The principle of land value taxation is an old one, dating back to the beginnings of social radicalism and the Labour movement. The idea that the tax system should target ownership and rent seeking over productive activity, such as work or worthwhile capital investment, is as valuable now as it was then. And choosing land in particular avoids the costly practicalities in identifying and verifying value, and in avoiding compliance through offshoring assets, inherent in a general wealth tax: land is easily valued, as there is a constantly-turning market for every kind of land and land use; it is also one of very few assets which cannot physically be transferred abroad.
Andy Burnham was right to advocate this change to the taxation system during the summer. In doing so he hypothecated the revenue for the abolition of stamp duty. But redistributing directly, through a system of freely tradeable shares, would instantly widen asset ownership to everybody and permanently shift the balance of power in Britain.
The idea is a simple extension of Andy Burnham’s tax. Once a land value tax has been levied, a system of National Land Shares is introduced. Everyone would receive one thousand shares on their eighteenth birthday: this would be non-means-tested, and a simple and equal benefit of citizenship. These Shares, to be clear, would not be tied to a specific piece of land, and would not entail ownership: rather, they are a hypothetical share of the entire national stock of land and its total value.
The proceeds of the Land Value Tax would bypass the exchequer completely, and be paid directly to the holders of Shares as a dividend. The dividend on each share would be the same, and the shares would be tradeable only via a National Land Share Exchange. A small commission on sales would be ample to pay for the administration of both the tax and share schemes.
This means that everyone in the UK begins their life with a valuable asset. They can hold on to their shares, and accrue the annual dividend; they can buy more, and watch their income grow; or they can cash them in, selling them at the going rate via the Exchange to those willing to buy.
The consequent expansion of asset ownership to all would have revolutionary implications for life chances, opportunities, and the country’s economic life. Value from land, currently only used as a means of extracting rent, would be freed for more productive uses: since the general population spend more of their income and use savings methods (such as bank accounts and ISAs) which feed more directly into financial capital for investment, there could be great benefits for economic growth. There could also be a flowering of popular entrepreneurship, as millions of people are given the means for the first time to realise business ideas with crucial start-up capital.
Direct redistribution of a land value tax also allays fears that such taxes hit middle-income wealth and aspiration by taxing the modest goal of home ownership to which millions of us aspire. The ownership of land nationwide is gapingly unequal, so the vast majority of the tax would be paid by a small number of extremely wealthy landlords and aristocrats: the absolutely equal distribution of Shares, on the other hand, ensures that the Land Value Tax liability is offset by the share dividend for all but the very, very wealthiest. And everyone has the option, of course, to further compensate themselves for their land tax liability by purchasing more shares from the Exchange, obliging them to pay for this privilege by purchasing shares from their fellow citizens at the market rate.
A Land Value Tax tied to a citizenship-based National Land Share scheme would be simple to implement and to administer, and provides a tangible financial benefit for the vast majority of the population The market for shares does all of the heavy lifting for policymakers, with the initial ownership of shares providing the mechanism for serious and permanent redistribution of wealth for more equitable and productive purposes.
Doubtless there are further implications, in economic, policy, administrative and political terms, of such a scheme that I have not considered, and I welcome further contributions. But our willingness to innovate, think radically and debate policy ideas such as this seriously is part of what the Labour party’s current ‘blank page’ policymaking process should be about. I hope that all comrades have the courage to consider all new policy ideas offered in this spirit on their merits.
oh yeah ‘land’ groovy,to build on and grow stuff,cool.But if you were say,Malcolm Rifkind you’d think nah mate to be pigs in ,I mean quids in we’ ll go to Ukraine/Poland &grow there cos like ‘s cheaper for fertilizer’n stuff (grow,wheat,rape,sugar beet,maize,money on trees etc)and looky here dude wheat up 6% is it ,cool! and no sweat.(Continental FarmersGroup plc ) Of course,I KNOW ‘there’s no law against it’ blah blah blah just that its such a big gap from get on the bus and find a job…… (Land Tax,yes, good idea though) (how much of UK owned by Chinese by now ? Mind you,if Prince Charles owns Cornwall he couldn’t afford to pay the Tax on that could he? gawd love him an’ all)
All I can say is this – yes please. I’ve been reading Henry George’s Progress and Poverty and am convinced that progressives need to tackle land reform *before* any other reform to fairly distribute the wealth be taken into consideration.
I agree it’s about time we seriously considered an Annual Land Value Tax. One of the benefits of an annual Land Value Tax is that if the income is used to reduce income tax for those on or below the average wage and to reduce (or even abolish vat) the economy will move up a gear and those on poverty wages will be able to keep more of their wage-packet. The dead loss burden of these taxes deters the creation of wealth and creates poverty and unemployment. However, I don’t like David Green’s idea for land shares that can be traded. I was one of those stupid young people who on changing jobs twice cashed in my pensions for a third of their value (losing the taxman’s and employer’s contribution) in order to pay off debts and buy an old banger. Now I wish I’d kept the pensions (or at least kept the old banger!) Can’t you imagine 18 years olds selling their land shares to buy the latest fashion items but when later in life they could do with the income to fund studies or a young family – live to regret it? As well as reducing destructive taxes I support the policy of paying a land dividend to all citizens (including children) every year. Alaska successfully does this with their oil wealth giving every family an extra income of several thousand dollars a year. Could you imagine the Tories gaining support after LVT had been introduced by saying “Vote to drop LVT, give the land rent to the Duke of Westminster and lose your annual land dividend!” For further info’ re LVT see http://www.LabourLand.org or http://www.theIU.org.
It’s about time Labour went back to its roots and supported the collection of the full rent of land for public benefit. Land value tax was the prime economics policy of the Labour Party manifestos in the early years. However, the idea of apportioning shares sounds like Tory policy to me. Introduce such a system and within a century you can guarantee that we’d end up with a similar pattern to now where less than 1% own 70% of the land which is our common heritage. I sincerely hope that no Tories are reading this.
well Carol,I’m sure they have someone to read it for them !