Friday, 5 September 2014

Killer Arguments Against LVT, Not (334)

From PublicFinance:

The coalition government has been told by the Institute for Fiscal Studies that its failure to carry out a revaluation of property values for the purposes of levying council tax is ‘increasingly absurd’...

‘Even if we can’t have perfection something close to coherence and consistency would be nice. In the words of former US Treasury Secretary William Simon we should have a tax system which looks “like someone designed it on purpose”. That feels like a low benchmark, but it is one we are a long way from meeting.’

All good stuff. And up pops Colin Aiken from in the comments:

A revaluation of property values will result in more people paying more council tax - remember what happened in Wales.

That's simply not true, most people ended up paying a few quid less, a small number of people ended up paying a few quid more. Overall it was fiscally neutral.

Council tax now is too high as it was abused by the previous Government.

"Too high" compared to what? Council Tax is only about five per cent of total tax payments, for crying out loud.

The council tax system itself is absurd. Property values don't always reflect the occupants' ability to pay the tax and council tax benefit is not the answer.

You get what you pay for. Do we criticise landowners for selling or renting land at prices which do not reflect purchasers' or tenants' ability to pay? Do we criticise Range Rover for selling cars which very few can afford? No, because people look for a home or a car which they can afford. The problem solves itself. If this is acceptable - and indeed desirable - behaviour between private parties, why should the government behave any differently?

What is needed (apologies to Sir Michael Lyons) is a new system that is fair to all - e.g. everyone pays for local services.

OK, define "local services". That would be, at the very least, the NHS, schools, roads, police/law and order and refuse collection, total cost approx. £250 billion a year; Council Tax only raises enough to pay for one-tenth of that.

LIT is not the answer and neither is LVT. It's about time we thought 'outside of the box'.

What he means is a Poll Tax, fair enough, in which case let's have a Poll Tax of £6,000 per adult. I'm sure he and his pensioner friends will love that. Or perhaps he means bumping up income tax by a few per cent?

Or, we could ask everybody to pay for the value of what they get from society (the location) and then argue the toss about how that money should be spent or redistributed.

With income tax or Poll Tax, you are forcing people to pay for things which they might not value, regardless of their circumstances. With LVT, you are only asking to people to pay for what they value.

It's the closest you can get to a free-market tax system; and it's not even increasing the amount of tax anybody pays - if land values are not collected nationally they will be collected privately. If they are collected nationally, everybody gets something back. If they are collected privately, then plenty of people get nothing back.


ThomasBHall said...

It makes sense if you refuse to see land ownership as putting a burden on society/ being a benefit itself.
If land is property (and so out of the equation), then the poll/income tax route to pay for things that clearly have a cost (bin collections, NHS etc) seems reasonable.
I understand this- when I was a child, I used to think Council Tax was unfair as the amount of rubbish put out was not connected to the amount of tax paid, the amount of schooling received was not connected to the amount of tax paid etc.
It is hard to visualise how your comparitively tiny plot/house has any cost to society at all, so the tempation is to put up walls (home is a castle), and feel injustice that the bully of the state is making you pay for "services" you don't want.

Kj said...

10 quid his idea of thinking "outside of the Box" is either a "local Income tax" or "local sales tax". Something that does not upset pensioners and other homeowning interests.

Bayard said...

"A revaluation of property values will result in more people paying more council tax - remember what happened in Wales"

As he has started both with a lie and then immediately pointed it out to be a lie, there seems little point in reading much further. The man's obviously an idiot.