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Thursday, 15 June 2017


Yes, it will be you. You are one of the lucky ones. You have watched the ‘value’ (price) of your house rise faster than inflation, sometimes putting on more value per month your salary.

Then along comes Corbyn and his army of killjoys who want to take your accumulated wealth away from you with their fiendish Garden Tax.

To make matters worse, many of you will be paying vastly more than the Council Tax it replaces.

But fear not! In the long run—very long run, 30 years or more—it will all work out beautifully. Nearly every home-owner paying this Land Value Tax (to give the Garden Tax its proper name) will benefit.

Thanks to LVT only the cost of the house matters, not the land it stands on. As a result buying a house will become much cheaper. This also means that the burden of paying off the mortgage will shrivel too.
Why? See House Prices don’t rise-Its the cost of Land.

In total, over your lifetime, the cost of your LVT should be no more than the previous cost of mortgage interest payments PLUS the old Council Tax. 

So Land Value Tax means paying roughly the same as the old Council Tax plus most of the old mortgage payments? Not much to cheer about there is there?
One benefit is the smoothing out of payments. Today when you buy a house at the currently inflated prices, the mortgage payments are huge, and in many cases crippling. As the decades roll by you eventually pay off the mortgage. 

Then there’s only Council Tax to pay.

The new Land Value Tax not save you money, but the payments will be smoothed over your home-owning life-time. Assuming LVT will be geared to inflation, it should start low and then  will only gradually increase (as hopefully your salary increase, too!).

Spreading the costs of ownership more evenly without increasing the total take would be a Good Thing, but hardly enough to go through the trauma of introducing LVT. There must be something else to make it worthwhile.

There is. Instead of the banks making loads of money out of mortgage interest, most of it would go to the Chancellor — as LVT. The last time I checked mortgage interest payments amounted to more than 15% of total government expenditure.

With this new-found bonanza the Chancellor could cut Income Tax by a quarter, or VAT by a third. Either way your hard-earned income would go a bit further. You should have something left over to save, to build a nest-egg, to create an accessible wealth-fund. So much better than depending on the erratic movements of the housing market!

LVT will take decades to work through. The initial shock of losing your wealth will eventually be replaced by a different and more fungible form of savings. Economists assure us that many more benefits will accrue to the economy once we adopt LVT.

So yes home-owners and everyone else: Rejoice! You be delighted with the imposition of the LVT-Garden Tax — eventually, in the distant future, when as Keynes put it, we are all dead.

Postscript: I hope this shows the utter naivety, politically speaking, of a straight replacement of Council Tax with LVT. Something much cannier is needed, something which of necessity will take a long time.

Start small with LVT and gradually extend it. Anyone for SDLT replaced by a mini-lvt?

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