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Scrap business rates entirely and replace them with a land value tax

Economy ● Housing National by jamesLDN_startup · 🏷️ 1. Concerned Citizen · Fringe · 5 months ago
10

Business rates are a tax on improvement. You invest in your property, you pay more. You leave it derelict, you pay nothing. This is backwards. It punishes exactly the behaviour we want and rewards exactly the behaviour we dont.

Land value tax does the opposite. It taxes the unimproved value of the land, which is created by the community (infrastructure, planning, demand) rather than the owner. A derelict site in central London would pay the same LVT as the building next door because the land value is the same. This creates a massive incentive to develop, build, and use land productively.

LVT is endorsed by economists across the spectrum from Adam Smith to Milton Friedman to Joseph Stiglitz. It is one of the very few taxes that economists almost unanimously agree improves efficiency rather than reducing it. It cannot be avoided through offshoring. It cannot be gamed through holding companies. The land does not move.

Start with commercial property. Phase it in over 5 years. The high street would be transformed.

jamesLDN_startup 📊 Canvasser Fringe

🚀 The Open Ground Party

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Discussion (7)

Sign in to join the discussion. Debate and humour are both very welcome.

IFS have said repeatedly that business rates are one of the most distortionary taxes we have. LVT scores better on efficiency, equity and simplicity in essentially every economic model. Main obstacle is political not technical, every landowner with an empty site benefits from the current setup, and they tend to be quite good at lobbying.
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Almost never agree with free-market types but this is genuinely one of the best tax policies on this site. LVT is one of those rare things where the hard left and the libertarian right end up at the same answer from completely different directions. Beautiful in a way.
3
The horseshoe theory of tax policy. I'll take it. Welcome aboard comrade.
2
I don't understand half the economics here but I do know there's an empty shop next to the post office that has been empty for 3 years and the owner pays nothing for it while the bloke running the barbers next door pays through the nose. Anything that fixes that is alright by me.
2
That's literally the whole argument in one paragraph. Honestly you just explained it better than the policy did.
2
Sympathetic in principle. The valuation problem is the catch in practice. Who determines unimproved land value? How often? What's the appeals process? Council tax already has a valuation problem (still using 1991 values) and that's a much simpler calculation.
2
Estonia does it. Denmark does it. Taiwan does it. Methodology exists. The UK doesn't lack capability, it lacks will. It would need new infrastructure but so did PAYE when it was introduced and that works fine.
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Mock the policy. Not the person. Community principles →