Time for Think Tanks to Work on The Details of Implementing A Land Value Tax

This blog has not always been a fan of SW1 think tanks.  Indeed the superficial fashion and headline chasing of some – notably the Policy Exchange ‘Dumb Tank’ with half baked proposals quickly debunked as soon as the are tried and failed has somewhat devalued there worth and led to a trend towards evidence free policy making.  Where thinks tanks are at there best is investigating long terms trends and international best practice, lifting eyes above the day to day crisis management of civil servants.

One such area is Land Value Taxation.  In our age of rentier capitalism, poor productivity and a housing crisis our latest policy hero seems to be Henry George, with think tanks across the political spectrum championing it.

Of course it is far easier to propose a policy reform than to get down to the nitty gritty details of implementing it.  The great mistake for example of of the Centre for Social Justice was to treat the wicked problem of welfare reform to introduce Universal Credit as a simple one.

Replacing SDLT, council tax and business rates with a new land value tax, even in increments, is a wicked problem.  Beyond perhaps the institutional capacity of the DCLG and treasury to get right.  They need the think tanks help and they need to cooperate to look individually and selectively at many of the issues.

The Letwin review on ‘landbanking’ provides a great opportunity to influence the debate.  It may be utopian but why don’t a group of think tanks, and bodies such as the IFS with modelling expertise, cooperate on tackling the issue with different think tanks tackling one small piece of the jigsaw puzzle, and cooperating on inputs to modelling.  Such modelling has for example provided a great help in acting as a reality check on some other areas of policy development – such as basic income.

There are many aspects to unpick, such as how to identify land holdings without yet a full Torrens based cadastral system.  How to value land in the absence of universal and clear zoning.  How to identify liable and exemptions.  The impact on asset rich but income poor households and the fiscal impact on deferral till death.  What would the macroeconomic impact be of the increased flow of development land?  What are the options for phased implementation?  What are the differential impacts across the country and what changes would be needed to the current rate/council tax redistribution mechanisms?   There is equal potential for simplification here – rather than a complex ‘needs’ formula just take an average land value nationally – those raising above this level throw into the pot pro-rata – those below it drawing from it pro-rata.

Equally important are links to ‘Death tax’ and payment for end of life care, and whether a LVT could fully replace S106 and CIL, or more practically whether area based infrastructure charges would be an exemption to LVT.  Here is an excellent area for potential modelling, especially in terms of expenditure of social housing.

So think tanks get down to it.  The objections to LVT amongst the chattering classes are no longer ideological, now that the majority of the voting population are no longer land owners, kit is practical.

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