A complimentary piece from Tim Worstall of the ASI appears on the CapX blog.
But LVT is one of these generally good ideas that no one ever actually does. There’s an awful lot to like about it – not least that it annoys all the right people while still holding true to decent economic principles.
Which is why, of course, that it has been proposed for over a hundred years and never quite happened.
Here
Interesting to see the speaker flagging up the old myth that the poor are a breed apart. Homo Pauperens perhaps. William Cobbett in the C19th was complaining about this view, if I remember correctly.
From The New Sratesman, it was published in 2010 but I've only just noticed this bit:
Before he went to work in Nick Clegg's private office, Richard Reeves, biographer of John Stuart Mill and the then director of Demos, argued persuasively for the introduction of capital gains tax on the profits made from house sales.
I asked his successor at Demos, Kitty Ussher, the former Labour Treasury minister, what her position was on this. Like Reeves before her, she favours introducing capital gains tax on primary properties.
“This should be relatively straightforward to achieve, as we already do it on second homes," she says. "I'm extremely in favour of it, though I know the Daily Mail would hate it... if we'd had such a policy in place during the housing boom, it would have taken the edge off rising house prices for sure."(1)
I asked Ussher what she thought of introducing a land value tax - in effect, a tax not on the value of residential or business property, but on land ownership itself. "Umm. I remember when I was at Oxford someone senior at Balliol telling me that the college owns half of Scotland or something like that.(2)
"But surely it all depends on how much the land you own is worth. Even if you owned a huge bit of Scotland, it would depend on the value of that land - but if you owned a chunk of Knightsbridge (3), then the tax could have a powerful effect. Surely this tax would have most effect in the early years, because it would encourage divestment and changes in behaviour. The yield would go down."(4)
1) The KLN she trots out at the end applies in spades to the tax she favours - capital gains tax on main residences. It has been observed over and over that the revenue-maximising rate of CGT is very low indeed as you can avoid it by simply never selling - this is the opposite of what LVT would encourage, the yield would be very low indeed and by gumming up sales and purchases, might push prices up rather than down.
2) Yes, the government of the day always buys off the opinion formers.
3) Well duh, that's why it's called Land VALUE Tax. An acre of Kinghtsbridge is worth as much as all the farmland in Aberdeenshire (give or take a bit).
4) That makes no sense whatsoever. As it happens, the Dukes who own central London probably wouldn't change their behaviour, they'd accept a cut in net income from £10 billion a year to a mere £1 billion a year and bide their time until they can push tax policy back in their favour. If it did change behaviour and they sold off all their thousands of homes and business premises, then the purchasers (ex-tenants) would be paying the tax instead. The yield would be entirely unaffected by this change.
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From a recent article in the FT:
Sir Peter Rogers, chairman of the New West End Company, a lobby group that represents hundreds of businesses around Oxford Street, Bond Street and Regent Street (1), has called for a radical rethink.
“Our proposal is a more appropriate tax, possibly a sales tax or turnover tax, which is difficult to avoid, easy to collect (2) and reflects the economic performance of individual businesses.(3)”
1) Nope, look at the list of their members and supporters, it's all big landowners and banks with a few token actual businesses as a fig leaf.
2) Is he having a laugh? Property taxes (Business Rates or LVT) are nigh impossible to avoid and easiest to collect. Turnover taxes are at the other end of the scale.
3) Business Rates reflects the rental value of buildings, which in London is largely location value so barely different from proper LVT. It is a tax on those rental values.
Funny how landowners always recommend the most Socialist of policies.
From The Evening Standard:
Some of the UK’s biggest music festivals are planning to let revellers test their illegal drugs before destroying them.
Reading and Leeds Festivals and a number of other live music events will introduce the testing, with the support of local police forces, for the first time this summer...
1. For this to make any sense, we have to assume that people will buy slightly more than they intended to use, secrete most of it and then take a token amount for testing. If they get the thumbs up, they sacrifice that bit and consume the rest.
2. AFAIAA, testing for what's in substances is heinously difficult. If you take some random powder or liquid and test it to see if it contains cocaine or speed or whatever, you can normally get a 'yes' or 'no' answer. But you can only find what you are looking for, you can't tell what else is in it.
3. The list of chemicals in the so-called designer drugs is more or less endless, you'd need a fairly big sample (several grams?) and plenty of time to go through them all, and the user would have to give the tester a fairly accurate description rather than using the drug's street name.
4. Some drugs are often cut with something else to bulk up the volume, some are harmless, some are downright dangerous. the tester can probably test for the common ones, but not all of them.
5. So even if the tester can confirm that the substance actually contains what the user intended to buy, the answer will probably be "it's 60% [what you actually wanted] plus 30% [icing sugar] plus 10% heck knows what".
6. It's usually the "heck knows what" that kills you, meaning that an ethical tester will have to inform most users that the drugs are "probably" unsafe, even though statistically, only about one dose of illegal drugs per several hundred thousand is actually fatal.
7. So in most cases, the user is none the wiser. Even if the tester can identify some chemical or other, how is he to know whether the user will have a bad reaction to it? Clearly, most don't or the number of drugs deaths would be tens of thousands a year, not a few hundred.
8. It's highly unlikely that such market forces will work back to the actual source. If the manufacturer/importer knows that his drugs will be tested this way, he'd concentrate on producing the purest, safest stuff. But the distribution networks are so long and vague, this is unlikely to happen.
9. This is all beating round the bush:
David Raynes, of the National Drug Prevention Alliance, said: "I'm cautious about it because it normalises drug taking behaviour. Every year there will be a new generation of of festival goers who will be influenced. Those [drugs] are illegal because they are unsafe and it will lull people into a false sense of security."
No, you twat. Drugs are unsafe because they are illegal and not the other way round.
Poor old Stephen Fry. How detached can one Blairite, Uber Luvy become? When asked to prepare a thesis of his own in celebration of Martin Luther’s: Ninety-five Theses in 1517. Fry describes what he thinks is an 'extinction level event' in cyber space. He says here:
“An extinction-level event ... will obliterate our title deeds, eliminate our personal records, annul our bank accounts and life savings, delete all the archives and accumulated data of our existences and create a kind of digital winter for humankind,” he warned.
Notice 'our' order of horrors. He couldn't even manage to mumble something about 'our' NHS records. I know the old chap has a fine command of the English language and even works for the BBC, but it seems to this reader, Fry is actually confusing the definition of his 'digital winter' with the definition of 'freedom'. Something of a insult to all those poor and starving serfs who before, and since Luther, have sort to destroy the tax and tenancy records of their overlords as a first act after battering down the master's door.
I was not invited to the Hay festival, but I would like to contribute some ideas in celebration of Luther's work. After careful consideration, I have reduced the list to one central thesis: Fuck off, Stephen Fry.
Click for website, he* actually had a complete one made (not clear whether it actually drives) and exhibited it at the Geneva Motor Show.
* Who is coincidentally my cousin.
From This Is Money:
Landlords call for help as tenants can go almost a year without having to pay rent due to lengthy eviction process
Tenants are able to live rent-free for up to almost year if they're in dispute with their landlord about moving out, experts have warned.
Strict laws about evicting a tenant means it can take weeks, if not months, for a landlord to repossess a property.
Arla Propertymark, the industry body for the lettings agency, described the eviction process as 'a chaotic mess' and is calling for new housing courts to be established to help speed it up.
Don't ask paying tenants to leave then. Problem solved.
Spotted by Lola at the ASI, a fairly long article on a relatively minor but nonetheless interesting topic.
My view is, manufacturers can (or should be able to) dictate the retail price contractually - by simply not selling to shops which sell their products for less than the set price, and it's not up to the government to ban this.
It's all down to market power anyway. If you make a generic product (white sugar, toilet paper), shops can simply switch to a lower-cost alternative; if you have a reasonably well differentiated/distinct product (a Porsche, or a specific book or music CD), you can probably enforce this.
From the comments here:
I suggest that the payment for queue jumping is not rent, but the premium paid for convenience and saving time.
Would you classify the premium paid for supersonic travel as 'rent'? Or the taxi fare versus the bus fare plus a walk at both ends for the same journey?
Anything collected by government is tax.
DP
A good way of defining "rent" is "premium paid for convenience and saving time". The magic word is "premium". Consider: it costs the same to build and maintain a home in a good location for commuting or in a bad one. People will pay more for the former, primarily for convenience and saving time, ergo the difference/the premium is "rent".
Tools and capital are labour saving devices, I use an electric drill not a hand drill for convenience and to save time. But there are enough competing drill manufacturers and the price of a drill is a fair price for making it, there is no premium and no rental element.
The Daily Mail article explained that doing a certain operation costs the NHS £5,000, but people will pay £14,000 if they can queue jump and get it done next week. That breaks down into £5,000 actual cost of service provided and £9,000 rent.
Anything collected by government is tax.
Nope. If the NHS i.e. the government collects it, it is £5,000 cost and £9,000 rent. If an NHS surgeon takes the day off and does the operation privately for £14,000, it is £5,000 cost and £9,000 of it is rent.
The fact that the NHS i.e. the government collects it does not make it a tax. A tax is an arbitrary payment with no relation to cost or value of services provided to the individual taxpayer. So VAT, income tax and National Insurance etc are taxes.
Would you classify the premium paid for supersonic travel as 'rent'?
Not a live issue, let's take a real life example
I recently flew Stansted to Edinburgh and back for £49, car parking for a day also cost £49. There must be a small rental element to the £49 ticket price or else the airline would not be able to afford the Air Passenger Duty, but for the sake of this discussion, let's assume it's £nil and £49 is for cost of services.
The price for parking a car is nearly all rent (apart from a few pence for maintaining the tarmac).
London to Edinburgh is 332 miles. London to Paris is only 214 miles, but return tickets cost (say) £200 and upwards. Therefore three-quarters of the London-Paris ticket price is rent; one quarter is for actual cost of services. Of course, the government collects some of that rent in Air Passenger Duty, landing fees etc, but it is still rent.
"Or the taxi fare versus the bus fare plus a walk at both ends for the same journey?"
The cost per passenger of ferrying one passenger is clearly higher than one seat on a bus so of course it a taxi will cost more. In a free market, the taxi driver is charging for cost/value of services provided with no rental element. If there is a restriction on the number of taxi driver permits, then taxi drivers can charge a bit more; that excess is rent (as measured by the value of a taxi permit on the grey market).
There's no point being too scientific about this or pretending that there must be one all-defining way of describing it, but you know it when you see it.
