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What a quaint and obsolete view of economics! Lawry “[T]he three traditional
factors of production – land, capital
and labour....” From: [EMAIL PROTECTED]
[mailto:[EMAIL PROTECTED] On
Behalf Of Harry Pollard Arthur, This
from the Financial Times. There
is widespread activity in the Harry ----------------------------------------------------------------- A CASE
FOR TAXING LAND Samuel
Brittan Financial Times December 9th, 2005 Of all
the three traditional factors of production – land, capital
and labour – land is the most obvious object for taxation.
The ownership of land is by far the most arbitrary contributor
to differences in wealth and income. As long ago as
1817, the economist David Ricardo distinguished "the original
and indestructible powers of the soil" from "interest
and profit on capital". Winston
Churchill put it more eloquently in 1909 when he said:
"Roads are made; electric light turns night into day; water
is brought from reservoirs a hundred miles off – and all the
while the landlord sits still?...He contributes nothing
to the process from which his own enrichment is derived."
When
the London Jubilee Line was extended, the increase in property
values attributed to it was privately estimated at £10bn.
The government estimates that the value per hectare of
"mixed agricultural land" averages £9,287 in rises
to £749,000 if it is used for business development and to
£2.46m if it is switched to residential use. Land
taxation should also be regarded as the least evil kind by
believers in competitive free enterprise. Land differs from
both capital and labour in that the quantity of it is fixed.
Taxation should not lead to a reduction in its supply as it
can of business enterprise (including exploration)
or work. Anything developers gain from its increased
value is a bonus. David
Lloyd George, the pre-1914 Liberal chancellor, was well on
his way towards a land tax when the first world war intervened.
After the second world war, Labour governments made
four successive attempts to tax the unearned increments due to
the appreciation in value of pure space. But they all ran
into the ground. This is well described in a book of essays,
Time for Land Value Tax?, published by the Institute for
Public Policy Research. The main explanation there is that
they were taxes on transactions rather than on value and
therefore penalised development. At least as important in my
view was the justified expectation that future Tory governments
would repeal the levies. When
Kate Barker, the economist, was asked by the Treasury to look
into the problems of housing supply, she shied away from a
pure tax on site value and instead advocated a levy on the
"land value uplift" resulting from development permission.
In his pre-Budget report Gordon Brown, the chancellor,
took up the idea as a suggestion to be discussed with
interested groups. Predictably, some of these have already
vigorously protested. Christmas.
The
chancellor's planning gain supplement (PGS) is obviously far
short of a full site value tax. There is no taxation of land
that has already been developed. The very limitation of PGS to
planning gain will work against it because of the difficulty
of separating the uplift caused by planning permission
from all the other factors at work. Moreover, the fact that
it is a one-off levy impairs its value as a revenue
source. Its
best chance lies in the unpopularity of the council tax and the
review of local government finances now taking place.
The chancellor intends conferring on local bodies any PGS
revenues. It is unfortunate that the Liberal Democrats, who are
the political progenitors of the land tax idea, have abandoned
it in favour of a local income tax, which is a disincentive
to activity and less redistributive. The PGS
should be welcomed as at least a small step in the right
direction. It is reminiscent of another idea, buried away in
a Brown fiscal statement, namely the child trust fund or
"baby bond", which is a very small step towards what Anthony
Eden called a property-owning democracy and is now being
implemented. Any
change in the balance of taxation is, of course, a blow to
legitimate expectations. The reason both the old rates and
council tax have been so politically unpopular is that long-delayed
revaluations lead to sudden increases in the relative
burden paid by some people. The modern income tax began
with William Gladstone levying it at a very few pence in the
pound. Similarly, any variety of land tax should start
at a modest rate as the government proposes. It would also be
coupled with a lightening of so-called "section 106" obligations,
under which developers negotiate to provide a variety
of local services in return for planning permission. To my
mind, the key to success on land tax is a degree of cross-party
consensus. I am not one of those always calling for
coalition or for parties to sink their differences in the
national interest. Those who do so neglect the value of competition,
which is as important in political as in commercial
life. But there are certain structural policies that
are only effective if they are expected to last. If the promised
policy re-examinations of both opposition parties mean
anything at all, they should be prepared to examine land
taxation on its merits. ******************************** of 818 352-4141 ******************************** From:
[EMAIL PROTECTED]
[mailto:[EMAIL PROTECTED] On
Behalf Of Cordell, Arthur: ECOM Subject: Ordering pizza in 2010 just a bit too
true!
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