Friday, December 12, 2008

Q: when is a free marketeer not a free marketeer?

Mark Wadsworth is once more banging the Land Value Tax drum in respect of the theft of land by the government. I find the idea of LVT instinctively distasteful, for reasons that I shall elaborate on in the future; however, I did want to pull Mark up on his opening sentence. [Emphasis mine.]
In the comments, I suggested Land Value Tax as a free market solution to the question of whether the State should be allowed to permit ramblers access to coastal paths even where they cross somebody's land.

Um...

A tax is a "free market solution" now, is it?

Fuck me, I hadn't realised. You see, I thought that taxes were a distortion of the free market since it is a cost imposed upon free transactions between two entities, thus rendering that transaction... well... not free. I'm happy to be corrected by Mark.

Fucking hellski.

62 comments:

Mark Wadsworth said...

And who said this ...

There's a sense in which all taxes are antagonistic to free enterprise ... and yet we need taxes ... We do need to provide for certain essential government functions - the national defense function, the police function, preserving law and order, maintaining a judiciary. So the question is, which are the least bad taxes? In my opinion the least bad tax is the property tax on the unimproved value of land, the Henry George argument of many, many years ago.?

Er, no less than one of my great heroes Milton Friedman.

Devil's Kitchen said...

And just what does that prove, Mark? Even were I to believe that Milton Friedman was infallible – which I don't – even he admits that "there's a sense in which all taxes are antagonistic to free enterprise".

Milton does, indeed, say that, is in his opinion, "the least bad tax is the property tax on the unimproved value of land", but he doesn't try to pretend that this tax is a "free market solution", for fuck's sake.

What you propose is not even a tax on the unimproved value of land: in the comments to your own post, you start talking about the change in LVT if someone should build a skyscraper next to someone else's garden – that is taxing the improved value of land.

So, if you think that one of your great heroes is wrong on this issue (as you must surely do, since you propose changing his idea), what the hell should I think of him?

So, what's your point, Mark?

DK

no longer anonymous said...

Not a fan of tax at all but LVT is probably the tax least likely to cause economic distortions. Some libertarians seem to view it as the "best" tax:

http://www.amazon.com/Libertarian-Party-at-Sea-Land/dp/0911312978/ref=sr_1_1?ie=UTF8&s=books&qid=1229126298&sr=8-1

Some good points here too:

http://www.landvaluetax.org/what-is-lvt/

That said I'm not a "geolibertarian" insofar s I don't subscribe to their particular theory of the business cycle or their philosophy on land. I just happen to think LVT is the tax system most consistent with economic efficiency and the free market.

One could even construct a conservative philosophical case on the basis that the monarch owns all the land in the country and LVT is basically paying rent.

Mark Wadsworth said...

DK, my point is that I agree that all taxes are "antagonistic etc". But there are some taxes that are less bad than others, and half a free market is better than none.

I am perfectly aware that you personally despise LVT, but even you must agree that some taxes are less bad than others. It is all a question of working out - by logic and real life examples, which are the least-bad ones.

As to 'free markets', a working definition is that in a truly idealised free market, all producers sell for the same price and all consumers pay the price.

Applied to land/location values, under current rules, an incumbent pays NOTHING towards the current value of that location, but a newcomer has to pay considerably more (whether that is to the previous owner or to the bank is academic). So that's clearly not a free market.

Contrast that with e.g. cars or TV's. If I want to buy a car or TV, I pay the market value. The second value of my car or my TV drops like a stone, but so what? I pay for value-in-use, and not in the hope of making a capital gain. If other people want a car or a TV, they don't need to wait patiently until I choose to sell, they just buy a new one from the shop or save a few quid and buy one second hand.

As to your point on "unimproved value", this is short-hand for "that element of the value of your land that is beyond your control". If they build a sewage works or asylum seeker centre next door to you, clearly you are due a reduction in LVT. If they open a new railway station or hospital, your land value increases, so you pay more.

It may well be that some people don't want to pay more, ever, ever, on a point of principle, in which case they should lobby their local council to ensure that no new businesses ever open up in the locality, that drains are not repaired, that the area gets no new hospital or railway station, that the council wastes money on 5-a-day advisors rather than bobbies on the beat etc.

Other people will be happy to welcome new businesses etc to their area, yes they will pay more LVT, but provided that is set at a sensible rate, the gain to the landowner is more than the extra LVT cost and everybody is happy - the grumpies, NIMBYs and swampies can revel in their Mediaeval Non-free market Heaven while the clued up people get the business investment, infrastructure and so on.

Anonymous said...

...."If they open a new railway station or hospital, your land value increases, so you pay more".

Hmm - since when does living next to a hospital improve the value of one's land?!

I'm a commercial property developer and chartered valuation & Development surveyor. I've worked in property for 20 years. Land Value Taxes do not work - they never have. They stifle development and enterprise.

It is also a nightmare to administer fairly and causes a reduction in liquidity in the property market. Not a good thing on a small island with strict development control and limited development stock.

Anyway, we already have LVT - It's called a S106 contribution and it is the legalised robbery of the landowner, confiscating monies for the public purse.

Why? Why the fuck am I supposed to pay some beaurocrats wage when I add value to my property or benefit in a windfall gain? I already pay 4% every time I buy property, 17.5% (sorry 15% for now) VAT, corporation tax or cap gains on the profit and 40% Inheritance Tax if I have the shear temerity to want to pass my own property to my family on death!

Why is this country so fucking hung up on property being some never ending golden egg?!!

Jock Coats said...

"Q: when is a free marketeer not a free marketeer?"

A: When the market they deal in is unquestionably unfree, quasi-monopolistic and state protected. ie LAND ..:)

Mark Wadsworth said...

Dear Anon,

s106 agreement, Planning Gain Supplement, Stamp Duty Land Tax and capital gains tax are vaguely related to land values, this does not mean that they are LVT in the sense that I, NLA or Jock mean.

Most LVTers are against s106 agreements etc for the reasons you outline (they do indeed stifle development), we're talking about an annual tax on the location value to replace all the other stuff (esp. Council Tax, Business Rates, Inheritance Tax etc etc)

Harry Haddock said...

Personally, I think anyone advocating LVT whilst retaining Planning Laws should be taken outside and shot in front of his or her family as the evil statist bastard that they are.

Oh, and although I understand that Friedman was opposed to violence, I suggest he would have been mightily pissed off with anyone who used his words to justify a LVT to fund a citizens basic income, rubbish collection, TV license, welfare, etc, which both Mr Wandsworth and Mr Coats have in the past.

LVT is the authoritarians wet dream. It gives bureaucrats the ideal tool for social engineering. It is based on a false premise, is unfair, open to political corruption, and would hamper any business that required long term investment in land.

Some even argue that it is good because it is 'economically efficient'. Whoopie do. So was fucking slavery.

Richard said...

Yes, Friedman's probably right, if we must have tax then some form of Land Value Tax is probably the least bad sort.

Yes it will have administrative costs. Yes there will be some economic distortions and some unfairnesses (partly through simplified valuations brought in to reduce the admin costs). But so do the taxes we have now. That's an argument against all taxes, not just LVT.

BUT - and this is a huge, Prescott-sized but - the worst option would be to have LVT as well as all our other taxes.

And that's what we'd get.

Why? Because LVT will raise only about £30 billion per year. Yes, that might be all the government really needs to do its essential duties, but it's a hell of a lot less than the £600 billion it takes in tax at the moment.

So unless we first cut out 95% of government spending, LVT would be another tax on top of all the rest - and that would be a disaster.



[Calculation:
The ONS Blue Book values all UK real property (housing, commercial and farmland) at just over £5,000 billion.
Assume (optimistically) that 40% of the value is the underlying land rather than the building, so the capital value of the land is about £2,000 billion.
Assume (again, optimistically) an 8% return, so the annual rental value of the land will be 8% of £2,000 billion, i.e. £160 billion.
With a 20% tax, that will raise £32 billion.]

Richard said...

Harry Haddock - slavery wasn't economically efficient; Adam Smith proved that

(That's why Wordsworth, trying to smear him in support of his slaving patrons, called economics the "dismal science". Never trust a poet.)

Slavery made a lot of money for a few people, but that doesn't make it economically efficient.

Paul Lockett said...

In the UK, all land is owned by the Crown, so if the owner wants to levy a charge for exclusive use of land (as it already does for oil fields, etc.) and then use that revenue to fund public expenditure, it sounds good to me.

Much better than income tax or VAT, which could legitimately be called theft.

Devil's Kitchen said...

Paul,

"In the UK, all land is owned by the Crown..."

Even under a freehold (genuine question, by the way)?

"Much better than income tax or VAT, which could legitimately be called theft."

Income tax, yes, certainly. But I still favour a local sales tax on luxuries (quite widely defined luxuries, to be sure) since this is the nearest that one can possibly get to a voluntary tax.

One does not have to buy luxuries (by definition) and so taxing those seems to be reasonably fair (and means that the richest will, voluntarily, pay more than the poorest).

DK

Ian B said...

Oh fucking hell. Who's going to define what a luxury is? Fags? Beer? Cakes? Cars? Garden furniture? Waffle irons? Lingerie? Organic free range eggs?

No, no, no. Once you start taxing "luxuries" you're just asking for a mud-wrestling match over what counts as a luxury and you may as well be shouting "come on down and fuck us over, social engineering ninnies!"

You tax every sale, or you don't tax sales at all. Taxes need to be as immune to special interest group subversion as is humanly possible.

Also, I have no idea, despite years of observing people discuss it, why so many people think an income tax is theft, but stealing a portion of every sale of cakes and fags isn't. Sheesh.

Anonymous said...

Paul......the Crown does not own all the land in the UK.

I make this point for the reason that if your assertion were to be repeated often enough to become an accepted truth.....then that's another right and freedom lost.

Paul Lockett said...

Even under a freehold (genuine question, by the way)?

Yes. The Crown is absolute owner of all land (it holds alloidal title) and the freeholder holds it "of the Crown."

I'm (unusually!) in agreement with Ian B, with regard to the issue of defining luxuries. In terms of taxing luxuries to make the wealthy voluntarily pay more, LVT achieves that to a degree, as the wealthy will tend to occupy larger plots in nicer areas which are more valuable.

Devil's Kitchen said...

"I'm (unusually!) in agreement with Ian B, with regard to the issue of defining luxuries. In terms of taxing luxuries to make the wealthy voluntarily pay more, LVT achieves that to a degree, as the wealthy will tend to occupy larger plots in nicer areas which are more valuable."

Erm... I feel that I must, again, draw people's attention to the distinction between capital wealth and income wealth.

You may own a nice house -- which you have inherited, say -- but that does not mean that you have the income to afford a massive premium to live in it.

Now, the response may be, "tough shit: sell it" but it will not be a popular response.

And Ian B: if you think that special interests will not corrupt LVT, you are sorely mistaken.

And, unlike LVT, a sales tax allows for tax competition between, say, counties. I would also have shops display what the tax is on each item, so that people know precisely how much the tax is and be reminded of it on a day to day basis.

Plus, sales tax on luxuries (however those might be defined: roughly, unprocessed food, water and energy, I would say) takes some account of ability to pay, which LVT does not.

All tax is theft, we know that: however, if we accept that some tax is necessary, I would prefer to have a tax that is flexible (shopkeepers can set their own prices; councils can set their own levels and punters can choose whether or not buy the products) than one based on the value of land over which one has no control.*

DK


* Let us say that you have your own cesspit and water well, which you are perfectly happy with. Then your property is put on the mains system: you don't want mains water but the very fact that you are now on the network increases the value of your land and thus your LVT.

Paul Lockett said...

DK, I've never really been convinced that those with capital wealth deserve more protection from taxation than those with high income levels.

Of course, if you have a nice big house that you inherited, you might not be able to afford a massive premium to live in it, but that premium could equally be the fuel bill to heat it which goes through the roof when commodity prices increase.

On the other hand, actual income doesn't directly equate to disposible income, so it isn't a perfect proxy for affordability.

LVT does take account of ability to pay, because if you can't afford a large plot in a nice area, you down size (although, as you say, probably not a popular response). In any case, if somebody is seriously poor, they're probably renting, so LVT wouldn't do them any harm anyway.

LVT could include a locally set element in the same way as a sales tax (i.e. central government collects x% of value, local government collects y%), although I'd personally rather it was uniform.

The idea that shopkeepers are absolute masters of their prices doesn't quite ring true. Prices are set by market forces determined by buyers and sellers and that's true whether it's goods in a shop or land.

I don't necessarily agree that all tax is theft. I think it is when it takes away my property (income tax, NI, VAT, etc.), but when it's a charge for exclusive use of a common resource (LVT, a broadcasting licence, oil drilling rights, etc.) or a charge for using a government service (road use fees, etc.), I'm generally happy with it, so long as I get a fair share of the revenue.

The other angle to LVT that I like is that it is far less invasive than income or sales taxes. It doesn't require people to tell the government about every penny they earn or every item they sell and it doesn't require an army of tax inspectors to monitor evasion. In its simplest form, it only needs a completed land register and each landholder's declaration of how much they would be prepared to sell their freehold for.

Mark Wadsworth said...

DK "I must, again, draw people's attention to the distinction between capital wealth and income wealth."

I for one never confused the two. I am all in favour of a flat income tax (say 30%-ish) on all incomes (and getting rid of VAT, higher rate tax, National Insurance etc) with a generous personal allowance of £10,000-plus, all perfectly do-able if we got rid of 3 million unproductive quangista (cost, about £100m a year).

I am also in favour of replacing Council Tax, Business Rates, SDLT, Inheritance Tax, TV licence fee, Capital Gains Tax etc (a bizarre mixture of poll taxes and jealousy surcharges) and having a flat tax on property or location values (at whatever % rate is required).

The flat income tax benefits people on higher incomes. The latter benefits people in smaller houses or tenants. So if you earn a lot of money and you're a tenant, you win - average earners in average houses are indifferent, high earners in big houses might come out slightly ahead - and if you are 'cash rich, asset poor' you lose out. For political reasons, pensioners would be allowed to defer LVT to be repaid on death.

If we net the two off, it reduces the tax burden on the productive economy and keeps the tax on unproductive assets (i.e. land/location) at the same level, while being a massive bloody great simplification.

If I may ask, DK, do you think that people with 'capital wealth' are to be favoured over people with 'income wealth'? In that case, do you support the government's idea that people with big mortgages should be given two-year interest free holidays at the taxpayers' expense? Because that's the same thing, really.

Ian B said...

DK, what makes you think I'm in favour of LVT? It's an abominable idea. I wasn't saying "luxury tax bad, LVT good". I was just saying "luxury tax bad".

If libertarians should want anything from a tax system (beyond taxes being as low as possible) it should be that said tax system should not be manipulable by special interest groups. A "luxury" tax fails that test horribly. To get to economic fundamentals, there is no such thing as a luxury- just goods and services that individuals, at some instant, seek to trade. The trade occurs when the good or service has utility to the buyer, that is all, and if some have utility as pleasure or decoration, or may not seem like "needs" (© K. Marx) to somebody else is nobody's business, least of all the State's.

If you want a sales tax, tax everything from newspapers to nappies to bread to beer. Otherwise you're asking the State to make moral judgements about lifestyles. From what I've read here, I don't think you're generally in favour of that.

It then follows that people who lead "good" lifestyles (as defined by the ninnies) get to vote for higher taxes, paid by those defined as leading "bad" lifestyles. Every tax increase should hit everybody equally. It's the only half decent chance you've got of discouraging tax escalation.

Richard said...

"In the UK, all land is owned by the Crown..."

In feudal theory, yes. In practice, it's meaningless because freehold gives full rights to buy, sell, use etc.

The American courts sometimes get worked up about "allodial title" (the over-arching ownership of all land by the State), and over there it is seen as the basis of "eminent domain" (the State's right to take property for public good). But in the UK it is a dead letter.

Even the government doesn't claim that the Crown owns all land in any real sense; modern restrictions on the rights of land owners (such as planning law or compulsory purchase) are statutory like any other, based on Parliament's claimed power to do what the hell it likes rather than any Crown ownership rights over land.

And Paul, even in feudal times when this was a real issue, a freeholder could not be charged rent by the Crown.

Richard said...

Agreed with Ian B on a "luxury tax". Horrible idea - gives far too much power to politicians and special interest groups to decide what a "luxury" is.

MatGB said...

Harry Haddock: "I understand that Friedman was opposed to violence, I suggest he would have been mightily pissed off with anyone who used his words to justify a LVT to fund a citizens basic income"

Friedman advocated a negative income tax to replace all benefits payments. I've seen a lot comparing the idea to a CBI and some implementations of CBI that are proposed are basically Friedman's proposal

So no, I don't think he'd be too pissed off with people taking his ideas and actually proposing them as policy.

I was persuaded of the case for CBI and a flat tax with a high threshold by DK, and I've read a lot more about the ideas since then. I really like the idea of significant simplification of the tax system, so LVT, flat tax and possibly a sales tax/excise (although I'm less keen on these) would do the job for me and be much simpler and easier to administer than the current mess. If you count inherited monies as income, then you can get rid of the estate inheritance tax and effectively replace it with a type of capital gains tax instead. Dumping the current death tax and replacing it with something based on individual inheritees has to be much more just, right?

DK, in your example of the person that inherits a large house that their own income can't support, they're effectively living beyond their means and distorting the market, pushing prices up for the rest of us. My landlady while in London was in a slightly similar position, so she let out several of the rooms in order to keep the "family home".

Thus marginally reducing the rental costs in her area by increasing the number of rooms available.

LVT rewards councils for encouraging development, and acts as a disincentive for owners to sit on empty property and allow it to become derelict, as the current system does.

I favour the idea.

Jock Coats said...

Matt - I was gong to make that point, but personally if I want LVT to replace income tax, there would be no need for a negative income tax. And people do suggest that whereas a negative income tax incentivizes work, a CBI incentivizes laziness, though I do not agree with that pov.

Ian B said...

LVT rewards councils for encouraging development, and acts as a disincentive for owners to sit on empty property and allow it to become derelict, as the current system does.

No no no. Taxes aren't supposed to reward anybody, or disincentivise anybody, or any of that shit. The only reason for a tax is to raise revenue for whatever functions the people have delegated to government. That's it.

The whole fecking mess we're in is people thinking they ought to encourage this damned thing and discourage that damned thing and using the jackboot of the state to do it. You want government to have some money- fine, levy a tax. But don't start flailing taxes around at people you think aren't behaving as you wish.

A person forced out of property by a tax is not "living beyond their means". They are being forced out by a tax. They don't owe you or anybody else a justification for why they have a property, other than they own it. That's all the justification they need.

This is the whole problem with LVTers, or at least part of the problem. They have this Big Idea that the state needs to force people to develop their land, and if they're so antisocial as to want to use it for a rose garden or nature reserve or just live in their goddamned house or some other undeveloped application, they should be kicked off it. That isn't liberty and it isn't respecting property rights. It's totally awful.

MatGB said...

"Taxes aren't supposed to reward anybody, or disincentivise anybody, or any of that shit"

I believe that pigouvian taxes on market externalities can be perfectly acceptable. You don't.

You believe that property rights are the essential liberty. I don't.

Thus we will not agree on this at all, and further discussion on these points is moot.

Taxes have to come from somewhere, the taxes that are the least distorting and easiest to administer are the best.

Can we at least agree on that point?

Ian B said...

MatGB-

Since you state you are in favour of Pigouvian taxes, I hardly see how you can then claim to be in favour of taxes which are "least distorting", since the whole purpose of pigouvian taxes is to create market distortions.

For instance, you apparently wish to force people to use their land in ways you prefer, rather than how they would prefer to use the land, using a land tax. You may euphemise this as "correcting for an externality", but then so does every social engineer.

Anarchy said...

Q: When is a free marketeer not a free marketeer?
A:When he advocates a tax of any kind.

Freedom is Freedom.

Theft is theft- whichever name you give it.

MatGB said...

A tax doesn't force anything other than payment. But it does act as an incentive, all taxes do.

Forcing someone to use land in ways they don't like is things like compulsory purchase orders. Encouraging people to maximise the use of land in order that they make the most utility from it is perfectly fine.

There's no force, and if someone prefers the utility they gain from a rose garden over the utility from expanded usage, that's their call and choice.

I'd rather have derelict buildings and areas that have already been built on redeveloped than build over more and more of the countryside, and of course LVT can and does encourage councils to encourage this in many ways.

If you genuinely think an increase in tax on an item is equivalent to forcing something, then the terms of reference for this discussion will be difficult, as the choice is in no way forced.

Pigouvian taxes correct for external distortions on the market, that's the whole point of them.

Consequently we're using the same words to mean completely opposed things, and thus I think we'll need to leave it. Especially as I've a 5 year old to cook a meal for.

Longrider said...

They have this Big Idea that the state needs to force people to develop their land, and if they're so antisocial as to want to use it for a rose garden or nature reserve or just live in their goddamned house or some other undeveloped application, they should be kicked off it. That isn't liberty and it isn't respecting property rights. It's totally awful.

Yes, absolutely. I choose to live in my house. I choose not to develop it for some spurious "public benefit"; that is my business and no one should have the right to force me to sell to satisfy their social engineering ambitions.

Ian B said...

A tax doesn't force anything other than payment. But it does act as an incentive, all taxes do. Forcing someone to use land in ways they don't like is things like compulsory purchase orders. Encouraging people to maximise the use of land in order that they make the most utility from it is perfectly fine [...] If you genuinely think an increase in tax on an item is equivalent to forcing something, then the terms of reference for this discussion will be difficult, as the choice is in no way forced.

Let's consider Sarah. Sarah is a pretty young woman. She works for £10/hour as an ordinary shopgirl. However, in your wisdom you note that she could be earning £200/hour as a prostitute. Clearly Sarah is not maximising her economic utility. So, you impose a £100/hour tax on pretty girls like Sarah. Now Sarah has to work as a prostitute and her economic utility is maximised. She hasn't been forced, because taxes aren't force. She's just been incentivised. Everybody wins!

Well no, because Sarah hasn't won. What you've left out of the equation is Sarah's personal opinion of what she wants to do with her life, and lying on her back for blokes in return for money isn't something she wants to do. In economic terms, she has rationally judged that not doing so is worth a loss of £190 per hour to her. Doesn't she have the right to make that choice?

Liberty is sovereignty; over oneself and one's possessions. The market works because individuals use that sovereignty to make the optimal choice in their own opinion. There is no such thing as an objective value (hence, your LVT assessors cannot judge the value of land which is not for sale) and there is no objectively right economic choice- you may be willing to pay 50p for a tin of beans, whereas I will pay no more than 15p. Neither of us has any capacity to declare the other's decision right or wrong. The market does not work that way.

Pigouvian taxes do not correct "market distortions" because when people say "market distortion" they actually mean "my view is objective and the market is not doing what I objectively demand it should do". They are saying that all beans should be 50p, or all pretty girls should extract maximal economic value from their poonani. When we look at Sarah's example, we can see (hopefully!) what an infringement on personal liberty such thinking causes. The same infringement on property may be less emotive, but is qualitatively the same.

Of course targetted taxes are force. It's the whole bloody point of them.

Longrider said...

Ian, I would go one step further, when a land owner refuses to sell, no matter what price is offered, they have decided that the land has no monetary value - the value is not measurable in mere monetary terms.

Mark Wadsworth said...

MattGB point outs, quite rightly that if local councils had one source of income only, being Site Value Rating (or Land Value Tax) on local properties (instead of being 60% to 80% funded out of general taxation, skewed to favour councils that are controlled by the party that happens to be in government, of course), this would incentivise/force councils to spend money in ways that 'add value', or else their income would dry up.

IanB seems to think that this is A Bad Idea

I think it is A Jolly Good Idea. Out go five-a-day advisors, in come more bobbies on the beat. Out go sink schools, in come selective schools. Out go climate-change advisors and instead they spend more on useful stuff like roads or street lighting.

The whole point about free markets is that the consumer (in this case the resident/taxpayer) only pays for the VALUE of what they get (regardless of the cost), whereas under normal taxes, you are forced to pay for the COST of what the state does, whether it has any value or not. If the council makes a surplus (because it only spends on things that cost less than the value they add), then hurray, there's money left over to cut taxes or pay off the national debt or whatever.

What's not to like?

Ian B said...

Oh my. What I think is a Bad Idea is you, or anyone else, deciding what is Good or Bad for the rest of us, particularly deliberately manipulating the property market to your own ends. But anyway, let's look at your "virtuous circle" there...

What you're saying is- the council taxes its property owners, then they spend the money on anything that will push up property taxes which, remember they assess themselves, raising their income, which they invest in pushing up property taxes. Can you see a flaw there?

Where do those people who don't want arbitrary "improvements" get to live? Where do the people who don't use the new sports centre, concert hall and spaceport go? One of your disastrous assumptions in all this is that an "amenity" which raises a property value as actually always an actual benefit to the householder. You're taxing not what people have, or what they earn, or their ability to pay, you're taxing a hypothetical figure proportional to (and in practise grossly in excess of**) what they might earn, in the opinion of a council assessor, if your rapidly escalating tax forced them to fuck off elsewhere. I keep trying to think of something more unjust, but my imagination fails me.


**If the householder sells up, they get a one off payment which may have been inflated by your amenities, whereas your LVT has to be paid all the time.

Mark Wadsworth said...

Ian B, I can see a flaw in your logic, which is that you think that councils can decide what the tax should be.

Nope. The tax would be, on, er market values of land/location, based on actual selling prices. Ergo. £1m splashed out by the council on a 'fact finding' mission to Bali does not add value and the taxpayer does not pay extra for it. If the council then hikes total bills in their area by £1m to pay for it, then the market value of properties falls accordingly and the tax falls as well.

Local councils are democratically elected, are they not? Parties would then compete on who keeps LVT to a minimum and spends it most sensibly.

What is also irritating is that LVT opponents always point out who would 'lose' and not who would win.

Take the low-income person who inherits a £1m home. Under current rules, they have to find £400,000 to pay the IHT, so they take out a loan for that amount and pay £24,000 a year in interest plus council tax on top.

As I have said, LVT could and should replace e.g. council tax, stamp duty land tax, inheritance tax, TV licence fee etc. Like Richard, I would be totally opposed to LVT as an extra tax on top of all the shit we've got - in the same way as we would all be opposed to DK's suggested luxury tax were that just an extra tax on top.

So assuming that LVT is about 1% or 1.5% of total property values to generate the same revenues as the taxes it replaces (assuming prices fall by half from peak), our person then inherits a £1m house, has no IHT to pay, and just pays £15,000 a year (or whatever) in LVT, without additional council tax as well. That must be better than £24,000 interest plus council tax plus TV licence fee etc?

So actually, such a person is just as likely to be a winner under my proposals.

Or take a low income person in a £50,000 house. Instead of £800 council tax plus TV licence, they'd pay (say) £750 LVT.

Or take anybody whose estate is currently liable to IHT, they'd all win. And people who want to move home would not have to pay up to 4% Stamp Duty when they move, Stamp Duty would be scrapped as well, of course (if it were up to me).

Ian B said...

What is particularly irritating about LVT proponents, it seems, is you're not addressing the central injustice (and saying it will replace current unjust taxes isn't an answer)- which is that you are taxing a hypothetical. As I explained, and Longrider reiterated, a good only has value when actually sold. You aren't taxing what somebody has, or has earned. You are taxing what they might have, if they sold their land, which is what LVTers apparently want all the antisocial unproductive people to do. Fred is forced to pay a rent, which the council inflates deliberately in order to justify a spiralling LVT, simply for owning some land. It's no better than taxing televisions or windows. You're taxing people simply for owning something.

The fact that you're then tying it to a hypothetical market rent or sale value is neither here nor there. Most people aren't maximising their land income for good reason. E.g. they want to live in their family home, not rent every room out to hairy arsed lodgers.

The very basis of the tax is fundamentally unjust.

Tax lawyer said...

Ian B said... "a good only has value when actually sold."

Bollocks.

Non-financial assets, such as land, have a value in use, even if they are not sold. If you own a house, you can live in it rent-free - and that has a value.

In fact it's an income. Yes, it's in kind rather than cash, but one can put an approximate cash value on it (by comparing to similar market rents).

That's what LVT does. It doesn't tax the potential sale proceeds of the land, but the rental value - what I would have to pay to rent it on the open market.

Think about other taxes. If I work, I am taxed on the cash I receive from my employer, but I am also taxed on the value of non-cash benefits (use of a car, health insurance, etc) that I get from my employer.

If I invest in a house, I could rent it out - in which case I would be taxed on the rent received. But if I live in it I get just as big a benefit - tax-free.

Yes, having no tax is good. But taxing some types of income but not others is not generally a good idea.

Ian B said...

you can live in it rent-free - and that has a value.

What? Is that the value of not paying a rent of £1000/month or £100/month somewhere else?

Can I tax your television because you aren't renting one, so you're getting a benefit? Can I tax your car because you're getting the benefit of not renting one or using taxis to go everywhere? See where this is going? According to your logic, your every possession can be equally calculated for rent. This is going to cost you, pal, sayeth the council.

Yes, it's in kind rather than cash, but one can put an approximate cash value on it (by comparing to similar market rents).

As I've pointed out at length elsewhere, an average of what other people may be renting something similar out for (in the opinion of somebody or other wielding the taxman's whip) has no bearing on the value of the asset to the individual.

Mark Wadsworth said...

Ian B, what on earth has this to do with cars or TVs?

I buy my car or TV on the open market for what I perceive to be market value, as long as producer can make it for less than I am prepared to pay, everybody's happy.

By buying a TV I am not depriving anybody else from having a TV as the factory can always churn out more TVs. That's why the price of TVs hasn't trebled or quadrupled over the past ten years, unlike land.

The same applies to cars. Besides, we have a perfectly good tax on cars, it's called fuel duty, the more you drive, the more you pay towards the cost of road maintenance etc.

The point is that location values are a very very special class of asset, to which normal rules do not apply. They only have value provided that the council restricts other surrounding land owners from e.g. opening a pig farm next door and provided that the council provides policemen, fire brigade, street lighting and refuse collection. All that stuff costs money, so as a free marketeer, I don't see why local property owners shouldn't pay for that cost directly.

In an idealised town where all the houses are exactly the same size, this would be like a poll tax, a straight user charge.

Our only hope for having a sensible low level of taxation is for the connection between the level of the tax and the value of what the council provides as direct and as simple as possible.

As to DK's example of the man with a well and a cesspit. If he is perfectly happy with that, why on earth would anybody put him on the mains? If he lives in the middle of nowhere, connecting him to the mains might cost £500,000 but only add £10,000 to the value of his house, so it wouldn't be done.

Contrast that with towns and cities. We couldn't have towns and cities without mains water/sewerage. So in this case, mains water ADDS value and is worth doing.

And in a marginal situation, a small hamlet where each has their own well and cesspit, the local council can put it to the vote - if people don't want it they will vote against it.

And like I said, the grumpies and NIMBYs can always refuse to allow their own house to be connected, can't they? That gives us the least-bad combination of cost and benefit.

Paul Lockett said...

There is no such thing as an objective value (hence, your LVT assessors cannot judge the value of land which is not for sale)

You could quite easily use a self-assessment system alongside, or even instead of, assessed value.

Longrider said...

As an aside, when Mark first started talking about LVT, I was mildly in favour. The longer this discussion goes on, the more hostile to the idea I become...

Firstly, there is the assumption by advocates that by buying, I am somehow avoiding rent. I do not accept this. The whole point of buying is that I am not beholden to a landlord. I am depriving no one of anything. That others cannot afford to buy is just too bad. There are things I would like to buy, but I cannot afford them. I have a choice; save my pennies or go without - I do not suggest that those who do, owe me or society for their ownership - and it makes no difference whether the asset is appreciating, depreciating, scarce or plentiful. Once bought, it is owned and the owner owes nothing to anyone other than the seller or their lender.

The second issue that I take great exception to is that I should specify a value for which I would sell and that a potential buyer could force a sale (mentiond either here or over at Samizdata).

I bought my home to live in. I don't want so-called amenities - and if that makes me grumpy, so be it. All I ask is to be left in peace to enjoy my home. I don't expect to be taxed for the privilege.

Some years ago, Bristol Rovers tried to build a stadium next to our street. They were eventually defeated. Despite trying to convince us that this would be an amenity, it became obvious that we did not want this amenity - if I wanted to live next door to a football stadium, I could have bought a house in Ashton Gate. I don't, so I didn't.

So, if anything, Mark has gradually convinced me that LVT is a bad idea. Not necessarily because the idea of the tax is automatically a bad thing, but because it is being sold as a justification for some pretty unpleasant social engineering.

Oh dear...

Mark Wadsworth said...

LR, what social engineering?

If you look at the comments above, I suggested that all taxes on production and income should be replaced with a flat tax (at whatever rate, the lower the better, obviously). These taxes raise the bulk of gummint revenues.

Is that social engineering, or just Friedman's second least bad tax?

Similarly, why is a flat rate tax on location or property values social engineering? As a replacement for all other taxes on wealth or property (council tax, stamp duty, inheritance tax, capital gains tax, yada yada) it is probably a lot LESS like social engineering. Such a tax would only raise about 15% of total tax revenues, there is a natural upper limit.

Further, LVT opponents say that this is the thin end of the wedge? What wedge?

We are now at the THICK end of the wedge of taxes on income and production, I'd like to get towards the thinner edge again.

As to taxes on property and wealth and social engineering, wouldn't a flat tax on location values be a lot LESS like social engineering that the pile of shite that we've got?

As you say, if local residents don't want a football stadium, they will vote against it. You have answered your own question as to whether the stadium would have 'added value' - quite probably it wouldn't, that's why you voted against it.

So given that your land value has increased ever so slightly as a result of depriving the owner of the land on which the stadium would have been built of an opportunity of making a profit, is it so unfair to pay a bit extra for being able to exercise that right?

Would you describe the collective efforts of you and others in campaigning against the stadium as 'social engineering'? I certainly wouldn't - it was your choice and you exercised it. Half a free market is better than none, surely?

Longrider said...

Damn right it is unfair that we should pay taxes for depriving Bristol Rovers the opportunity to despoil our environment. We were just fine as we were before Bristol Rovers tried to bully us. That was the status quo. Why should we pay for the privelige of merely defending ourselves against an unscrupulous bully (because that was what happened)? I won't bore you with the details of their "campaign" of disinformation to get their own way - suffice to say, I regard large organisations with similar contempt to that I hold for politicians. And you want me to pay for it? Take a hike, matey!

During these discussions I've identified three major objections to LTV:

One; ability to pay. If the perceived value of land increases (or we successfully fight off an unwanted development) we get stung for it irrespective of income. I'm sorry, but in what way is this fair or reasonable?

Secondly, it is a tax levied on the taxpayer for circumstances beyond his control.

Thirdly, it is far to vulnerable to corruption. The ideology might be pure but the practice is that this will eventually lie in the hands of local officials and their vested interests - I trust them to be impartial, fair and objective about as far I can chuck an elephant.

Having carefully studied your arguments, I would prefer income tax, quite frankly, or sales tax and I don't like either of those options very much.

The social engineering aspect is that there are "incentives" - to develop in this case. Tax is a necessary evil and I agree it should be the least worst tax. You have convinced me here that LTV is not the least worst, I'm afraid. Indeed, you have changed my mind on the matter. Not, perhaps, the result you were hoping for.

Rory Meakin said...

DK:"I feel that I must, again, draw people's attention to the distinction between capital wealth and income wealth."

Income is a flow over a period of time between two points in time. Wealth is the total value of assets at a fixed point in time. Therefore, "income wealth" is a conflation of terms. And "capital wealth" is a tautology.

Two assets of the same value should produce either a higher stated income or better prospects for future income (ie, capital growth).

But that aside, DK, I'm with you - the idea of LVT strikes me as utterly and ridiculously arbitrary. Why only assets held in the form of land? What is it about the economic value of a plot of land that makes its utility less price elastic (which is presumably the basis of the idea that it is somehow more efficiently and justly taxed) than other assets?

Why should an investor who choses to invest in land have to pay some arbitrary asset tax that is not applied to other asset classes? Fucking stupid if you ask me.

MatGB said...

Rory, I've seen a few proposed implementations of LVT that suggest it should be applied to all owned assets (the details were complex and it's not my field), but it would include things like, for example, broadcast spectrum rights and similar (we effectively already do this, CF the 3G selloff and the £22billion that the game theorists raised to pay off a lot of national debt).

LVT is a shorthand really, and many would call it property value tax. There are thresholds and similar to apply, naturally.

There are those that see LVT as a panacea to solve all taxation problems—I see it as an interesting solution to a problem that in and of itself has a useful benefit, moreso than most other taxes.

Mark Wadsworth said...

Rory Meakin: What is it about the economic value of a plot of land that makes its utility less price elastic (which is presumably the basis of the idea that it is somehow more efficiently and justly taxed) than other assets?

Two different things here. The underlying location/rental value is pretty stable. The other element is the 'bubble element' on which Nulab's economic miracle was based, and no doubt that one which the Tories hope to base their next economic miracle (e.g. house price boom/bust in early 1970s and late 1980s) - don't think they won't do it again.

As a disinterested observer, I'd rather have an economy without these faux miracles and bubbles and ensuing crashes and recessions, thanks very much. On a personal level, I think they are brilliant, because buying low and selling high is how I made my fortune, but hey. Other people's losses vastly exceed my gains.

Either way, seeing as you address 'price elasticity', as a simple matter of logic and fact, land with planning permission is in more or less fixed supply, so whatever tax you levy thereon does not reduce the amount supplied - it merely reduces the price paid.

Contrast this with taxes on income and production; higher rates depress the amount supplied as well as increasing the price. Such taxes have huge deadweight costs. The fact that the gummint wastes vast amounts of money (paid for by taxes on incomes and production) merely doubles up the horror.

Jock Coats said...

Mat,

Nobody I know would *ever* call it a "property value tax". People may call it a "location benefit levy" or "rent sharing", but *never* anyone who understands it would call it a "property value tax".

Land is sepcial. You are right about the spectrum, because the spectrum *is* land in the economic sense.

I'm otherwise being very quiet in this discussion because I can see what the problems are that makes it so contentious, and are best expressed by the comment before yours which asks "what is so special about land" and I am therefore writing up a piece explaining, from a libertarian perspective, just what is so special about land. Just please, not "property value tax" which is, in effect, the complete opposite.

Ian B said...

Mark, the house price bubble had nothing to do with... I don't even know what you think it has to do with, nor why LVT would somehow stop it. It happens because of money supply expansion which is purposely channelled into the property market (since all money has to be loaned by the banks to somebody, and the property market is the best place to do it since people are used to taking out usurous loans for property, because the price is permanently being bubbled).

It has nothing to do with the land supply being fixed. Indeed, I have no idea why you think this makes land a special case for taxation. The supply of food is pretty much fixed too, and the supply of labour is entirely fixed, right up until you get the technology to grow workers in vats. Or androids.

You also claim that land value is somehow created by the local council "preventing pig farms" and supplying police, firemen, rubbish collection and street lighting. Firstly, pig farms are pretty much self zoning- you may notice that villages tend to have the church in the centre and the farms outside. They did this before the Town And Country Planning Act, because the village centre is a good place for a church but a lousy place for a pig farm. Secondly, it's unlikely that the land value is primarily created by the presence of police and firemen, since land had value long before municipal police and fire brigades, and if the fire brigade were abolished tomorrow it is hard to believe that a land value crash would result.

Land value has little to do with municipal services. It is simple supply and demand. The majority, if not all, the services you mention could be supplied by the private sector- and in that situation, where would the "debt of the landowner to the community" that you rely on come from? It simply demonstrates that you're using the "socialist fallacy"- that community==government, so everyone is in debt to the government because they benefit from being part of a community.

Introducing another of my cast of characters to join Fred the cottager and Sarah the reluctant whore, meet Patel, who owns my local shop. He benefits from the presence of the community, since without it he would have no customers.

But then we note that the customers benefit from Patel's shop- without which they would have no alcopops and ciggies. Should Patel be paying a special tax to "the community" because they give his business value? No. The benefit is mutual. There is no "debt" to be paid. Patel gains, the customers gain.

Likewise, all members of the community, be they rentiers or renters, gain from the presence of each other. Unless they live next door to Karen Matthews. Perhaps she ought to be paying all the tax...

The reality is that singling out one class as being beneficiaries of community is arbitrary. Claiming then that their benefit from the existence of community translates into a debt to the government (council) is simply an excuse for the council to plunder them. Everyone benefits (idealistically) from police, firemen and rubbish collectors, but you want only the landowners to pay for them. The farmer's hundred acre field benefits negligibly or not at all from any of these municipal services, but you'd charge him rent for them anyway. None of what you want to do follows logically from your justificational basis. I can't see anything deeper here than rent seeking, however hard I look.

Jock Coats said...

I'd be very interested in how you square that qith Ricardo, if at all. Or do you just reject his theory out of hand?

Ian B said...

Who? Me?

Paul Lockett said...

Ian B: "It [house price bubbling] has nothing to do with the land supply being fixed."

It has everything to do with land supply being fixed. Supply can't increase in response to demand, so prices spiral, which draws in speculation.

LVT would reduce the potential for speculative gain and therefore damp down the bubble.

Ian B said...

1) Was the supply of dot coms fixed? Then why did they bubble?

2) The bubble wasn't in land prices, it was in property prices- that improved value LVTers won't tax (supposedly). House prices went up, not land prices. There is plenty of room to build more houses, so why weren't more houses built to increase supply? We hadn't run out of the fixed land supply to build them on, had we?

The problem isn't a lack of land, so your LVT isn't going to address the problem.

Paul Lockett said...

Ian B:

Was the supply of dot coms fixed? Then why did they bubble?

Novelty and excessive expectations. I said fixed supply was a driver for a particular bubble. I didn't claim that it was the only reason for every bubble.

The bubble wasn't in land prices, it was in property prices

No, it was in land values. The value of property (i.e buildings) is essentially what it costs to build them and that didn't increase at anything like the same rate.

There is plenty of room to build more houses, so why weren't more houses built to increase supply?

Because of planning constraints. Without them, I've no doubt that houses would have been flying up and prices not. That was what happened in a lot of city centres, where there was the opportunity to build.

We hadn't run out of the fixed land supply to build them on, had we?

Except that you can't build a house just anywhere; we've got a fairly rigid planning system. Get rid of it and house prices would plummet, but then begin bubbling from the new reduced base.

The problem isn't a lack of land, so your LVT isn't going to address the problem.

It depends what the problem you are talking about is.

Ian B said...

Well, you just answered your own question, which was where I was aiming at. You can't blame the bubble on a fixed land supply, when the actual problem is government actively preventing house building via the planning system. So abolish the planning system. LVT isn't your solution, the problem lies elsewhere.

"The value of property is essentially what it costs to build them".

Sounds like a labour theory of value creeping in there. The value of a particular property is whatever you can sell it for. In general, sellers of new housing won't stay in business long if they sell for less than the production cost, but that's not the same thing at all.

So, the bubble was caused by a false excess of demand due to cheap credit created by government, and restriction of supply, created by government. An LVT won't fix this. The problem is political.

Mark Wadsworth said...

Ian B (and also Harry Haddock), yes of course liberalising planning laws would help in preventing bubbles and would be a useful adjunct to LVT - perhaps it would render it unnecessary (a completely free market is of course better than half a free market, which in turn is better than none).

But you try banging your heads against the "The Green Belt Is Sacred And Sacrosanct Lobby" and the Greeny and NIMBY lobbies who don't want a new runway at Heathrow or don't want Bristol Rovers to build a new stadium, and you're back to Square One.

Liberalising planning laws = carrot.

LVT = stick.

Jock Coats said...

Sorry - whilst as I said I am busy writing something up that might help to explain our differences, I just cannot let that conclusion lie uncontested as if you have proven something. Which you haven't, Ian.

Were your thesis correct, one would expect housing in different places of the same quality (Barrett Box "A" in Battersea versus Blaenau Gwent say) to have risn by the *same amount* - not even the *same proportion* but the same amount (give or take relatively small differences in labour costs).

The fact that they don't or didn't is down to their location. Which is *land* value not *improvement* value.

Land at any one location is fixed in supply. There is very little the planning system can actually do about that except perhaps to permit more building upwards or even downwards which it does when it's appropriate, such as in central business districts.

Even if all zoning laws were completely eradicated - something I advocate but recognize it is likely to be even more politically impossible than changing the tax base - there would still be differential locational values.

Until, that is, we have invented Roddenbury's transporter technology so that A-B is no longer a time and resource consuming journey.

I tell you - the difference between our positions is so great that whilst DK and others may question how one could possibly be a libertarian while accepting LVT I actually cannot understand how one can be a libertarian without accepting LVT! I don't know whether there is any common ground at all!

Paul Lockett said...

You can't blame the bubble on a fixed land supply, when the actual problem is government actively preventing house building via the planning system.

If you got rid of the planning system, you'd get a one off reduction in prices (or to be more accurate, land which currently has planning permission would fall in value, but agricultural land would rise), but the price bubbles would start again from the new base.

So abolish the planning system. LVT isn't your solution, the problem lies elsewhere.

I don't support LVT because it is a solution to a problem, I support it because I don't believe one person should be able to exclude another from a location without compensating them. Any other benefits are just a pleasant side effect.

The value of a particular property is whatever you can sell it for. In general, sellers of new housing won't stay in business long if they sell for less than the production cost, but that's not the same thing at all.

If I hold a plot of land and I ask a builder to sell me a house to go on it, the price he will charge for building it will tend to increase much more slowly during a price bubble than the price I can sell the completed house for. That's because it's the value of the land that's bubbling, not the bricks and mortar.

Longrider said...

Mark, people who object as we did to Bristol Rovers do so because the proposal will do active harm to their quality of life. Had the proposal gone ahead, I would have had no option but to move as living next to a football stadium would have been unbearable. Now, why is the desire of Bristol Rovers somehow of greater import than my desire to continue a peaceful life in my pre-existing condition? The value of property is irrelevant here - I neither know nor care what would have happened to property values had it gone ahead, all I know and care about is that my quality of life was being threatened. You simply cannot put monetary value on these issues. Nor is it moral to tax it.

The underlying thrust of this discussion seems to be a recurring theme that developers should be allowed to do as they please and to hell with whoever currently owns the land (or neighbouring land) and how it may affect them. Sorry, but when you encroach adversely on another, that's where liberty reaches its limit - once again we are back to the right to swing one's fist.

That said, some relaxation in our planning laws may well be a good thing...

Ian B said...

Just as a matter of interest, and nothing to do with LVT or whatnot, I used to live opposite the main entrance of (the old) Arsenal ground, and actually it barely impacted life at all. And I can't stand football. A crowd would turn up for an afternoon, every now and again, then leave. Really, you barely knew there was a game going on.

My own idle preference for a replacement for the ludicrous planning system would be a requirement for developers, or those proposing a significant change of use of property which will affect neighbours, to have to get neighbours' permission; a system of "externalities contracts" effectively. If somebody wants to build a football stadium next to your house, they have to get your permission and that may require compensating you to whatever degree you demand. Large undertakings might be a larger area (a friend suggested the modification that the developer must gain consent of every property owner within an area equivalent to the longest dimension of the developing property in all directions. So, an airport would need a lot of consents, whereas turning a newsagent into a kebab shop would just need permission from next door, kind of thing).

Anyway, the key thing would be to get rid of bureaucrats making planning decisions. And obviously you'd abolish nimby shit like the Green Belts. Ideally you want to get to a state in which it's trivial to buy a plot of land and stick a house on it again.

Jock Coats said...

I can at least agree with that Ian about planning! Have you read I think it was Mark Pennington's book from the IEA on the "privatization" of planning.

However, that really only addresses the sort of issues that are *meant* to be dealt with by Section 106; i.e. mitigating problems arising from a development. But it would be a leap forward from the current situation.

Mark Wadsworth said...

Ian B, your suggested system is half a free market at least, and thus better than none.

BillG said...

There is no choice as to whether or not to have a "land value tax" as all locations in a scarcity market have economic rent that attaches to them as the result of the location's proximity to the labor and services of others.

The only question we have to answer is:

"Who shall pay the economic rent and who should receive it?"

The answer to that question has everything to do with whether or not a society is based on the principle of equal liberty.

If the landowner pays the economic rent their individual sovereignty is still intact because they by definition contribute no labor towards it's creation as it is the location's proximity to the labor and services of other that gives it it's MARKET value (not personal utility value).

If those being excluded from the location pay the economic rent in the form of higher prices for the location they are in, then their individual sovereignty is violated because they are being forced to labor as an obligation to those that are excluding them.

Anton Howes said...

Longrider:

With the Bristol Rovers Stadium, the point is that LVT is meant to compensate you for it being built there.
If despite all your protestations the stadium were to be built next to your house, market prices would fall in that area, thus meaning that the value of the land itself falls. This in turn means that you'd pay less LVT.

However, if say a gym were built nearby that caused prices to increase, the value of the land itself would increase and you would pay more LVT. The point is that LVT takes something that you didn't earn in the first place. You benefitted from the increase in value as a positive externality, and so LVT doesn't penalise you at all, it merely takes something that wasn't yours in the first place.
If the value falls, then it takes less.

Then, in order to increase the revenue from LVT, your local council might think "hang on a second, I'm not going to allow this football stadium to reduce our gains from LVT!" and so might prevent it being built at all. In a sense it also aligns your interests with those of the council - in order to get more revenue, the council does things like better rubbish collection to improve the value of its areas.

Concerning you issues raised a lot, lot earlier:
1) "Ability to pay."
I've proposed that LVT replaces existing income tax, corporation tax, CGT and current property taxes. For households this would mean they benefit in general. The only people disadvantaged would be large land-owning monopolies or oligopolies such as Tesco's or BAA. You can see the calculations at www.voteliberalist.org under policy.

2) "Levied on taxpayer for circumstances beyond control."
LVT makes you pay for something that you have gained, but you haven't earned. Yes, it's not under your control, but it's taking back something that wasn't yours in the first place, ever. The value you pay may not correspond exactly to your tastes (e.g. a stadium might increase value to you personally as a footie fan), but then again no system is perfect - having said that this is better than existing taxes. Relative property prices in the area (and the smaller the area the better, as it's more accurate), determined by the free market should be enough to determine the value of something.

If however I were to tax you for circumstances beyond your control that did not bestow any positive externalities whatsoever, or for 'gaining' negative externalities then that would indeed be unfair. E.g. if I taxed you according to the length of a rat's tail in New Zealand, or if I taxed you for another person smoking near you and forcing you to inhale. However LVT is the polar opposite of these.

3) "Vulnerable to corruption"
As stated before, it aligns the interests of council and taxpayer. However all existing taxes are vulnerable to corruption - LVT is merely better than existing taxes.