Killer Arguments Against LVT, Not (282, 283)

George Osborne stepped up to the plate last month:

282. This brings me onto the Treasury’s role in devising tax policy.

Every time you walk past a beautiful Georgian house and see a wall where a window used to be, you’re witnessing a visible sign of the Treasury’s well thought through tax policies in action.

When the Window tax was introduced in 1696, it was designed to make sure the wealthy paid more in tax. These fine motives were soon undermined by as a new form of avoidance emerged. Simply brick up the window.

Luckily we don’t have to deal with these sorts of issues today. The window tax was hugely unpopular because it was seen as a tax on light and air – and nothing can be more essential than that.

A tax on the rental value of locations is the opposite of a Window Tax. The number of windows can be varied at will by the owner (subject to planning constraints), but the amount of surface area of the earth at any location is fixed (barring some bizarre tectonic event).

The Homeys argue that if we had LVT, then people would tear down their own buildings to avoid it. Apart from the fact they wouldn't (or else why are there any commercial buildings, liable to Business Rates and the closest thing we have to LVT, left standing?), this is about as stupid as arguing that if people have taken out mortgages to buy land and buildings then they will promptly tear down the buildings to try and get their mortgage payments down.

The LVT payments would relate entirely to the value of the location/planning permission and not to the actual buildings thereon in whatever state of repair, in the same way as mortgage repayments relate to the amount of loan taken out at the time of purchase and not anything which happens subsequently.

283. Lloyd George’s famous People’s Budget of 1909 introduced social insurance for the first time, funded by taxes on cars, on petrol, and a new tax on land and property. Though those tempted by a modern version of a property tax should note Lloyd George’s land tax was eventually abandoned when it cost more money to collect than it raised.

That's an outright lie.

It was the House of Lords which put paid to the increases in "rates" (whether Business Rates or Domestic Rates. Agricultural Rates were already on the way out at the time). Both Business Rates and Domestic Rates (or their modern poor relation, Council Tax) have always raised far more revenue than they cost to collect, in fact, collection costs (including compliance, non-payment and deadweight costs) are far, far lower than for any other major taxes.

Seeing as Osborne's best mate has refused to even contemplate the least radical suggestion, which was to simply add new Council Tax bands at the upper end, which would mean more revenue for the same collection costs, I think we know which side he's on.