November 2004 Archives

Ireland's Chambers of Commerce have adopted the UK Liberal Democrats' policy "Site Value Rating" as their way of restoring balance - and independence from state funding - to local authorities in Eire.

Thanks go to Pennsylvania's Center for the Study of Economics publication, appropriately named "Incentive Taxation" for leading us this Press Release on the Irish Chambers' site, where their Chief Executive John Dunne says:

"...Where commercial rates currently generate around €1bn per year from 8pc of the property base, the site value tax should be geared to generate at least €2bn and this revenue should go straight to local government. ... The local government fund from the central exchequer could then be abolished and local authorities could have control of their own budgets.”

This is pretty amazing when you consider that Ireland's local tax reform debate was non-existent until two years ago, when the Irish equivalent of the New Economics Foundation - Feasta - came out for LVT. The Henry George Foundation of Great Britain jointly hosted a conference in Dublin in October 2003, since when SVR has dominated the debate.

Home truths about tax

Monday November 8, 2004
The Guardian

If Polly Toynbee and Kate Barker want "a tax on all your houses" (Comment, November 5), they shouldn't stop at new ones. In fact, the planning gain supplement is a species of what 19th-century economist David Ricardo called "the ultimate anti-market tax", that on transfers of property rights. It will be just as inflationary as its predecessor "land taxes" - development land tax and betterment levy. Moreover, it will undermine the principle behind planning gain: that the developer's contribution to infrastructure costs must be applied locally to the development.
The only sound form of tax on houses that will achieve what we all want - a greater supply of housing land at lower price - is a tax levied on all land annually, based on the value which planning permission, actual or implied, gives to its owners. Land value tax must not be seen as an additional tax. When introducing it, governments should alleviate other taxes that are more distorting. My favourite for the chop would be stamp duty. Land tax and planning gain itself would follow shortly after.
Cllr Tony Vickers
West Berkshire Council

P.S. Unfortunately the Guradian misprinted the last sentence of mine:
"My favourite for the chop would be Stamp Duty Land Tax and planning gain itself would follow shortly after." The point is (a) Stamp Duty was scrapped by Labour last year (replaced by SDLT on all house sales) and (b) planning gain won't be needed when we have LVT.

View ALTER Strategy 2004 to see how ALTER plans to influence the general election from within the Lib Dems.
Download the file and in Word2002 use "View/Markup" to see ALTER Chairman Tony Vickers' comments on progress since the Strategy was adopted at ALTER's AGM in March. Suggested priority actions are highlighted in yellow.

Send your comments to tony@libdemsalter.org.uk and/or come to the ALTER Executive meeting in Oxford on Saturday 20 November.

"First" is the weekly magazine published by the Local Government Association sent to every councillor. ALTER Vice Chair (Policy) Cllr John Pincham had an article in it earlier this year about LVT. ALTER's other Vice Chair (Camapigns) Cllr Andrew Duffield had this letter published last week, alongside another from Labour Oxfordshire councillor Brian Hodgson telling readers about the LVT Trial there:
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Dear Editor
We need Kate Barker’s local development tax like we need a hole in the head. As Duncan Robertson reported in issue 224, past Labour governments have indeed introduced similar taxes. They failed because they penalised the very activity they were supposed to "tap into", resulting in less construction and making affordable homes even more of a scarcity.
It is a racing certainty that the proposed "Barker Tax" will suffer exactly the same fate. If you tax an event, like development, you simply deter it from happening. Unlike Duncan Robertson however, it is vital that we do not confuse a development tax with land value taxation. LVT is a charge on the annual rental value of land, not buildings. It incentivises construction and collects what are actually community-created values – not as a once-off tax on development gain, but every year, and potentially on all land.
Government and the LGA really must switch on to capturing the wealth removed from society through land ownership on a recurrent basis. Otherwise, unaffordable housing, the widening rich-poor divide and unsustainable taxes on value-added will remain the norm, prolonging the misappropriation of tax-free, unearned income at the expense of the young, the poor and the economically excluded – not to mention a workable balance of funding solution!
Yours faithfully,
Cllr Andrew Duffield (Lib Dem)
Alnwick DC & Northumberland CC