Monday 5 June 2017

Killer Arguments Against LVT, Not (415)

The Daily Mail does a hatchet job, as expected. The 3% figure is plucked out of the air (they are talking about something the Labour Land Campaign group proposed, Labour's actual manifesto was far more modest than that).

Even if The Daily Mail were right and the tax on an average home were £3,837 instead of just under £1,000 for Council Tax (or £1,000 under Labour's proposed Land Value Tax), so what?

The average motorist pays £1,500 in extra taxes on his car; the average smoker pays £1,500 on tobacco duty and VAT if he buys his smokes in the UK (2012-13 figures, by now it's a lot more); the average drinker pays £1,500 in booze duty and VAT.

I smoke, drive and drink (the last two not at the same time of course), tots up to £4,500 a year. Not to mention being fucked over for about £12,000 a year in VAT. Am I a victim of "Marxism"?
But my favourite KLN is this one:

‘Either you are whacked with massive bills in places where property is dearer – or you’ll suffer a hike for living in a part of the country where there is more space for bigger gardens.’

The "either" bit is an outright lie. He conveniently forgets to complete that sentence by saying "... but of course, most of the majority of households who live in semi-detached houses, terraced houses or flats outside city centres will pay less."
According to the last available figures from the BBC (2013), the national average prices paid by type of home were as follows:

Detached £329,600
Semi-detached £203,943
Terrace £202,972
Flat £250,101

Seems a little unexpected if you don't understand land/location values. Most people don't want to live in a flat; they only build them in larger cities where the extra convenience makes up for lack of space (and where higher land values mean higher densities etc).

The larger city, the more expensive the land in the inner areas; hence the larger the city the more flats. There are relatively flats in the largest and most expensive city (London) which pushes up the average so the average price paid for a flat is higher than the average price paid for a semi-detached or terraced house.

We therefore see that detached houses (usually in outer suburbs or rural areas) would pay more in LVT (biggest gardens), then people who live in flats (as they have the highest land/location value) and the majority of people who live in truly 'average' homes would pay less.

Even if the tax were 3% of the land value, that means it would cost about £2,400 a year more if you move from a semi-detached house or terraced house to a detached house. If you like having a really big garden, you are clearly prepared to pay £50 a week extra for it. Nobody's going to try and sell off part of their big back garden to save £50 a week.

Job done, move on.


Dinero said...

The land under gardens has a lower land value than the the land under houses as it does not have planning permission and is to small to build a house on.

Mark Wadsworth said...

Din, exactly. Two similar houses on the same street with different sized back gardens hardly differ in value.

Dinero said...

So there is an issue with existing houses where a tax on the land that is not big enough for housing and does not have planning permission for housing is at the same rate that land that does.

A terraced house with a strip of garden at the back would have three times the tax as next door with no garden.

Mark Wadsworth said...

Din, that would be a daft way of doing it.

Dinero said...

But don't you see that as a problem.

Mark Wadsworth said...

Din, if you have a stupid valuation system, of course it's a problem. So have one that reflects actual rental values. Duh.

Dinero said...

But that is the proposal , the proposal in the article is to tax the garden area at the same rate as the house area.

Mark Wadsworth said...

Din, that is NOT the proposal. The article is lies from start to finish.

Dinero said...

are you sure about that

From the labour land value website

"...First off, the value of every piece of land in this country should be assessed. By 'land' we mean the site alone, not counting any improvements on the site. Thus, the value of any buildings, crops, drainage or anything else which people have put on, or done to, the site would be ignored. Then, after the land has been valued, a tax should be fixed on the basis of that value..."

Bayard said...

Din, in that excerpt it doesn't say "by area", does it? Does it anywhere else? If not, then the DM article is lies (as one would expect).

Mark Wadsworth said...

Din, please see next post.

B, ta for back up.