Killer Arguments Against LVT, Not (334)

From PublicFinance:

The coalition government has been told by the Institute for Fiscal Studies that its failure to carry out a revaluation of property values for the purposes of levying council tax is ‘increasingly absurd’...

‘Even if we can’t have perfection something close to coherence and consistency would be nice. In the words of former US Treasury Secretary William Simon we should have a tax system which looks “like someone designed it on purpose”. That feels like a low benchmark, but it is one we are a long way from meeting.’

All good stuff. And up pops Colin Aiken from Isitfair.co.uk in the comments:

A revaluation of property values will result in more people paying more council tax - remember what happened in Wales.

That's simply not true, most people ended up paying a few quid less, a small number of people ended up paying a few quid more. Overall it was fiscally neutral.

Council tax now is too high as it was abused by the previous Government.

"Too high" compared to what? Council Tax is only about five per cent of total tax payments, for crying out loud.

The council tax system itself is absurd. Property values don't always reflect the occupants' ability to pay the tax and council tax benefit is not the answer.

You get what you pay for. Do we criticise landowners for selling or renting land at prices which do not reflect purchasers' or tenants' ability to pay? Do we criticise Range Rover for selling cars which very few can afford? No, because people look for a home or a car which they can afford. The problem solves itself. If this is acceptable - and indeed desirable - behaviour between private parties, why should the government behave any differently?

What is needed (apologies to Sir Michael Lyons) is a new system that is fair to all - e.g. everyone pays for local services.

OK, define "local services". That would be, at the very least, the NHS, schools, roads, police/law and order and refuse collection, total cost approx. £250 billion a year; Council Tax only raises enough to pay for one-tenth of that.

LIT is not the answer and neither is LVT. It's about time we thought 'outside of the box'.

What he means is a Poll Tax, fair enough, in which case let's have a Poll Tax of £6,000 per adult. I'm sure he and his pensioner friends will love that. Or perhaps he means bumping up income tax by a few per cent?

Or, we could ask everybody to pay for the value of what they get from society (the location) and then argue the toss about how that money should be spent or redistributed.

With income tax or Poll Tax, you are forcing people to pay for things which they might not value, regardless of their circumstances. With LVT, you are only asking to people to pay for what they value.

It's the closest you can get to a free-market tax system; and it's not even increasing the amount of tax anybody pays - if land values are not collected nationally they will be collected privately. If they are collected nationally, everybody gets something back. If they are collected privately, then plenty of people get nothing back.

How can you have a debate if people won't listen?

Mike Schofield of Isitfair wrote an article on the iniquities of Council Tax over at ConHome last week.

Heartened by the blurb on the front page:

"Markets don’t do what politicians want them to. That’s because markets are human. They reflect the interactions between millions of human beings. Indeed, they are the interactions between human beings...",

I posted as follows...

"C[ouncil] T[ax] only pays towards a quarter or so of local government spending, and accounts for about 4% of total tax revenues. I get more upset by the tens of thousands that Mrs W & I have to pay in income tax/National Insurance and VAT than the £2,400 we pay in CT, which, as we are tenants, merely serves to depress the rent that we have to pay. In other words, if they scrapped CT and had local income tax instead ... then our landlady could hike the rent by £2,400 and we'd pay even more [than that in extra] income tax. So for tenants this would be a double whammy, and for landlords is would be a God-send ...

"I recently moved from a Labour controlled council to a Conservative council area in a similar sized house and the council tax bill is £2,400 as opposed to £1,400. Which is fine by me, actually, because the lower council tax boosted the value of the home I sold and depresses the amount of rent we have to pay."

To which Mike Schofield responded "Mark Wadsworth - You amaze me! You are happy to pay £2,400 a year - out of income that has already been taxed at least once!"

Which bit didn't he understand? Can somebody help me here?