LVT: Land Value Tax (LVT) - introduction

Please click here for answers to questions relating to Land Value Tax.


What is LVT?

LVT is exactly what it says on the tin: a tax on the value of land.

The value of land depends on:

  • What it can be used for.

    A acre of housing land has a higher value than an acre of agricultural land.

  • Where it is.

    An acre of housing land in Chelsea has a higher value than an acre of housing land in Derby.

LVT is levied on the value of land - not on the value of what is on that land.

LVT is levied on the owner of land.


Introduction


Click to watch a YouTube video about Land Value Tax

Click for a break down of land usage and taxes

The justification for LVT

  • All land belongs to us - to the Crown and the State. Freeholders "hold" land under a system of "socage" developed after "The Great Theft" of 1066 when William of Normandy claimed all land as his personal property and allocated parts of it to those who had supported him in battle.

    One third of all land is still in the hands of the aristocracy.

  • The Council Tax system is unfair - a house in South Derbyshire pays 2.2 times as much as one in the same band in Westminster. A 20 million house in Chelsea pays less that a Band H house in Derby.

    The National Non Domestic Rate (NNDR - "business rates") is a tax on employment because, in terms of land value, business pays 8.5 times as much as domestic property. We should be taxing profits, not employment. We should be preventing massive tax avoidance by major companies, We should be closing down tax havens. We should be encouraging people to create new businesses, not saddling them with a massive debt as soon as they start up.

  • LVT recognises that every individual helps create land values through their work, their community activities and their spending.
  • LVT recognises that every new investment - public and private - helps create land values, whether it is in public transport, businesses, leisure facilities, schools, hospitals, airports, making neighbourhoods smarter and more pleasant, or in homes or jobs.
 
  • LVT recognises that existing services and businesses - public and private - add to land values.
  • By including land that is currently kept idle, LVT encourages better use of land, particularly in towns and cities.

    LVT therefore encourages investment in more jobs and businesses and more affordable homes.

  • Land increases dramatically in value as soon as it is zoned for domestic or commercial use. It increases even more when planning permission is granted. LVT is levied as soon as the value changes and therefore prevents land hoarding which is slowing down the building of new houses.
  • By encouraging the use of urban brownfield sites LVT actively contributes towards protecting the rural environment.

    LVT therefore helps to protect green land and minimise urban sprawl.

  • LVT will rid communities of derelict sites and buildings that encourage anti-social behaviour.
  • Unlike other taxes, it is practically impossible for people and businesses to evade LVT.
  • LVT increases the funds available for public services, including public transport, health, education, leisure facilities, crime prevention, and social welfare.

Land usage and taxes

The spreadsheet contains links to government statistics which provide the sources for tax data.

Council Tax (CT) and National Non Domestic Rates (NNDR - "Business Rates") are shown for England to match the land area values.

Statistics for other taxes are for the UK as a whole so care should be taken with their use.

Very important notes

Prices for agricultural land have been rising rapidly so the value in the spreadsheet has been taken from this article in the Daily Telegraph. The article shows an average price of 6,882 per acre.

  The return on investment in agricultural land (rent) is low - a bit like the return on gold (which is zero!) For details on rents please see this article on the DairyCo web site.

The average rent for pasture land in England and Wales is 245 per hectare (99.15 per acre) - a return of 1.44%. Arable land rents for 387 per hectare (156.62 per acre) - a return of 2.28%.

Agricultural land has its price artificially inflated because, like gold, it is seen as a safe haven for wealth.

LVT will have a dramatic effect on stabilising the price of agricultural land - in fact, LVT will wipe out the rental return.


Click for a full size image

Contact us for a copy of this spreadsheet so you can try different values for LVT and see the result.


From the Labour Land Campaign
 

 
Background to tax reform

A tax on land or a tax on rents?

LVT: Land Value Tax - introduction

FTT: Financial Transaction Tax

PWT: Personal Wealth Tax

RUT: Road Use Tax

Citizen's Income

A sample proposal

Media reform

FAQ about LVT

FAQ about Citizen's Income

How to avoid taxes

Trusts

Tax havens

Company avoidance

Tax advisors

Voter alienation

Young people

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