“Land monopoly is not the only monopoly, but it is by far the greatest of monopolies — it is a perpetual monopoly, and it is the mother of all other forms of monopoly…Roads are made, streets are made, services are improved, electric light turns night into day, water is brought from reservoirs a hundred miles off in the mountains—and all the while the landlord sits still.”
That was what Winston Churchill said about Land Value Tax in 1909. But what is it and why should I care?
“Every one of those improvements is effected by the labour and cost of other people and the taxpayers. To not one of those improvements does the land monopolist, as a land monopolist, contribute, and yet by every one of them the value of his land is enhanced. He renders no service to the community, he contributes nothing to the general welfare, he contributes nothing to the process from which his own enrichment is derived.” (Full speech transcript available here)
Makes sense? You buy (or inherit) some land, do nothing with it, someone else builds a road nearby and all of a sudden your land is worth more than before without you lifting a finger. Needless to say, this has big implications for the economy as a whole and also the likes of you or I trying to find a little corner of a field we might like to try living on!
Consider, for a second everything else you get taxed on, and the amount of the whole economy all taxation represents (about 40%)
Why not tax land instead? First of all, some of the technical / tax-related benefits:
- It can’t be offshored, disguised or otherwise hidden in some overly complicated tax swindle
- It could replace or reduce other less efficient / fair taxes – like Council Tax? Stamp duty?
- Arguably it’s a fairer balance of risk and reward – why reward those who have risked the least? What are taxes for, again?
Not to mention some the social, economic and environmental benefits:
- Landlords not using their land are encouraged to sell it on to someone who might (rather than paid to let it sit empty!)
- Purely speculating on land (linked to the point above) becomes more expensive
- Relief for less economically valuable land (which may be very environmentally valuable)
Interestingly Land Tax was one of the first modern taxes established in the UK, in 1692. If you’ve done any digging around for your family tree, you might have searched some of these records. A large motivation for the tax was due to the Nine Years War at the time, and I quote: “For carrying a vigorous war against France”
By 1780, you had to be registered for Land Tax to be eligible to vote and of course, only landowners were allowed to vote. More about the history can be read here, including such interesting bits and pieces such as that Catholics (not very popular at the time) may have been charged double the usual rate! The Land Tax seems to have generally diminished in its popularity, being replaced by other taxes, and was finally scrapped in 1963 when it brought in less than £200,000 a year. The Hansard record of this is surprisingly witty in parts, for politicians. 🙂
Currently, parts of Australia, China and the US have a land tax, as well as Denmark and Russia. Debates on the matter are gaining real traction in Scotland and Ireland.
Despite having ‘had it and lost it’, I would still urge you to read more if you think land is ultimately more valuable than cash, a home is more important than property, or are at all frustrated with the balance of power in this country, roughly half of which is owned by less than 1% of the population. More on this complex yet critical matter can be read by far better writers than me here:
Finally, going back to Churchill, he diplomatically concluded the speech with this concession to the individuals and landlords themselves:
“I do not think that the man who makes money by unearned increment in land is morally worse than anyone else who gathers his profit where he finds it in this hard world under the law and according to common usage. It is not the individual I attack; it is the system.”
And in case you still think this is some wacky communist scam (and Churchill hasn’t convinced you either) – I can also point out that even the Daily Mail kicks up a fuss about this from time to time! (The author would like to point out he cannot be held responsible for the content of external sites, especially the Daily Mail)
Phew, tricky subject! Hope that’s some food for thought. Don’t forget to subscribe for more!