October 2010 Archives

Did you know that the UN supports Land Value Taxation? In 2006, UN HABITAT awarded a contract to the US-based Earth Rights Institute to develop one of several Global Land Tools for the benefit of governments in the majority/developing world: an online "How to do it" course on Land Value Capture. The contract document stated: "Land Value Taxation is the appropriate instrument for the urgent fight against global inequity and poverty". Securing Land Rights for the poor is seen as crucial to the UN's Millennium Development Goal 7, which includes the principle of "integrating sustainable development into national policies and programmes, to help reverse loss of environmental resources."

Earthrights' co-founder Alanna Hartzok has just contacted PLRG to inform us on project progress in a number of countries, using the SWOT methodology to analyse a country's current status as regards capture of land values for securing land rights and combating poverty.

Among the components of what the UN-HABITAT regards as good practice for land policies are:-

"Consider fiscal and other measures, as appropriate, to promote the efficient functioning of the market for vacant land, ensuring the supply of housing and land for shelter development; Develop and implement land information systems and practices for managing land, including land value assessment, and seek to ensure that such information is readily available; Make full use of existing infrastructure in urban areas, encouraging optimal density of the occupation of available serviced land in accordance with its carrying capacity; Consider the adoption of innovative instruments that capture gains in land value and recover public investments".

In the UK today, almost the only people (outside the top decile of income earners) able to enter the domestic property market are those with family already in it, via "the bank of mum and dad". Therefore it is timely that RICS is taking a long hard look at how tax impacts on the entire property cycle. Our Coalition Government is 'market friendly' and should be receptive to ideas that make the housing and land markets work better.

Stephen Hill, Director of C2O futureplanners and a member of RICS' Planning & Development Professional Group Board, has kindly agreed to be the next speaker in the series of talks for the Professional Land Reform Group (PLRG).

Hill will give his talk on the subject of Planning and Land Pricing. In his piece fronting a special feature on the future of UK spatial planning in the RICS Land journal, he writes in favour of fundamental reform of property-related taxes:-

"...reforms that abandon transaction taxes in favour of a fairer and more efficient system focused on the consumption and use of property and land. The state must ensure a fair and progressive allocation of scarce resources that have a uniquely important role to play in a modern political economy. Land pricing unconstrained by public-interest considerations makes it hard to move to a low-carbon economy, as it externalises all the environmental costs that other aspects of public policy are trying to tackle."

Hill was among several members of PLRG who attended a workshop at RICS on 23rd October on Taxes & Property.

PLRG meetings take place at London South University, near Elephant & Castle Underground. Entrance 103 Borough Rd, SE1 0AA, Room B172. Travel directions Please email PLRG Hon Sec (and Landvaluescape editor) Dr Tony Vickers 

This talk will take place on Wednesday 24th November at 6pm.

Suggestions for future PLRG talks should be sent to Dr Vickers at the same address.

Volterra note 22 Oct10.doc is a brief record by PLRG Hon Sec Dr Tony Vickers of a workshop he attended at the invitation of RICS to discuss how various taxes affect those who own, occupy and invest in land and property. It was part of an ongoing study which RICS commissioned in July 2010. Consultants Volterra and Edge P&D are undertaking the work. Workshop attendees came from across the spectrum of RICS' many disciplines.

This is the title of an article in this week's New Statesman by its editor Jason Cowley. It gives a good overview of the historical background to the great "unquestioned" issue of democracy and market capitalism.

It represents only the beginning of a debate and cries out for letters in response.

For a much better informed debate, please encourage your contacts to subscribe to this website by emailing me. It would also be good to see CentreForum's proposal to have Philippe Legrain write a book on the subject move forward - for which some £15,000 is sought by the publishers.

The Professional Land Reform Group (PLRG) held its first evening meeting at the new venue of London South Bank University (LSBU) on 16 September. Speaker Dave Wetzel, an independent transport consultant and PLRG Chair, gave a talk China needs LVT, which was followed by discussion.

Wetzel has visited China at least once every year for the past five years, at the invitation of universities, professional bodies or governments there, mainly to talk about various ways of using land values to finance infrastructure projects. He usually starts his talks there by reminding his Communist audiences that Karl Marx wrote on the Land Question in Volume III of Das Kapital, published posthumously in 1909, 40 years after his contemporary Henry George (self-taught American political economist and supporter of free markets) published Progress and Poverty. Marx had thought George was "giving sticking plaster to capitalism".

Nevertheless Wetzel confirms that the modern Chinese Communists are receptive to the more free-market ideas of George than was Marx, drawing more from nationalist Chinese founder Sun Yat Sen (a keen supporter of George's "Single Tax" on land values) and from Hong Kong (where there is no freehold land tenure in an otherwise free market economy).

The Chinese Government, according to Wetzel, is very worried about house price inflation, very keen to build "green" cities and very open to foreign academics and their ideas. The American Lincoln Institute of Land Policy, which was set up to promote understanding of George's ideas, has established a presence in Peking University.

In the current issue of the international journal Land & Liberty, published by the Henry George Foundation of Great Britain, Danish commentator Lars Rindsig reports that "between 30 and 50 percent of properties in the centres of major Chinese cities are empty and only used for speculative purposes". These include some 90% of all p[roperties sold since mid-2009.

The Chinese government has introduced mandatory down-payments of between 30% (for owner-occupiers) and 100% (for third and subsequent purchases) of sale price for dwellings. Despite this, the gambling instincts of Chinese appear to be putting the entire economy at risk of a crisis similar to that recently experienced in the West. Prices in Beijing, where the annual minimum wage will now buy you 6 square feet of living space, have trebled in two years

Brief for UK Government.doc

This paper was prepared at the request of a member of the Coalition Government. It is not known how - if at all - it will be used. However it is a matter of public record that at least four of the Liberal Democrat ministers have been associated with the Party's LVT campaign group ALTER.

At their Party Conference last month, Liberal Democrats overwhelmingly backed a motion aimed at ensuring that the Coalition Government's austerity measures protect the most vulnerable and do not allow the wealth and inequality gap to widen. A key part of the motion was a call for Lib Dem ministers to be allowed "the freedom and resources to commission research to fully assess the viability and practicalities of increasing taxation on wealth - including land values".

Immediately following the debate, one of those Lib Dem Ministers asked PLRG Hon Sec Dr Tony Vickers to prepare a briefing paper for his Coalition colleagues on how LVT has been shown elsewhere in the world to act as a stimulus to construction. Dr Vickers was a member of the Lib Dems Tax Commission in 2005-7, which produced the Party's tax policy paper.

The think-tank CentreForum plans to commission a book by one of the many independent commentators on political economy to have recently written favourably about a land value tax: Philippe Legrain. The book will cover the theory, history, overseas experience and benefits to Britain of LVT in the current global situation. 

The project's scope is at this stage largely dependent on CentreForum being able to raise the money for it. PLRG Hon Sec Dr Tony Vickers was recently approached by CentreForum's Chief Executive Chris Nicholson and asked to use his contacts among sympathetic donors and grant-giving bodies to help. Vickers himself was a recipient of a small grant from CentreForum to help him write his 2007 book Location Matters.

CentreForum Advisory Panel member Will Hutton expressed his personal support for "a tax on unearned increases in land value" in a Commentary in The Observer this Sunday 10th October. Among other CentreForum Advisers are David Willetts, a Minister under Dr Vince Cable in the Coalition Cabinet - whose Mansion Tax was approved of by Hutton in the same article - and Chris Huhne, another Lib Dem Cabinet Minister who is known to support LVT.

All offers of funding for this CentreForum project should be addressed to CentreForum mentioning where the request was seen.

RICS, the leading property professionals' organisation, in July 2010 commissioned an independent review of how taxation impacts on the land and property sectors in the UK, throughout the 'property lifecycle' (i.e. from vacant site through useful occupancy to demolition). Volterra, a research consultancy headed up by Bridget Rosewell, will be working with RICS members to ensure the final research report - due to be published later this year - is as robust and critically evaluated by property professionals as possible. PLRG Hon Sec Dr Tony Vickers is one of those invited to take part in this work.

In late November or early December, RICS will hold an invitation-only event in London to launch the Volterra report. Dr Vickers has offered to publicise this among PLRG members, in case any wish to be invited - whether they are currently RICS members or not.

Anyone reading this, who believes they can contribute to a debate on the reform of taxes that affect the UK built environment, should email policy@rics.org with the subject: "PLRG & RICS Volterra event". A brief CV and full contact details will be needed in the body of the email. No guarantee of an invitation can be given, as space will be limited.

If you are lucky enough to be able to attend this event, Tony Vickers would like to know beforehand. It may be possible to hold a PLRG 'pre-meet' on the subject earlier in November, as the planned topic speaker for that month has had to cancel.

Ten years ago, as New Labour was mid-term in its first Parliament, Liverpool voted to ask Government to be allowed to pilot Land Value Taxation. Now it could be Newcastle that undertakes a follow-up, under a centre-right Coalition Government. The common factor is Liberal Democrat local control.