Friday, 21 February 2014

Killer Arguments Against LVT, Not (317)

The KLN goes like this:

But rich people will just register their homes in the name of an offshore company, so the government won't be able to collect the tax.

This flies in the face of all known reality, as the UK has something pretty similar to LVT on commercial premises called "Business Rates". A lot of commercial premises are - for one reason or another - registered in the name of offshore companies, but non-payment is minimal, about one or two per cent of potential revenues.

Logic says that there is little or no need to find out who the actual owner of land is, because in case of non-payment, the government can simply sell the property and recoup the tax that way.

At this stage, the smartarses, who don't understand that a tax on land values always reduces the net income collected by the owner rather than adding to the tenants' costs, will say that this is because the tax is collected from the occupier, not the owner.

Well so what? In case of non-payment of LVT, it's fair to ask the occupier to pay it (the occupier might well be the indirect owner of the offshore company anyway), and if he doesn't want to pay it on top of the current rent, he's free to leave or negotiate a lower rent.

In a rare outbreak of commonsense, the UK government decided to impose a modest LVT on high value homes registered in the name of offshore companies etc a couple of years ago (called "ATED" or Mansion Tax Lite).

If the KLN stacked up, then revenues from such a tax would be precisely zero.

Well jog on, you Homey f---ers, revenues from the Mansion Tax Lite are actually five times as high as predicted.

So there :-b