Killer Arguments Against LVT, Not (418)

As soon as anybody mentions upping the take from taxes on land/buildings, the landowners in London and their cheerleaders squeal that this would be “a tax on London”.

I’m not sure why it’s a KLN in the first place – London is only about one-tenth of the population, and only half of those own their own home/business premises, meaning that for 95% of the UK population, this is an argument in favour. To quote Uncle Vince, the best kind of tax is one that somebody else pays.

Turns out, it’s not an argument for or against anything in particular, being entirely without substance.

1. As BenJamin’ calculated last week, the total value of land excl. buildings in London is about one-third of the total value of all UK land, so one-third of any flat rate national tax on the value of land would be on land in London, and paid by whoever chooses to own it.

2. As it happens, about one-third of taxes on land/buildings and other private wealth are from land in London (‘not enough’ Council Tax, cancelled out by ‘too much’ SDLT, Business Rates, Inheritance Tax and obscure stuff like ATED or non-dom levy). So a flat rate national tax which replaced the lot would make little difference to how the tax is shared geographically.

3. Ben later emailed me a link to an article by Centre for Cities saying that one-third of all UK taxes are from ‘London’ (payable by of people who work there and those who own land there; the two groups are fairly distinct).

The CFC draw this conclusion:

The report highlights the potential risk to the UK exchequer of relying heavily on one city to generate such a large portion of national tax revenues, warning in particular that a slowdown in London’s economy would pose major challenges to both the capital and other places across the country…

They have completely missed the point. If somebody relocates from a low wage/profit area to a higher wage/profit area, then – as depressing as it is for the emigration area – the overall tax take goes up. That’s A Good Thing overall.

‘London’ is not magically or qualitatively different to the rest of the UK, it is part of it, and depends on/leeches off a massive hinterland, all national taxes (other than poll taxes) have the effect of returning some of that flow.