The Land Value Tax is an idea I’m quite interested in, and that I think needs consideration. (My introduction to the idea is here) It’s one of those ideas that has been discussed many times in the past and almost implemented on occasion, but never quite got underway in this country. It’s being revisited at the moment, and the latest contribution is from the Centre for Labour and Social Studies, a new think-tank that was founded last year.
Their briefing is titled In Land Revenue: The Case for a Land Value Tax in the UK. It’s by housing consultant Andy Hull and it argues that “a Land Value Tax, targeted at unproductive wealth and speculation, could help deliver the house-building revolution – and the economic revival – our country desperately needs.”
The first and most important reason for considering land taxation is that Britain has a housing problem. Many parts of the country have a shortage of affordable homes, and need to find space to build them. Despite the need, speculators continue to sit of large areas of land, hoping the economy will turn a corner and the value of the land will increase. In Luton, this has led to the crazy situation of local parks being given over to housing development, while vast areas of the town sit derelict.
One of the worst aspects of this land hoarding in Luton is that it is a predatory way to make money. Those sitting on the unused post-industrial sites around the town are depending on others to invest. They’re waiting for the council and local businesses to invest in regeneration, and they’ll then sell up once the value of their holdings rises. A tax on that unused land would make it less profitable to hoard it in this way, and it would be released for development.
This freeing up of unused land would be likely to lower the price of land, encouraging development and house building. This would ease the housing shortage, and could provide a more stable, less inflation-prone housing market in future.
I won’t go through all the detail now, but if you’re interested in the idea, it’s worth taking a few minutes to read the briefing. It’s only 10 pages or so, and it’ll give you some context on how it could be applied, pitfalls to avoid, and other groups who are looking into it too.