Killer Arguments Against LVT, Not (436)

What is particularly irritating about all these KLNs is that they are not based on facts or reason, even though the Homeys pretend they are. Even if you could sit Homeys down and carefully rebut their objections, they wouldn't say, ah well, good point, I suppose my KLN is baseless. They will just invent another one and would have no qualms about completely contradicting themselves (as the commenters do below).

Emailed in by MBK from The Times, from the comments to an article headed John McDonnell says Labour backs levy on land to replace council tax:

GK: They really are flying the Marxist flags high this week. Will WC 19th February 2018 go down as the week the Socialist Party finally unveiled their true intentions?

John McD clearly said that it would be a replacement tax. One in, one out. Maybe Labour intend to collect more from LVT than they would have done from Council Tax, so what? How is that more "Marxist" than the Tories regularly nudging up the main rate of VAT, something which a Labour government (to its credit) has never done?

Another cyclist: The fairest form of local taxation was the Community Charge - every person who used council services paid for them. Why should two people living in a large house pay more than two people in a small house? Both use the same council services.

A Poll Tax is inherently regressive and difficult to collect, so 'honest' souls would end up overpaying to compensate for those who wriggle out of it. For a given total revenue, the average household would be paying as much in Poll Tax as they would be paying in LVT. The big differences being that LVT is inherently progressive, easy to collect and encourages more efficient use of land and buildings.

Christopher Sheldrake: I have a large garden, it's actually large enough to build a second house on. This was obviously what was originally intended because there is a missing number between us and one of our neighbours.

However, there is zero chance of the council agreeing to give us planning permission to build another house (They even refused a detached garage because they thought the intention was to turn it into a house - it wasn't). So, can McDonnell please tell me how we are supposed to make our garden more "productive" to avoid Labour's squalid Land tax ? The answer is we can't, the council won't let us...

That's a valuation issue, clearly, the valuation system has to be consistent with the basic concept of 'optimum permitted use'. If there's no planning for a second home, then the extra large garden would only incur minimal tax. Observation tells us that people value the first 100 sq yards of back garden or the first one or two off-street parking spaces very highly. The additional price/rent that most people are prepared to pay for anything more than that is minimal (diminishing returns to scale), so the extra tax on the would also be minimal.

... This is nothing more than a tax grab which will, quite by coincidence, of course, not hit Labour Lovies [sic] in Islington with their small gardens, nor their supporters living in council or Housing Association flats.

Bollocks. The LVT on homes in Islington will be very high. how high the LVT-inclusive rents for social housing would be is - and always was - a political decision.

colinus: That's the London vote gone. Carry on McD.

Wahey! That's the equal and opposite argument! He recognises that LVT on homes in London will be a lot higher than Council Tax. Caveat One - it's set at a national rate, which is not clear from the article. Caveat 2 - over half of people in London are tenants and won't be affected.

Toby Jones: What is the difference between taxing land and taxing property? Does it mean that a tumbled down property on a valuable piece of land is presented with a large bill...

Yes, obviously.

... but a central London luxury Penthouse has low tax on the basis that it sits on land along with 35 other flats and they all share the land bill..?

Nope, 80% or 90% of the value of a London luxury Penthouse worth £1 million is land/location value, so it would pay very high LVT. The value of inner-London land is so stupendously high, you can divide it by 36 and still have a very high land value per unit. That's why a pokey flat in outer London costs the same as a normal family home in the suburbs of most other British towns - and would have a similar LVT bill.

Why would you take land values as the basis when the value of the property is 1) more able to be estimated and 2) A more accurate sign of ability to pay.

Because land value is the best measure of benefits received from society in general and/or burden placed by the occupant on society in general; the land/location value of housing is far easier to calculate; and taxing land/location value encourages improvements rather than discouraging them. Pure land value has nothing to do with "ability to pay" of any particular individual household but a) neither does total building/land value and b) they are both good indicators of "willingness to pay" of all households in the area.

drunk and disorderly Brexiter: I tried to have this explained to me by advocates but their answers ranged from outrageous to stupid.

I asked what an elderly person living in a large house should do if they can't afford the LVT based on the value of their property. Considering they probably bought the house when it was worth far less and its current value was completely out of their control...

Roll up and defer, that's what most LVTers say. If the value is completely out of their control, then that's a bit of a clue bat that the gain is entirely unearned. See the equal and opposite KLN: "I have worked hard to improve my home and shouldn't be taxed on my own efforts". Er, income tax?

Apparently that person should sell and buy something smaller...

If they don't want to roll up and defer, can either buy something smaller in the same area, or something the same size in a cheaper area, or indeed something much larger in a much cheaper area.

So - ignore the nastiness of uprooting someone against their will for the moment - I then asked what it would do to property prices for first time buyers if elderly people kept buying up small homes. The response to that was silence.

The price of the sort of homes that young couples would like to buy - family homes - will clearly fall, as there will be more of them on the market. That also saves them the hassle of moving again in a few years if/when they have kids, win-win.