Former Labour prime minister Tony Blair, through his Institute for Global Change, has released a report that argues that land value tax (LVT) is a fairer system of taxation.
“For decades, the goal of housing policy has been to boost homeownership,” says the report. “But the promise of these policies has recently given way to their pitfalls: levels of homeownership are at record lows, while levels of rental sector evictions are reaching record highs.”
Tony Blair has set out his ideas around the introduction of LVT, which was touted in the Labour manifesto earlier this year as an alternative to council tax. It was met with support as well as criticism, with many accusing Labour leader Jeremy Corbyn of inflicting a ‘garden tax’ on the country.
The idea behind the suggestion is to prevent landowners from hoarding land in order to benefit from rising prices, as the tax would significantly reduce the gains. Rather than homeowners being stung by council tax on the of price their bricks and mortar while landowners avoid it, LVT would mean the land itself, whatever its current use, would be taxed according to the unimproved rental value.
Taxing the rich
Across Britain, just 432 people own half of all private rural land, so LVT would hit a small number of wealthy property barons and landowners the hardest, while the majority of the population would get a cut.
Blair’s report says: “Today, council tax hits hardest among lower-income citizens, in part because it is based on property evaluations conducted by [John] Major’s government nearly three decades ago. An LVT would shift the burden of taxation up the income scale by updating the tax code to reflect recent gains in property value.”
The suggestion has caused fears among some that they would have to sell their gardens to lower their taxes, and others have suggested that the tax unfairly targets households that are asset-rich, cash-poor – in particular, retirees who own homes.
However, the report says this would be countered by complementary tax reforms.
“The LVT is not meant to be implemented in isolation,” the report says. “Rather, under the CRP [Community Reinvestment Programme], it will replace a range of other taxes — from property taxes like the council tax, to development taxes like linkage fees, to acquisition taxes like stamp duty, and finally to commercial taxes like business rates.”
See Tony Blair’s video here.