Speech given at the George Square Theatre in Edinburgh on 28th November, 2002
Good Evening Ladies & Gentlemen ...
Tonight, our meeting has a modest agenda. To bring back into public debate the issue of Land Value Taxation, which has been off the mainstream political pubic agenda for over 90 years - testament to extraordinary success of landed vested interests in the UK. But to use playwright Arthur Wing Pinero's line "The future's just the past entered through another gate." So through we go.
Let me put land value taxation in 21st century context far from the days in Lloyd George's time, when 500 local authorities lobbied for legislation. For now the battle is beginning to rage around provision of public services. Down south - London's transport chief Bob Kiley sees advantages in Land Value Taxation in tackling London Underground funding, while Liverpool and Oxfordshire Councils now see LVT as sound source of local finance for economic regeneration of their areas and are looking to lobby central government.
So what is Land Value Taxation. What's so great about it? Why on God's earth would we want another tax? LVT is an annual charge or levy on the rental value of land. Current taxes penalise personal and commercial enterprise - jobs, labour, savings, homes ,offices, and enterprise. In Scotland we contribute ?29bn in taxes . Huge drain on productivity. And In the UK as a whole tax burden approaching 41% - 2nd highest in industrialised world. This, as the Centre for Land Policy Studies tells us, is costing a dead-weight loss of foregone goods and services. LVT on the other hand, involves a taxation shift to an annual levy on the land beneath our feet. This shift recognises that community not landowner gives land its value. And it IS a mental shift too . For LVT harvests that community-created value for the community good. Adam Smith the father of freemarket economics in the Wealth of Nations in 1776 "Ground rents are perhaps a species of revenue which can best bear to have a peculiar tax imposed upon them," No, hardly a bleeding heart liberal Professor of Moral Philosophy - social cohesion good for business.
Obviously greater community effort the bigger the value. E.g. 1 acre in Edinburgh Georgian New Town would have less than one acre of windswept Grampian hillside. And yet Land remains a sacred cow. Extraordinarily Treasury has apparently no estimates of flow of income to those who own land, yet they know every penny we employees earn. There remains an incomplete land registry down south. However, thanks to Kevin Cahill?s book Who Owns Britain, we now know that 159,000 people, roughly the population of Aberdeen own 2/3 of the land in the UK. Now, the idea of this meeting is to ask whether what is good enough for Pennsylvania, New South Wales, Hong Kong and Denmark could be good enough for devolved Scotland enjoying tax varying powers to provide public services and infrastructure we need to compete.
Speakers on the platform and experts in the audience have approached LVT re environment & social justice. But I am a business journalist who has worked in a family business; it is the fact the LVT brings measurable benefits to business that appeals to me. In business, there is already some recognition already of advantages of capturing community created value here in Edinburgh. Last month the Edinburgh based E-Rail Group announced that it would be possible to raise the ?25 million need to restore the old south suburban railway ?25m purely from rising value of rents on offices on adjoining land. Also New Edinburgh Ltd recently announced it would be contributing ?1.5m to the new Edinburgh Park station in recognition to what a station near their development would mean in increased rents and land values. Welcome one-off gestures from imaginative commercial self interest but as piecemeal as the unsubtle cosh of Section 75 planning gain meeting resistance in Edinburgh from housebuilders.
So. Why not planned for annual levy - LVT - raised for the public good? LVT is NOT anti-landowner for, as these two Edinburgh property companies recognise, proximity to infrastructure creates value. Anyone here in the audience working in property - read London property developer Don Riley Taken For a Ride pub. this year, which sets out commercial case for LVT. He worked out that land within a 1000 yard radius of each station on the new Jubilee Line extension there were accumulated gains of ?1.3bn. 5 more stations between Stratford and Waterloo would have led to accumulated gain of ?13.5bn = 3 times the ?3.5bn it took of ordinary taxpayers money to build line. I should also say too, 50% more than extra billions Chancellor said yesterday he needs to borrow just this year. Riley suggests that this capturing the community created land values could provide ?180bn Government plans to spend in next 10 years. It is inevitable that public borrowing will translate to higher taxes. Why can't the idea of raising it through a levy on the monopoly of land values least be considered by our policymakers?
This month I have been in contact with Philadelphia Chamber of Commerce which have successfully lobbied for LVT to be introduced to their city next year as a means of regenerating local business and curing its blight of 35.6 empty properties and land sites per 1000 of the population. They estimate the shift to LVT will result in a decrease in property taxes for 54% of small family businesses which creates 80% of all new jobs. This is Controller of taxes writing on the Council website about LVT?s effect on homeowners ... taxing buildings less and land more to encourage individuals to maintain and improve their properties as it discourages speculation and blight by decreasing incentives to allow buildings to decay. Such a system will reduce Real Estate Taxes on nearly 80 percent of residential property owners. Similar systems in Harrisburg and Allentown have reduced abandonment, encouraged development, and generated popular approval.
But LVT is not new. It has a distinguished pedigree. Here a few lines in latest edition of Geophilus written by the mayor of New Westminster British Columbia in 1930s describing the effects of 25 years of LVT. ... the merchant and manufacturer do not have to carry the dead weight of a large investment of high priced land... nor maintain taxes on buildings,machinery and equipment Here factories have been able to keep operating when other cities they have had ... to close down. Real estate developers have played the role of home builders rather than land gamblers."
Now it may be tonight that you maybe won't receive all the answers. This is a rusty subject. Different viewpoints on the platform and in the audience. There will be those of you who will not agree but I hope whatever happens you will enjoy the evening and agree that in the City of the Enlightenment, Land Value Taxation is now back - a fit subject for polite society.
Why not spread the word: use your favourite social network!