Those Institute for Economic Affairs tax proposals.

Full report available here.

Most of the more detailed stuff slagging off existing taxes on pages 167 to 222 is actually quite good. They make the usual Faux Lib mistakes in thinking that VAT is a tax on 'consumption' and that corporation tax is a tax on 'capital', but hey.

Here's the fun part:

Location value tax

One exception [to their rule that 'wealth taxes' are bad], however, is tax that captures the location value of land. If properly constituted, a tax on location value may cause disproportionately little economic damage, because land cannot be hidden or taken overseas to avoid the tax and owners cannot respond to the tax by producing less value in its location – for the reason that they are not responsible for it in the first place.

A location value tax involves a tax on the value of land in a given location which is normally calculated on the assumption of the land being in its most valuable permitted use. However, it is a tax on the land value only and not on any associated buildings…

So far so excellent. Then come the KLNs...

A further objection arises from the fact that the burden of a location value tax falls on the owner of the land at the time when the tax is announced. The value of the land should fall immediately by the discounted present value of the expected future tax payments required under the tax. It is therefore a windfall tax on landowners and amounts to arbitrary and retrospective confiscation of the value of their assets.

That's not actually an argument against LVT, that is a huge advantage in favour. You can view it as a large one-off tax hit today, payable in instalments by whoever chooses to own/occupy the land in future; in exchange people will get a reduction in other taxes, leaving most people plenty of extra income to pay it. After the tax has been introduced, people will be largely unaffected; they are just paying in LVT what they otherwise would have paid in rent of mortgage payments (out of higher net incomes). So it's not retrospective at all, the tax (in cash terms) is due in future on the basis of where they decide to live in future.

And why does the word "confiscation" creep in? They don't describe income tax as "confiscation" of part of your income, even though that actually be true.

Over the next few pages there are the usual further KLNs, army of surveyors, poor widows etc, but still very favourable overall.

Being numpties, they estimate the site premium of all UK housing at £74 billion, which is only one-third of the true figure. But at least they propose a high tax rate of 75% (page 221), so their LVT (on housing, commercial and farmland!)would be enough to replace Council Tax, Business Rates and SDTL, so amen to that.

And even though they say that taxes should be simple, they also propose this:

To better adhere to the neutrality and transparency principles, almost all exemptions and all reduced rates for VAT should be abolished. But new dwelling construction, repairs and maintenance, and rents should not be subject to VAT. Instead, these items should be captured along with the consumption value of owner-occupied housing with a housing consumption tax which should be set at the same rate as the standard VAT rate and should aim to mimic VAT.

A system such as this this operated in the form of domestic rates until its abolition in 1990, when it was replaced by the community charge (‘poll tax’) and then council tax. The rates were intended to be reassessed frequently but, in practice, reviews were usually long delayed, which led to even stronger pressure to resist reviews as the changes in particular households’ tax rates that the review would lead to would be so great. This distorted spatial patterns of housing consumption and opened a gap in the level of taxation on housing versus other consumption.

To avoid repeating this problem, three design features should be implemented:
• Assessed rents should be automatically increased annually in line with a local rent index.
• Rent reassessments should be carried out at a fixed frequency, perhaps every four years...

In isolation that seems better than what we've got, but why bother with two taxes on essentially the same thing? Elsewhere they point out the stupidity and unfairness of levying two layers of income tax on employment income (income tax and national insurance), why have two similar, smallish taxes on housing instead of one bigger one? And why should the rate be the same as normal VAT? The normal VAT rate should be heading towards zero, for a start.