Killer Arguments Against LVT, Not (462)

Emailed in by MBK, from The Spectator, in among the shite are these classics:

The report’s editor, George Monbiot, has not thought through the unintended consequences of the proposals.

Well yes he has.

Just one example and perhaps the most damaging is the desire to reduce land prices. With government (national and local), institutions and pension funds and religious organisations being the most prolific landowners, often on our behalf, this would be an economic disaster.

It would undermine the nation’s ability to pay for any of the measures they propose, by reducing our ability to borrow efficiently.

If people already own land, why do they need to borrow? I thought the idea was, take out a mortgage, buy a home and pay it off as quick as possible. The only reason for borrowing on land you already own is to leverage up and by more land etc.

The 'nation' raises the money to pay for by collecting taxes (such as the report's suggested 'Progressive Property Tax'), borrowing is just deferred taxation.

I'm not aware that land speculation is a major source of government finance. With a PPT, land values would continue to be a major source of government finance, only better.

Pensions would see a reduction in their value too.

So what? It's a negative sum game, and one man's pension is another man's poverty.

Replace Council tax with ‘Progressive Property Tax’

This is the idea that won’t go away. In another guise, the Mansion Tax is back. Except it won’t just be mansions caught by this pernicious change. Forget the cost of local services. Or how much you earn. The more valuable your house, or flat, the more you would pay in council tax under Labour’s plans.

Nobody has forgotten the 'cost' of local services; we have to collect taxes to cover that cost. Most services are local services - it's not just mowing the grass verge and emptying the bins. Schools, hospitals, police, roads etc are all local to somewhere and maintain local land values, total cost approx. £250 billion a year.

In ideal world, LVT (aka Progressive Property Tax) receipts would at least be enough to cover the cost of all this stuff; a flat PPT at 3% on current values should just about cover it. The more benefit you get from such local services, the more you pay. Seems like a perfectly fair free-market solution to me.

And these nutters hate income tax, so surely they would welcome a tax not based on 'how much you earn'? It's one or the other.

Getting a mortgage

After a big fall in house prices has been achieved, expect to find it more difficult to get a mortgage as LTV, Loan To Value, rates are tightened.

After a big fall, people won't need to borrow so much (so an LTV cap is probably unnecessary anyway) and it will be easier to get a mortgage large enough to buy a home.

It is simply easier getting and paying off a two-times salary mortgage than getting and paying off a five times salary mortgage (especially if taxes on wages are reduced and potential borrowers have higher disposable incomes).

So this one is really fucking stupid.

To ‘discourage land and housing from being treated as financial assets’ is beyond bonkers.

It is the most sensible thing I have ever heard.