Land value tax "could boost regeneration"
Tue 17th September 2013, 10:21 am
The Liberal Democrats will examine details of how to introduce a land value tax, after its conference voted in favour of the measure.
The party signalled its support for the tax, which would be replace current business and property taxes, after the motion was included in a policy paper on tax presented to the conference by chief secretary to the Treasury Danny Alexander.
The motion argued that: “Land is in fixed supply, and its value is independent from its owner’s use of it. It therefore provides a unique opportunity to form a basis for economically efficient taxation which does not distort behaviour (such as moving income or wealth offshore).”
It also said that an LVT would reduce tax avoidance, dampen speculation in the property market, and help reduce regional economic imbalances.
Focusing on the possible effect on regeneration, it also said that such a tax would stimulate development of under-used sites, which in turn would help the construction industry and housing market.
The motion said: “LVT would require a significant level of change to the tax system, and therefore Liberal Democrats would launch a full-scale review early in the next parliament to look at how it might best be implemented.”
An initial step might see the trial of LVT based on the land value of commercial or residential properties.
However, the motion also said there may be a need for exemptions for “asset-rich, income-poor” individuals, for low value residential and business properties.
It said that the tax could be collected through existing income tax and corporation tax mechanisms.
Delegates voted overwhelmingly in favour of progressing with the policy, which means that it will appear in the Liberal Democrat manifesto for the 2015 election.
What will be the effect of an LVT would be on regeneration and housing provision in the UK? Would scrapping business rates scupper tax incremental finance schemes currently being developed on the back of expected business rate income?
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