,000 a year, he just doesn't develop and stays with the bungalow (losing nothing).
If the council agrees an extra LVT bill on the 4-bed of £10,000 or less, then the owner/developer goes ahead; and as part of the negotiations they might as well agree that for the six-month period during demolition/construction, the LVT is precisely nil; the higher LVT bill does not start until the developer has had a reasonable chance to get the new house built.
Inconvenient people
2 hours ago
20 comments:
"Paul Perrin: [blah waffle, poor widows, confuses LVT with planning laws, invents numbers out of thin air, doesn't have a clue about anything, whine, moan]"
Which is usually the case with anti-LVT protagonists. The question is why? Why do so many people spout palpable nonsense about LVT? Obviously they are against the tax and are seizing on anything that might be a plausible argument against it, but why are they against it in the first place?
Without wishing to sound too much like a conspiracy theorist, I would suggest that there has been a long-running campaign of FUD (Fear, Uncertainty and Doubt) against LVT ever since Winston Churchill proposed it many years ago.
During the last century, the right-wing power base has slowly shifted from rural landowners, the aristocracy and landed gentry, to urban rentiers, the very people who would be hardest hit by a fiscal switch to LVT. It is not a huge leap of imagination to suppose that for the past hundred years or so, these people have been conducting a subtle whispering campaign against LVT, so that its unsuitability as a tax base becomes one of those political ideas that is simply accepted, without anyone questioning it too hard. It has become a belief, like global warming and other extraordinary popular delusions.
Honestly I think it's just an allergic reaction to the word "tax".
B: "the right-wing power base has slowly shifted from rural landowners, the aristocracy and landed gentry, to urban rentiers, the very people who would be hardest hit by a fiscal switch to LVT"
a) It's not right-wing any more, there are as many Home-Owner-Ists in the Labour Party as in the Tories or anywhere else (except UKIP).
b) It is a simple fact that three-quarters of such urban rentiers, i.e. those with reasonable jobs, would be vastly better off if we shifted from taxing incomes to taxing the rental value of land. But they just refuse to accept that the laws of maths and logic and averages etc apply here as to anywhere else in the tax system.
RA, possibly, but it is a tax so why call it anything else?
It's not right-wing any more, there are as many Home-Owner-Ists in the Labour Party as in the Tories or anywhere else (except UKIP).
The particular group of baby-boomers who went Left around '68 are now retiring from their rather succesfull careers in govt/media/healthcare/whatnot, and is deciding whether to use their unearned increments on pads in either Tuscany or closer to the Pyrenees, i.e. not likely to be in support of anything that thwarts their plans...
Mark, the sort of urban rentiers I am talking about are not yer average BTL landlord, but the super-landlords who own great tracts of Central London, both residential (like the Cadogan Estate) and commercial.
"It is a simple fact that three-quarters of such urban rentiers, i.e. those with reasonable jobs, would be vastly better off if we shifted from taxing incomes to taxing the rental value of land."
Exactly, which is why their continued opposition can only be due to some sort of cultural brainwashing.
Only one problem with your example. You say that the developer would negotiate with the council. That just does not happen in any beaucratic government or state department of any sort. The people in such organisations always work on rules and procedures and check lists. The only time they vear away from the rule book is when they abuse their power for vegance, petty vindictivenss, or just because they are in a bad mood.
So what happens if someone else applies for and gets planning permission on your land?
I believe you can do that now because sometimes, quite sensibly, a prospective purchaser needs to know before making a purchase what would be permitted.
Does it not count because someone else got the permission, or would this be a very good way to piss off your enemies by upping their LVT?
Mark,
I think Richard Allen has a point.
How about Location Usage Fee instead?
People don't like the word tax.
B, aha yes, it is clearly that sort of people and the bankers who are really behind it, but we do live in a democracy, and the vast majority of people genuinely believe that 'Britain is a crowded island' or that 'land values are wealth' and so on, and they keep voting for it, quite consciously and deliberately.
SML, as a matter of fact, commercial property developers do negotiate with the council and get some sort of steer as to what their new Business Rates bill will be. And they always have the option of doing nothing and just making the best with the existing building. Don't forget - we have LVT in this country, it's called Business Rates.
W42, the tax is on optimum permitted use. Apply common sense. In urban areas, the value uplift from changes of use is relatively small, and there is a cost associated with demolishing the existing building AND there is always inertia, councils DON'T LIKE giving planning permission for change of use and NIMBYs hate it.
For developers, getting hold of the sites they need, especially if they have to buy two or three adjoining sites is hugely difficult. And any real value uplift only happens once you've got hold of all required sites.
So if the council grants outline planning for [very large building] and this spreads over three separate plots, what is the optimum use of any individual plot? It is entirely unchanged.
In all these years of arguing with Homeys and Faux Libs, they have yet to come up with one single real life example with real actual hard figures where somebody has applied for planning for somebody else's land and this has changed the land's value.
I mean FFS, HMRC can be vindictive sometimes when they are chasing PAYE or VAT. But they only ever apply the law and are not subject to any sort of democratic scrutiny - unlike local councils.
If your local council started doing what you allude to and ripping off Hard Working Hard Pressed Homeowners, do you seriously think that they wouldn't be booted out pronto? So coming up with supposed Killer Arguments on the basis that ALL COUNCILS ARE TOTALLY EVIL is hogwash, I might as well argue that income tax or VAT is fatally flawed because HMRC ARE FUNDAMENTALLY EVIL.
It's just so boring.
BJ, the name does not matter, even though "Location Value Tax" is possibly more accurate.
MW,
I disagree. Words and their meaning can be very important. Companies wouldn't pay advertising copywriter a fortune if they weren't.
"Tax" to me implies taking a cut of something you own.
"Fee" to me implies a charge for the use of something you don't.
I'd say the second of these options best describes what a LVT actually does.
Sounds pedantic, but, pitching an argument to an uneducated public has to be 100% watertight.
"W42, the tax is on optimum permitted use. Apply common sense. In urban areas"
I still don't see this.
You have a 2 bed bungalow in town with large plot. Your LVT is 1000 megaroods/pa and you are very happy as you are.
Builders get permission for a large block of flats incorporating your plot which suddenly is now worth a tax levy of 3000 mr/pa because (I paraphrase) you are depriving others of the use of your land and it has a higher potential value permitted use.
Under our current system staying 'as is' makes no change because the house is valued, but under LVT as I understand it the land potential is valued and that has gone up.
So can a third person put up your charge by changing the optimum permitted use on your land? If not then how can you charge on the basis of O P Use?
Ben, it doesn't matter what we call it, the Homeys and Faux Libs will always say it's a wicked Communist plot.
W42, if in doubt apply common sense.
a) if the builder has to assemble two or more plots to build his flats, and you own one of them, you cannot possibly build the block of flats on your plot alone, so the OP use of your plot is COMPLETELY unchanged.
b) Planning laws are entirely artificial and are 'man made'.
Do you really think if a government had the nerve to replace the entire tax system with LVT that it wouldn't take the time and trouble to sort of these wrinkles in the planning system and prevent predatory applications?
Do you really think that councillors would make themselves unpopular by openly conspiring with developers? Occasionally, yes, but so what?
You might as well argue "Some policemen are bent. This means that we shouldn't have a police force at all".
c) LVT works perfectly well with or without planning restrictions.
If it makes the Homeys happy, we could quite easily propose a system where no new constructions is ever allowed anywhere and regardless of the population or housing need, for all eternity, we have to make do with what we've got. No loft conversions or extensions will be allowed. Then LVT will ensure that we make most efficient use of what we've got.
Would you prefer this sort of world?
BJ, it didn't work with the Poll Tax, did it? The Tories tried to call it the "Community Charge", but everyone knew it was a poll tax and that's what they called it. Interestingly enough, to avoid it looking like they'd done a u-turn, the Tories called the new rates the Council Tax, and the name has stuck. Very few people refer to it as "the rates" any more, despite the fact that it is.
"and the vast majority of people genuinely believe that 'Britain is a crowded island' or that 'land values are wealth'"
Presumably because some people have gone to a lot of time and effort into instilling these ideas into the public consciousness. This sort of public re-education is most noticeable in wartime - remember there was no conscription in WWI until the end - but that's not only when it happens.
B: "some people have gone to a lot of time and effort into instilling these ideas into the public consciousness"
And because people have such short memories. They always forget the previous house price bubble/crash - where did all that "wealth" go? Answer - it was never there in the first place.
"And because people have such short memories. They always forget the previous house price bubble/crash"
and those that do remember it, write it off as a "blip". Because the Tories under John Major didn't intervene in the last crash, it was bad, but short and prices soon rose again. Also, within London, and other large cities there is the gentrification effect, which is not subject to periodic busts. Once places like Pimlico, Notting Hill and the west end of Chelsea had become smart, they remained so and so long term residents saw no return of prices to their previous lows, even in a crash.
Bayard, I've said this before, but my Dad refers to Council Tax as "Poll Tax".
B, yes "it's different this time" is another big fat government-Home-Owner-Ist lie.
As to gentrification, there is always equal and opposite slumification somewhere else, that's just the total rental value being distributed differently.
RA, your Dad is a very wise man, the council tax is so flat as to be a poll tax with a small "number of bedrooms" surcharge, it bears little or no relation to real rental values. And it is not supposed to do so.
KUTGW
And, "You can't tell 'em".
But keep it up all the same.
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