Harringay, Haringey - So Good they Spelt it Twice!
Labour Land Value Tax
http://www.telegraph.co.uk/news/2017/05/29/tax-homes-treble-labour-...
Replies to This Discussion
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Permalink Reply by John McMullan on
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It says at the bottom that The Labour Party has NO SUCH PLANS. However I am a big believer in land value taxes instead of income tax, not AS WELL AS. We should be taxing wealth over income.
As an interesting aside, 55% of the value of the property as "land" is VERY generous in London. It would cost about £150,000 to build an average Harringay terraced home from scratch and yet they're "worth" about £900,000, so the land is actually 83% of the value. If you had two decent sized flats instead then that's £600,000 * 2 = £1.2 million and so 87%.
Anyone bringing in a land value tax would be offsetting it initially at least, with a reduction in income taxes. This may force elderly couples living alone in large central London homes to downsize but is that really such a bad thing?
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Permalink Reply by Veinarde on
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I agree - Land Value Tax could be a good option on its own, otherwise it seems terrifying!
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Permalink Reply by Protheroe O'Shea on
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If it's in a manifesto of whatever party it's bound not to happen... Zzzzzzzzzzzz
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This was the IFS (Institute of Fiscal Studies) view on it a few years ago.
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Permalink Reply by Michael Anderson on
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Obviously a slow news day at the Telegraph as there aren't any plans in the manifesto to do this. But while we're on the subject I'd like to see some serious consideration given to replacing business rates with a local business income tax. That way lower earning but valuable local retail would have less of a tax burden than much higher earning businesses.
The main problem with a land tax would be that those local authorities with low land values would be on their knees while the Kensington and Chelseas of this world would be rolling in it. To work it would have to have some kind of redistribution formula.
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It would have to go to the Treasury first as it would be replacing income tax. So people will no longer pay income tax but land will pay "land value tax". If you own land, you'd better get it working and not just sitting there going up in value.
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There's a useful Wikipedia article on it
https://en.m.wikipedia.org/wiki/Land_value_tax
I didn't realise that it was already in use in a number of countries and states
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The Labour manifesto says: “We will initiate a review into reforming council tax and business rates and consider new options such as a land value tax, to ensure local government has sustainable funding for the long term.”
It sounds like it won't be replacing income tax
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Would a potential Land Value Tax be paid by a homeowner or a freeholder? I would hope the latter, since they own the actual land outright. It might serve to get rid of our ridiculous freehold system in this city.
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Permalink Reply by John D on
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The freeholder would probably pass it on to the leaseholder through Ground Rent charges.
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In individual American states, this sort of tax is how the state governments (not the federal government) pull in tax revenue. I don't know every state but here are some examples I do know:
1) Florida - the great smoke and mirrors is "no state income tax". But property tax is 3% of purchase value per year. That means if one pays $1m for a house in Florida, then it's $30K in tax/year.
2) California - 1.5% of property purchase price per year for those who bought after around 1978. And something like 11% income tax (ie PAYE) on top of that.
This is why I've always found the council tax to be a relative pittance. But the national government more than makes up for it as 40% is higher than the highest federal marginal tax rate in in the USA (and then of course there is 45% here as well)...and... there is tax relief in the USA on the federal side for state taxes paid.
I expect for leaseholds, the tax would fall to the occupier or long lease holder. In the US landlords pay the state property tax but you can bet that this is recouped from tenants.
It's a poor option as a stand alone tax as it's not liquid. Income is liquid. If land tax only became law, then, depending on the valuation mechanism for property, many many would be subject to foreclosure sales for unpaid tax liens or have to take out sub-mortgages on their homes to meet the tax bill. I don't see it happening on the info now available.
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