FURTHER ITEMS ON PARTICULAR ASPECTS OF LVT:
In Part 2 the relationship between land values and location was shown to be fundamental, but within that context it is worth noting how land in general or sites in particular may acquire value. The primary causes affecting land values are: 1. Natural advantages. 2. Infrastructure. 3. Population Intensity 4. The Planning System 5. Security.
The exercise of power in economic affairs invariably derives from ownership; whoever owns an enterprise or organisation will decide on the laws and procedures that govern it. Whoever owns the elements of production will set the conditions that lead to that production. This applies particularly to land, which is one of the two original elements of wealth creation, the other being labour. Continue reading
Amongst economists it is generally understood that the term ‘land’ includes all natural resources, all gifts of nature, natural forests, wildlife, minerals in the ground, fish in the sea etc. This definition raises the question of ownership, exploitation rights and also the concept of resource rents. Justice Cranston’s ruling could apply equally to all natural resources. Continue reading
In the explanation of Part 2, you may wonder why there is no mention of industrial land. This is because there is a big distinction to be made between ‘heavy’ and ‘light’ industry. For the purpose of the Part 2 explanation, light-industrial land comes under the heading of ‘commercial’. Heavy-industrial land is somewhat anomalous in that, where land values are concerned, it does not follow the same pattern of development as for other forms of economic activity. Continue reading
In the explanation of Part 2, it can be seen that LVT is predominantly an urban rather than a rural tax, in the sense that by far the greater revenue would be derived from the former. Although rural land accounts for about 87% of Britain’s total land area, it represents only about 5% of the total land value.1 This means that rural land would contribute about 5% of the total LVT and urban land about 95%. Continue reading
The term ‘unimproved land value’ is widely employed in much writing on LVT, but can be misleading. What is intended is to make the distinction between a site that has been developed or built upon (improved) and a vacant site where no apparent development has taken place (unimproved). The problem with this term is that it leaves unresolved various anomalies that might arise when trying to establish the actual meaning of ‘unimproved’ for the purposes of taxation. Continue reading
Politicians are always averse to any change in taxation that will create losers who will cost them votes, so they tend to resort to indirect taxes where no obviously disadvantaged group can be identified. Although any change to LVT would create winners and losers, in any part of the economy where land was involved, it is arguably the effect on homeowners that would give politicians most concern. Continue reading
This expression arose from the time when ordinary homeowners realised that their home did not have value simply as somewhere to live, but also as an investment. It became evident that constantly increasing property values, reflected in house prices, provided, over the long term, a better return on capital than savings accounts, and at the same time a place to live. Paying rent when you could be paying off a mortgage did not make sense to most people. Continue reading
As with any commodity, it is the combination of the price demanded and the financial means of the prospective buyer, that renders it affordable or not. Housing is no different. House prices have been rising inexorably at least since the 1960s and continue to do so, especially in the most sought after areas, such as London and the South East. Continue reading