God made the land for the people, so the old song goes. But not apparently if you live in Scotland. The executive's affordable homes policy, which Edinburgh City Council has been the first to pursue, means such swingeing demands in planning gain that, say housebuilders, residual land value in some developments is less than existing land value. If this continues, supplies of new houses will be reduced leading to a growing property bubble, threatening long term economic growth. We are still in the dark ages when it comes to finding means of capturing the land values for the community. Section 75 which delivers planning gain in Scotland is a blunt instrument which can inflict collateral damage on economic growth. Should society just leave it to the imaginative initiative and healthy self interest of individual developers - like New Edinburgh Ltd putting forward ?1.5m for the new Edinburgh Park station? What about an annual charge on the rental value of land which replaces the current property taxes on bricks and mortar? Welcome to the brave new world of Land Value Taxation, subject of a public meeting I am chairing on Thursday in Edinburgh and provocatively titled Time to Tax Land & Not People? It h aims to bring LVT back onto the public radar. "Ground rents are perhaps a species of revenue which can best bear to have a peculiar tax imposed upon them,"wrote Adam Smith, the father of freemarket economics in the Wealth of Nations in 1776, hardly a bleeding heart liberal but nevertheless a Professor of Moral Philosophy, who knew that social cohesion was good for business. Land Value Taxation was as important and even more discussed and lobbied for in the 19th century as whether to join the Euro is in ours. Yet when talking to senior figures in the housing industry this week, none had never heard of it, openly wondering how it could possibly work. An extraordinary testament to how successfully the vested interests have kept it off the agenda after its abortive introduction by Lloyd George in the 1909 People's Budget For Land Value Taxation uniquely satisfies the demand for social justice and wealth creation, capturing gains in land value for the community and recognising it is the community efforts which create the value. Unlike taxes on jobs, labour, homes and goods and services, LVT stimulates economic activity; why sit on empty homes and land sites if you must pay a tax on the value? It is cheap to collect and transparent - you cannot move land offshore. The proverbial little old lady with the big land asset can be catered for as with the Council tax. Elsewhere in the world it is neither thought revolutionary nor odd. Denmark has had LVT since 1843 ,with 1% of the value of land taxed nationally and up to 2% taxed locally with valuations ever two years. Hong Kong and Australian cities such as Sydney and Brisbane raise municipal revenue through LVT and most recent convert, Philadelphia, has introduced it after strong lobbying by the business community. Now in the UK , it is now perhaps at last an idea whose time is about to come, fuelled by the clear failure of existing taxes to produce the revenue needed to fund infrastructure renewal and for the wage re-rating of public service workers. And also set against a wider backdrop of a reformed House of Lords and a devolved regional political climate. Down south, Liverpool and Oxfordshire Councils are actively looking at how best to lobby central government for LVT . Next month Liverpool reports on a pilot valuation study of one square mile of urban land. Nearly half Liverpool's brownfield land in the city centre is owned by offshore property companies which use it as collateral for loans and neither sell nor develop, while next year Oxford County Council plan a semi rural pilot in White Horse Vale. These are straws in the wind of the coming debate which will require plenty of studies and pilots and debates before hits New Labour's manifesto. But in Scotland, this debate will perhaps at last allow land to be discussed in an urban context with business and taxpaying townies having a say, rather than the usual bitter, historically divisive rural context. Landowners will be relieved to hear , that land values invariably rise with LVT ; developers will see it break the drive of unsustainable speculator driven bubbles currently bedevilling the Edinburgh property market, while ordinary people can look forward to constant improvements in infrastructure and services.
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