Over at Appraiser10.com they list the main arguments for LVT, and then balance this out with Criticisms/Arguments Against, which I might as well look at in turn:
One of the biggest potential problems with a Land Value Tax lies in the valuation process. (1)
Under current property tax systems, the notional value for taxation purposes is often allowed to diverge from the actual market value. (2) Some jurisdictions assess property value at a fraction (sometimes quite a small one) of actual market value, and others tax only a fraction of reasonably accurate appraisals. (3)
Different rates of assessment and/or tax for different classes of property and even different sorts of owner also abound. When such complications go too far, people may end up paying an unfairly high or low amount of tax. (4) Sudden, large changes may occur in the tax amount, owing to the politically unpopular revaluations to market occurring in a single year after long periods of no change, rather than small changes occurring every year in step with changes in the true market value. (5)
1) The valuation process is the least of our worries, we decide which taxes we'd like to replace (all of them, for example) which gives us figure A; we then work out relative land rental values in each defined area (be that each postcode sector, each local council ward, each single street) on the basis of recent selling prices as recorded by HM Land Registry, add these up to give the total tax base B; divide A and B to give the rate and we are done.
2) So revalue more regularly, each year seems about right to me, in the same way as everybody's income or profits have to be reassessed each year for income or corporation tax purposes. It seems fair enough to cap upward or downward movements at ten per cent of the previous year's bill to give people time to adjust.
3) There's nothing that can't be done wrong. That's like arguing against income tax because there are infinite different rates, exemptions, allowances and so on. This is not an argument against income tax in principle, that's an argument against how it's implemented. The real question is whether LVT is a better way of raising tax (and preventing private collection of social gains) than all the other taxes, and not which is the best kind of LVT system. Evidence shows that even the crudest LVT systems work very well.
4) Which is why it's best to publish the official tax rate for each area (in £/sq yard, so that everybody can check his own bill) and also to publish a list of which particular plots of land get exemptions or discounts - and to make it clear that everybody else is paying a slightly higher rate as a result. If 'everybody else' is happy to pay a bit more because the village church is exempt, then so be it. If the factory run by the brother-in-law of the leader of the local council is declared LVT exempt, then either people vote in a different party, or they put up with it.
5) See (2).
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6 comments:
Every month I get an email telling me what properties have sold in my local area and for how much. In addition it tells me properties available for rent and an implied property value based on this rent. As far as I am aware this information is supplied to me without any government input whatsoever. We live in an information age - I don't see a good reason for not applying it to public policy.
DNAse, exactly. Add to that all the info which HMRC's SDLT department, HMLR, the VOA, council tax departments, Google earth, Rural Payments Agency, mortgage banks etc etc have and that's all we need.
From the linked article:
Since an LVT increases the value of improvements and penalizes dispersed land use, it could create strong incentives toward high intensity land use. For example, in large cities a pure LVT may not have adequate provision for open spaces in a densely populated city. Any parkland in a city would have an economic value higher than its usage as a park, leading to parks being removed and the city losing out in the process due to lack of open spaces.
Except this is wrong. In 2005, the value of Central Park in New York City was $528,783,552,000.
(see this: http://nymag.com/nymetro/news/reasonstoloveny/15362/
and this:
http://matrix.millersamuel.com/?p=280 )
But, as the second link mentions, "It's quite possible, and highly likely, that the net value of all of Manhattan would be less after Central Park was developed."
Final quote, from here: http://www-pam.usc.edu/volume3/v3i1tn1.html
Might collecting rent work too well? Might it spur edge-to-edge development, leaving no lot unbuilt? Not if the profit-motive is still in force. In New York, the city council keeps Manhattan's Central Park unbuilt not because Greens rule the Big Apple, but because property values overall are higher with the park than with luxury condos on the site.
Past a certain point, in-fill, covering the city with border-to-border buildings, would lower overall site value. Land value is at its maximum when land use is at its optimum, (my emphasis) when mixed use includes non-use. Some sites raise surrounding values not by being built upon but by being left pristine: the center for a plaza, a pari-central site for an open-air market, a ridge for a park, riparian areas for paths, etc. Owners of such sites would pay more land dues than they could collect from tenants or buyers. As owners look to sell, the locality would look to buy (8). Planners could convert the core into a new commons as popular as a watering hole in the Serengheti.
To pay their high land dues, owners of large lots that cover fragile marshes or steep hillsides might want to develop, until they figure out how much higher would be their surcharges. Requiring an Ecology Security Deposit and Restoration Insurance from owners would steer them away from the riskier sites: cliffs and river banks. These owners might then want to exchange their property margins for local bonds. The locality could then link the margins up into wildlife corridors and hiking trails.
The locality would not necessarily have to buy the pristine property. They could lower the LVT or give a subsidy or rebate proportional to the increase in value of surrounding property.
Snarf, yes of course, I was going to do that later.
These Homeys might as well argue that roads or pavements have little or no value and the local council would be able to increase its LVT receipts by converting them all to residential or commercial use.
Clearly, the optimum balance in towns and cities is about sixty per cent privately owned, twenty per cent roads and pavements; and twenty per cent public parks and playgrounds.
"These Homeys might as well argue that roads or pavements have little or no value and the local council would be able to increase its LVT receipts by converting them all to residential or commercial use."
Well, this has happened in London, with office space being built above railway lines and roads. Building at first floor over pavements would be a good thing, as it would keep the rain off the pedestrians.
wv ponsi
B, good point, that's what i call efficient use of land. The PwC offices balanced on top of (I think) Blackfriars station are a prime example of this. If anything, LVT encourages this sort of development.
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