UK politics is dominated by middle England pre-occupations, there are vaguely hysterical fears of the UK having a ‘Depardieu moment’, and capital flight in case of higher income taxes- not to mention fears of ‘taxing aspiration’. In part to sidestep these concerns calls are growing from radical quarters for Land Value Tax (LVT) which would be a tax on non-transferable (often inherited) wealth and assets rather than ‘hard earned’ income. Even if the UK coalition recently ruled out a ‘mansion tax’ – it is a sign of the times and the growing public unease at the transfer of wealth from poor to rich (trickle-up more than trickle down) that the proposition is even on the agenda in Britain at all. It’s time to challenge the neo-liberal hegemony.
Bedroom Tax – the sleeping hypocrisy…
Given the pressures on public finances, and many in the majority already struggling to make ends meet, the case for a Land Value Tax is justified. Take for example Lord Freud the minister responsible for introducing the coalition government’s “Bedroom Tax”. While his £1.9 million home costs 15 times that of a bedsit in his area, for council tax purposes he only pays a mere 3 times more than the bedsit dweller, protected by upper limits on the council tax banding system. There is a certain sense of popular justice, not to mention a financial case, for taking more tax from those with disposable incomes who chose to live in luxury homes, own multiple properties, or pontificate from country estates. Certainly from an urban perspective the issue does not seem too contentious.
With blanket application across the UK however a Land Value Tax would have unintended negative consequences, certainly on the profitability of food production in agriculture reliant economies such as Wales. It is hard to consider the exact impact on food inflation that the introduction of LVT could have, but a blanket UK wide application of new tax of this kind would suck yet more capital from Wales’ ‘real economy’, and this in a nation already struggling with under-investment, and an under-performing and under-developed private sector.
While (as stated it this otherwise excellent article http://kaalvtn.blogspot.co.uk/p/index.html?spref=tw) LVT introduced in tandem with adjustment and redistribution of the CAP and the EUs Single Payment Systems could work in England, Wales’ sadly EU subsidy dependent economy would suffer unless any such readjustment was weighted considerably in Wales’ favour. Which seems unlikely given recent suggestions that UK CAP payments and UK EU budgets should be spent ‘on old age care’. http://www.express.co.uk/posts/view/368525/Spend-EU-cash-on-old-age-care
Socialise Rent – Increase Opportunity and Productivity
What this highlights is not case for shelving any Land Value Tax proposals. On the contrary, some kind of Land Value Tax would work favourably for Wales, as elsewhere, if implemented with the strategic requirements of the Welsh economy at its heart. Wales after all has vast swathes of crown estate territory within its borders, and many second homes and holiday homes.
The problem in introducing a Land Value Tax in Wales however demonstrates the ineffective constitutional governance that underpins UK wide fiscal policy making. What works in some parts of England rarely works for the whole UK. With the bias of population densities and the exclusive nature of FTPP voting systems exacerbating the situation (Wales GDP is 25% less than that of the UK average- but nearly all macro-economic decisions effecting Wales are taken by Westminster) the economic inequality between the UK nations is illustrated by demand for greater devolution, and independence in some cases, both north and west of England’s limits.
Any new Land Value Tax, and general fiscal policy, should be designed to deliver wider objectives in the public interest, not just to swell government coffers, even if the intention is progressive redistribution at the end of it. A Land Value Tax designed in Wales and enforced in Wales could, like CAP studies in Scotland propose (http://www.macaulay.ac.uk/LADSS/cap_flattening.html), take into consideration not just the value of land, but land’s productivity, use, and quality.
Not ‘one size-fits-all’
Exemptions or rebates could be available, for example, for land used in helping deliver food security, carbon reduction/renewable generation, or bio-diverisity. This would encourage, in tandem with planning provision, the sustainable development of privately owned estates for public interest while ensuring that it is those who can pay who end up paying the most, or else put their under-utilised property to good use.
Calls for Welsh fiscal solutions to Wales’ structural challenges require a decoupling of growth from central UK government planning. These calls indicate, not a desire for constitutional transformation for its own sake, but rather that radical constitutional transformation should work to compliment wider, loftier, goals of social justice and environmental sustainability.
From a Renegade Correspondent – Chris Paul