Saturday, 18 July 2020

Another petition worth signing

Over at

They've even got a calculator on their website showing how much Proportional Property Tax you would pay each year and compares that with how much Council Tax and SDLT (which it would replace) you currently pay.

They annualise the SDLT by assuming people buy and sell every twenty years. So they divide the SDLT you'd have to pay if you sold your home and bought another one of similar value by twenty. They also knock 10% off the likely market value before applying the annual percentage of 0.48% (to reduce the number of appeals) and say that the owner would pay the tax, not the occupant.

All sensible stuff and great minds think alike. (I wish they'd thrown in the TV licence fee and Inheritance Tax as well, but hey).
The LVT purists insist that an ideal tax is set at a percentage of the site premium (the location element of gross rental values) and not as a percentage of selling prices.

On an intellectual level, this is correct, but at the low level proposed by FairerShare, it doesn't make any difference. The maths is very interesting here and it tends to sort itself out:

i. The selling price-to-gross rent multiple for housing in cheap areas is much lower than the selling price-to-gross rent multiple of housing in expensive areas.

ii. The fraction of the gross rent that relates to location is much lower in cheap areas than in expensive areas.

iii. Therefore, a tax based on selling prices is much the same as a tax based on the location value element of the gross rent.
Their Killer Arguments, Not section is also very good. Comprehensive but concise.


MikeW said...

Great. Signed up. Will link to family and friends.

Mark. Could you unpack the 'purist' not liking comment a little more for us. Is this a LVT or LVT/Lite project? Not that it matters to me as such.

Mark Wadsworth said...

MW, thanks. I have explained the purists comment a bit.

mombers said...

MW thoughts on similar (not sure if complete) program to replace stamp duty with revenue + selling price neutral higher annual tax in Australia?

Mark Wadsworth said...

M, the Australian Georgists are all in favour, so it sounds good to me.