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That's the beauty of LVT - reply to Doonhammer

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Doonhammer left this comment on the subject of the Scottish government’s auction of offhore wind turbine licences:

Yes, but what is the guaranteed price for all those expensive kWh?
And what do they get paid for NOT producing kWh when the wind is too strong?
And who pays for all the interconnecting copper?*
And who pays for the clean up when the rusting stumps and sea bottom concrete are no longer useful?*
And who pays for the fossil fuel back up when the wind speed is too low or too high?

No, I jest. I already know who will pay.

Let’s assume the kWh price is ‘too high’ (which it almost certainly will be, to “kick start the Green Economy” and suchlike bullshit) and all the other costs are borne by consumers and taxpayers (who are largely the same people).

That means that the future profits will be correspondingly higher – but with a properly run auction (the English/Welsh method; not the Scottish method) that doesn’t matter too much. Competing businesses will be willing to submit higher bids for the licences, so the government has more money available to pay all the costs and doesn’t need to make consumers/taxpayers pay all over again via taxation.

The same general principle applies to all forms of Land Value Taxation. If the actions of government and society in general benefit particular areas or businesses, the beneficiaries pay the surplus back into the pot (to be spent on ‘everybody’) and those who don’t benefit aren’t forced to contribute via income tax etc.

* In an ideal world, the National Grid would still be state-owned, so it would have to bear these costs anyway, which it would more than recover by charging generators for transporting electricity. The generators should all be private, competing businesses. Fancy owning a power station? Raise some money, build one and hook it up to the Grid. The most efficient forms generators will win out, the inefficient ones go to the wall and society as a whole benefits.


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