Burnham goes blue in the face

se1man

"they strike me as nearly conservative."

- which is exactly why the brother/sisterhood who get to choose the next Labour leader won't touch Burnham with a bargepole.

Pity, because it's the first time that any of the candidates has proposed anything innovative and sensible, and it's exactly the sort of thing that would (almost) make Labour relevant and interesting again.

Rhoda Klapp

Oh goody, a tax that will benefit me! Can't wait.

(Did I get enough sarcastic tone in there? Maybe not.)

Tony E

Land tax sounds quite sensible and definitely worth investigating in more detail.

However, he has no chance whatsoever of becoming Labour Leader, so we must hope that the Conservatives take a look at the idea and make serious costings and revenue evaluations.

denis cooper

David, what has happened to your last article, the one about the funeral at Regent's Park mosque?

Nik Darlington

It is a potentially brilliant idea. Game changer? Sadly for Mr Burnham, unlikely. We are still going to be saddled with David Milliband as Opposition leader and Ed Balls as shadow chancellor.

Still, it is the sort of radicalism that the Labour party won't get under either Milliband. Might get something like it under Balls but it would be nakedly opportunist.

Burnham is Labour's philosopher king in waiting...

Dan Grover

I'm a fan of a land tax. It seems fair to me that, given no one person was born owning the land itself, a tax on that's only fair. Of course, the stuff that comes about on the land as a result of the labour of a human (ie a factory, crops, a shop etc) aren't natural objects that we inhereted when we evolved from the primordial soup and so the riches of such things should be enjoyed by those who created it. It's not that I don't believe in property, I just don't believe one should be able to own land without paying something back.

Imo it's far more fair to tax this and to tax income.

denis cooper

"As far as I can gather, land value tax is not a wealth tax; it would benefit middle England. Levied according to accurate market rental rates rather than unrealised capital value, it taxes property ownership fairly."

Of course it would be a wealth tax.

You acknowledge as much yourself, by saying that "it taxes property ownership", albeit you think "fairly".

If the owner of an asset is forced to pay any tax on an asset just by virtue of his ownership of the asset, then part of his wealth is being taxed and it's a wealth tax.

Originally rates were occasionally or periodically levied on the rental income which was being received by the property owner, or which was assessed as being potentially receivable by the property owner, but the effect is the same - that the owner of a property must hand over a certain fraction of its value, irrespective of whether he has actually received the notional rental income.

I wouldn't be entirely opposed to that being done under certain very restricted circumstances, for example if a property company is deliberately sitting on a derelict site and leaving it as an eyesore blighting the area rather than going ahead with development, but certainly not for owner occupiers.

I'd rather include all houses in a capital gains tax regime so that the tax was levied on profits actually received on sale, rather than on a notional annual rental income during ownership, a notional rental income which in the case of owner occupiers is simply not being received and which is therefore not available to pay the tax.

I'd simultaneously abolish stamp duty, an upfront tax on the transaction and arguably as unjustified as a tax on ownership; during the long period of transition from the present tax regime to the new and more rational tax regime, if stamp duty had been charged when the house was purchased then then capital gains tax would not be charged when it was next sold or transferred to another owner.

Verityred

Easily the best of the Labour candidates, alas the assorted boneheads, privileged hypocrites and knuckledragging cave folk that make up the voters will decide otherwise.....

Dan Grover

But Dennis, the point is that the "asset" in this case has never been anyone's to buy or sell. You don't have to be a hippy to think that shouting "Hey, I got here first, this land's mine!" is a stupid way of running land. The land, and it's pretty much peerless in my mind in this sense, should be something owned equally by all. If you want to build a factory on it, go ahead - and reep all the rewards of that factory. But the factory owner never made the land. They didn't create it, or sculpt it into being. It was already there. So yeah, make the factory, but they should pay something back to everyone else in exchange for their use of it - almost like a license.

I meant to say that I think a land tax is far more fair than income tax above, but a typo totally ruined the sentence. Whoops!

Michael Fowke

I haven't taken Burnham seriously since he came out with that crazy idea to give websites certificates like movies.

TrevorsDen

Tories and or the Coalition can simply point to Burnham when they present thier 'aspirational' ideas.

If I were a govt politician (a rare breed so there are vacancies) I would be bringing aspiration in at every opportunity.

David Blackburn

Dennis Cooper,

It isn't because it's based on market rental values, ie the value of a property to rent in a certain area. So you could own or rent a large house in a rural area worth a lot in capital and end up paying very little because there's no real rental market; or you could own or rent a massive house in Belgravia and pay the fortune you earn against a boyuant rental market in West London. It is not a tax on the unrealised capital value of your house, like Vince Cable's propesterous 'Mansions Tax', a tax on asset wealth with no thought to people who were cash poor. That is a wealth tax.

denis cooper

@ Dan Grover - I believe that in law the sovereign still owns all the land in the realm, and merely allows subjects and others to make use of it under various terms and conditions. If anybody could be said to have got there first, it was William the Conquerer.

denis cooper

@ David Blackburn -

But, at least in theory, the value of an asset should be the net present value of all expected future cash flows associated with the asset.

So in principle the market rental value and the market capital value are correlated, and calculating a tax on the basis of the former is just another way of calculating a tax on the basis of the latter.

What's happened to your last article?

JohnPage

Peter, your discussion of LVT is meaningless without numbers. Of course Labour wouldn't abolish any taxes in compensation. It would hit the South harder than the North. And what about cash-poor pensioners?

Olaf Rye

So, he has one modestly good idea ? The pity is, he will merely continue the tax-and-spend tradition of Labour. He is merely another believer in the state and its right to coerce us through paltry laws and surveillance. Labour is an obscene farce and their instincts remain those of the Stasi and KGB.

Ian

A land tax is a terrible idea. Not only is it patently a wealth tax but its implementation could have serious consequences. Surely it would lead to an immediate crash in the property market as people offload properties to avoid paying the tax, leaving the politicians responsible massively unpopular with a large slice of the electorate.

David Blackburn

dennis cooper,

I removed it because the translation was not wholly accurate, rather undermined my point.

RM

Can anyone explain how this "land tax" differs from the old Rating system abolished by Margaret Thatcher?

That was based on a property's rental value (and is still used for commercial property). What makes this such a controversial or innovative idea?

denis cooper

Thanks for the explanation, David.

Andrea Gill

And another Lib Dem policy nabbed by a Labour leadership contender...

Doppelganger

Denis

Well said. It is a wealth tax pure and simple. And it is unfair because it bears no relationship to ability to pay. Would its proponents support a similar holding tax on all other assets, say shares, bonds, cash etc?

Tarka the Rotter

Andy Burnham is too orange to go blue in the face. Would certainly give him one though... cummon, wouldn't you?

Victor Southern

Mr Blackburn - the tax that you and presumable Andy Burnham are talking about is not a Land Value Tax at all. When you talk about taxing according the value of the improvements that has nothing to do with the underlying land value.

An owner who is holding a property to sell eventually for redevelopment would then logically demolish the structure immediately and pay no such tax.

How would properties be treated where the owner did not own the land - the Freehold? Would he pay on the improvements only? That is our old Rates not a tax. And would the owner of the freehold have to pay the difference?

In many countries the property which legally changes hands is the land together with specified improvements that may be on it. One does not sell No.2 Shady Lane but Stand 101 in Lovely Township.

David Bouvier

David - have to agree with Dennis. In general the rental yield on property is consistent across the market - though with some regional variation. I would expect declining areas would see values drop below yields (reverse in rising areas) because of the different durations of commitment involved.

As others point out there is a vast difference between a Georgist Land Value tax and a Property Tax.

Fergus Pickering

What is meant by 'aspiration'. We know ir is good to be aspirational, so what is it? I think it means wanting to be richer. That certainly makes me aspirational, along with everybody else, I would have thought. So what ELSE does it mean? Ireally want to know.

Mark Wadsworth

Here we go again. The opponents always say "Land Value Tax is a wealth tax".

No it's not. If you have a house worth £1 million and you don't want to pay the tax, then sell it and put the money in the bank or into shares or gold or paintings or a racehorse or any one of the real forms of wealth which are not land.

Further, land value tax is not a tax on 'ownership' of land, it is a tax on 'consumption' of land. The fact that land is not physically used up is a separate issue; but it is certainly not produced, therefore taxing the right to exclusive occupation is that miracle of taxation - the taxation of consumption without simultaneously taxing production (VAT is actually a tax on production, whatever the European Union says).

I would however agree with Denis Cooper's observation that as rental and capital values move in line, to pretend to tax the one but not the other is a tad duplicitous.