Tuesday 14 January 2020

Killer Arguments Against LVT, Not (477)

From City AM:

Transport for London (TfL) is considering funding the £3.1bn Bakerloo line extension with a tax on landowners. The proposed works would extend the line from Elephant and Castle to Lewisham via stations on Old Kent Road and New Cross Gate. 

However, the project has been left unfunded with no indication from central government that it will foot the bill. It was revealed today by New Civil Engineer that TfL is considering taxing landowners along the proposed route to pay for the line as they would likely benefit from increased property values from the extension...

The Centre for London and the Adam Smith Institute think tanks said the landowner levy would make sense. 

Adam Smith institute research associate Charlie Paice said: "Rather than relying upon central government handouts for infrastructure investment this land levy will mean that those paying are the ones who stand to benefit as the value of their properties go up.

"If land owners aren't prepared to pay for a project which will further increase their property values – then why should they expect taxpayers from the rest of the country to stump up their cash?"


Good arguments FOR. Now let's see the KLN:

However, the low-tax lobby group the Taxpayers' Alliance (TPA) took a drastically different view.

Harry Fone, TPA grassroots campaign manager, said: "Imposing levies on homeowners who had no idea of the proposal when they bought would be deeply unfair."


OK, let's rephrase that: "Income tax hikes on people who had no idea that their taxes would be used to subsidise landowners elsewhere in the country when they started their current jobs are perfectly fair and reasonable."

16 comments:

Bayard said...

Ok, how about this? Any landowner who doesn't want to pay the levy can, instead pay the uplift in the value of their land due to the construction of the extension to TfL when they sell. This can be simply determined by finding other similar properties elsewhere in London of the same value but unaffected by TfL's works and using an average to allow for inflation etc.

Bayard said...

"Harry Fone, TPA grassroots campaign manager, said: "Imposing levies on homeowners who had no idea of the proposal when they bought would be deeply unfair.""

I hope he would agree with the following as well: "Granting windfall value increases on homeowners who had no idea of the proposal when they bought would be deeply unfair."

I wonder if he was nicknamed "Trim" at school.

Mark Wadsworth said...

B, you are proposing "government land grabs".

Rational Anarchist said...

This does seem a little backwards to me, as does a lot of government planning. If the expectation is that land prices will rise, the project should buy land in the affected area, then sell it after completion to recoup the costs.

In the same way, councils and much of government could be funded by buying land, granting planning permission then selling it again.

Mark Wadsworth said...

RA, how is that going to work if tens or hundreds of thousands of landwoners are going to benefit??

mombers said...

RA, selling land is a one off so can't fund government. Much better to rent it out, providing perpetual funding.

Also how would you buy the land? Owners would simply demand the post-handout value, or refuse to sell until it is done.

mombers said...

Does the TPA really propose funding this by taking even more private property from people in working poverty?

Mark Wadsworth said...

M, yes. Serves them right for not taking a stake in society. Bleurgh.

Unknown said...

Mark, can you explain ATCOR and whether a Job Guarantee is self-funding with 100% LVT. Wouldn't it go into higher land prices?

Unknown said...

Equally important is that taxes on income or output push down the rental value of land, so it’s quite possible that if we subsequently reduced income tax etc by £x billion, the rental value of land would go up by £x billion, and ultimately there’s no reason why we can’t replace just about all taxes with LVT.

So will a similar thing happen JG increase land prices

mombers said...

Maybe the TPA thinks that passengers should pay for it? A critic is like a eunuch - they know how it ought to be done. If it's not the landowners who should pay, then who FFS?

Mark Wadsworth said...

Anon "can you explain ATCOR" and "taxes on income or output push down the rental value of land".

You just explained it!

I don't see the point of JG. If it is so brilliant, how come nobody has ever done it successfully in the long term? Pay people a UBI, reduce taxes on production and it will sort itself out.

M, passengers pay the running costs; landowners pay for the infrastructure/land value uplift. Seems fair to me. If passengers have to pay for running costs AND infrastructure, then a landlord gets a freebie land value uplift. Seems unfair to me.

Physiocrat said...

There are genuine objections to the proposal as it stands. There is no magic circle within which the railway station has enhanced the land value, and outside that circle there is no effect. It is a gradual fall-off. Moreover, the benefits are not a one-off effect and should not be funded by a one-off hit; the value is sustained by the continued operation of the service.

While it acknowledges the principle that land value is sustained by infrastructure, that principle is better applied by putting a land value tax in place and funding infrastructure by bonds secured on the enhanced rental value generated.

Bayard said...

"There are genuine objections to the proposal as it stands. There is no magic circle within which the railway station has enhanced the land value, and outside that circle there is no effect. It is a gradual fall-off"

So taper the levy accordingly.

"Moreover, the benefits are not a one-off effect and should not be funded by a one-off hit; the value is sustained by the continued operation of the service."

Whilst that might be true of a reinstated service on a disused line, TfL are hardly going to build a completely new line and then not use it, are they?

benj said...

Landlords will be able to increase their rental income. According to Phone's logic, that's deeply unfair to tenants.

Physiocrat said...

@Bayard
The benefits are perpetual, and there are recurring costs, which make a perpetual payment a better way of recouping value and paying for the costs.