Killer Arguments Against LVT, Not (381)

Via MBK from The Times:

Scottish council tax reform will take years and hit middle earners

A good start with putting the most negative possible spin on the report, which was a bit wishy washy to say the least.

If annual taxes on housing were more proportional to actual values, it will be people who own valuable housing who would pay more on an annual basis, however much or little they earn, not middle earners who rent or who own normal homes; and whether they are 'hit' all depends on what other taxes you replace (for example LBTT).

And why would it take years?

The Times quotes from the report:

New primary legislation to establish a wholly new system of local tax could not be delivered before the local government elections in 2017... Structures already exist to administer alternative property taxes, but transition would still incur costs and take a number of years to implement — even more so if land was to be taxed separately.

The first bit is a lie. All the legislation is in place, they just need to use the powers they already have.

The last bit is beyond a lie, although I have heard it many a time before.

LVT is just a variant of existing annual taxes on land and buildings like Council Tax (which was enacted and all the valuations done within a few months) or Business Rates. You can make Council Tax less proportional to values so it is more like a Poll Tax; or more proportional so it is more like LVT; or you can make a deduction for bricks and mortar and apply a higher rate to the smaller tax base and it is LVT. Or indeed you could make Council Tax more like income tax by setting it much higher and giving discounts to people on lower incomes. That's all. Big deal.

As to "costs and a number of years to implement", for a low level LVT (or a proportional property tax), it doesn't really matter whether you use rental values or selling prices and whether you make an allowance for the bricks and mortar element or not.

And the last thing you need is home-by-home or plot-by-plot individual valuations, you just work out local average values from existing databases, rank all homes/plots by size and then allocate them to bands, you can use the existing 8 1/2 Council Tax bands. This will take half the time of the Council Tax valuation/banding exercise. The value then ascribed to each building or plot doesn't need to be particularly 'accurate' either in an intellectual sense, as long as the same method of averaging and apportioning is applied consistently and fairly to all buildings/plots.