Local Taxation and a Sustainable Society

 Martin Childs

I have been following the debate in Sustainable Economics (SustEc) on local taxation. To recap, Green Party policy is for a range of taxation options for devolved authorities to decide upon and, perhaps a contradiction, there is also a commitment to tax land values. There is a suggestion that the land value tax (LVT) should be piloted first. Frank Taylor writes in SustEc (Vol 13, No. 3) that a diversity in local taxation will enable us to see what works and what does not.

Although regional assemblies, or other devolved bodies, should generally be making decisions on what other taxes they might levy, I strongly believe that LVT should be put in place across the country, because wherever it is levied, land values, and therefore house prices, will fall as they would then exchange at their use value, and not as now, at the higher speculative value. We need prices to be lower for the homeless, the first time buyers and generally for the rest of us who want a home to live in rather than as some kind of speculative investment. We also need lower prices because, combined with an enhanced community involvement in the planning process, we can then attempt to design and create the infrastructure necessary for the sustainable society we want to live in.

Bringing down prices throughout the land would not affect existing owners in any real sense as they would still be able to buy and sell like for like as all prices would be coming down together. If however, only certain areas levied LVT, it would mean a reduction of mobility as some areas would still remain with high prices, while those areas levying LVT would have lower prices with those house owners being unable to move where they wanted to.

At this point I think it a good idea to mention negative equity. If this happens when LVT is introduced it should be made clear that this is because prices had risen to an unrealistic level in the past and that this is not the normal situation with LVT. The stability that LVT will bring to the land market will mean that negative equity will be a thing of the past, however we could be faced with it playing out its finale.

Also, to see how LVT pans out, instead of piloting or implementing LVT in a piecemeal way, it should be brought in across the country but with the rate at which it is levied being increased gradually from a low point. The decision on these rates would have to be decided centrally, but it would be the decision of the devolved bodies how the money was spent. I think that they should also decide on any exemptions, rebates, reductions for the unemployed and retired etc, that they thought was necessary. They should also decide on what taxes, other than LVT, that they would levy. This would then be in keeping with party policy which quite rightly commits the party to returning the value of the land to the community but also states that devolved administrations should decide what taxes they levy.

 Martin Childs