Wednesday, 8 March 2017

Killer Arguments Against LVT, Not (409)

Via MBK from The Times:

The row over business rates, with Tory MPs leading the charge against rises for small companies, has prompted a rethink in the Treasury about the whole way in which companies are taxed. 

Again, there will be short-term relief in the budget for some of those hit by the recent revaluation, but Mr Hammond has become convinced that much wider changes are required in the longer term.

In his view, it is unfair and anachronistic for businesses to be charged on the basis of the value of property when many of the most lucrative enterprises now operate online. There could be a review of business rates, which date back to 1572, as part of an overhaul designed to make corporate taxation fit for the 21st century.


A tax on land values is not a tax on business, or households, or farmers. It is a 'tax' (actually, a user charge for benefits received/burden placed on those excluded*) on land owners. People owned land in 1572, they own land today, they will continue to own it for as long as nation-states exist and permit it. The basic concept is the same, what you (are allowed to) do with it is a separate issue, but clearly you hold it for some purpose or other.

A business (or a household or a farmer) which pays rent (or a mortgage) is just paying privately collected tax, so turning his non-logic round, we might as well say that "It is unfair and anachronistic for businesses to be charged rent based on the value of the premises they occupy" which is surely nonsense.

At the same time, the chancellor is determined to ensure that companies are taxed properly on the profits they make in this country — even if their customers are on the internet rather than physically going into a shop. For him this is not about waging a political war on “fat cat” multi-national corporations, such as Google and Facebook, but a question of making the system fit for purpose in the digital age.

Can we stop wailing about small, local retailers on The High Street and blaming their woes on glorified mail order services like Amazon**? If you want to run a small, local business from the High Street, then provide services - hair dressing, repairing mobile phones, a cafĂ©, estate agent, launderette, whatever - where there are little or no economies of scale - Amazon will never put them out of business. If you want to run something really niche, like second hand books, then the High Street is probably not the place for you, you can sell your stuff via, er, Amazon.

* Which is why Good Queen Bess introduced Poor Rates in the first place - to finance a very rudimentary welfare system.

** If we think that Amazon et al are taking the piss on corporation tax - and there is evidence to suggest they are - then it's easiest to just charge them higher Business Rates on their massive distribution centres and get the money that way.

6 comments:

Bayard said...

"Can we stop wailing about small, local retailers on The High Street"

Human shield. We all know who's hiding behind it.

Bayard said...

"In his view, it is unfair and anachronistic for businesses to be charged on the basis of the value of property when many of the most lucrative enterprises now operate online."

I wonder if he considers it unfair and anachronistic for businesses to be charged on the basis of turnover, when many of the most lucrative enterprises operate without having to pay this charge at all.

"and blaming their woes on glorified mail order services like Amazon**?"

If you go back a few decades there were a lot more "small, local retailers on The High Street", true, and no Amazon. Then people were whingeing about the supermarkets putting the SLROTHS out of business. However, if you go back a few decades further still, you will find that an awful lot of stuff was sold mail order and no doubt people were still whingeing that the SLROTHS were being put out of business, despite the fact that most villages, as well as towns had their SLROTHS.

Shiney said...

And anyway... from what I gather its only the SLROTHS in London and the South East (and maybe Bristol) that are moaning.

If you have a shop in Macclesfield or Rotherham, or a factory in [deleted for privacy purposes], I bet you are fairly relaxed about the whole thing.

Lola said...

The total lack of logical thinking fair makes you weep. How do you get it through their thick heads?

mombers said...

I think avg comp for Google employee in the UK is £160k p.a. A huge portion of this goes on residential rents or home purchases so if you just tax those as well then you collect most of what the public is due

Bayard said...

"How do you get it through their thick heads?"

You don't. There's none so stupid as those who don't want to understand.