November 19, 2019 - 7:14am
A significant revelation from Liam Halligan in The Telegraph (and his new book, Home Truths).
When the current Chancellor, Sajid Javid, was responsible for housing policy he proposed a “tax” on the huge uplift in value that occurs when land gets planning permission:
In some places, especially the South East, go-ahead from the planners can mean that the land suddenly becomes hundreds of times more valuable. This a massive windfall for some lucky farmer or wily speculator. Javid’s plan was to split the uplift 50:50 between the landowner and the state.
It never happened, apparently because Theresa May blocked it. But is it a good idea?
Well, it’s better than nothing, but it’s quite literally a half measure. The uplift in value is entirely created by granting of planning permission. From a landowners’ perspective it is entirely unearned. If it’s wrong for them to get all of it, then why should they get half of it? Effective marginal rates on earned income can be higher than that.
At most, landowners should get a low multiple of the agricultural-use value — and everything above this limit should be used to tackle the housing crisis and to ensure that all new development is both beautiful and sustainable.
The other big hole in Sajid Javid’s 50:50 tax is that land value uplift issue doesn’t just occur when land is first granted permission for development. All sorts of things can push up the value of already developed land — for instance investment in new local transport systems or the fact that a particular area has become a hub of enterprise. It doesn’t matter if you’ve done nothing to contribute to these success stories, if you just happen to own property in the area, then you get to profit from other people’s hard work and investment.
Only something like a land value tax can ensure that what Winston Churchill called the “unearned increment” benefits the common good.
I hope that Boris Johnson not only reverses his predecessor’s policy, but goes much further and embraces the Churchillian principle of land value taxation.
Peter Franklin is Associate Editor of UnHerd. He was previously a policy advisor and speechwriter on environmental and social issues.
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SubscribeFun article, Tom, but your longitude point doesn’t quite work.
Longitude is arbitrary – it’s east / west basis some reference point, which can be anywhere you choose. The French were still bitching that the 0 degrees meridian ought to go through Paris rather than London until the 20th century.
Latitude in contrast is absolute. It’s degrees above or below the plane of the equator. You can assign any point on Mars a latitude because it’s got an equator, but for a longitude you’d need to pick a feature and designate that as 0 degrees E, 0 degrees W.
But the degree is also arbitrary. For example, just try measuring latitude in radians.
Unfortunately, we have been seeing this kind of science in medicine for a long time. There is a tendency to run large groups of data through a computer and sees what falls out at the end, and publish the results whether it is relevant or not. Several years ago, NEJM publish a widely sited study that women, 35-55, who were more than 10 pounds overweight, died at twice the rate for those who were not. This caused many with tendency to bulimia to frantically loose weight and get sick. This group of patients is actually the healthiest with a mortality rate of like 2/100,000. Doubling this number was irrelevant. Publish or parrish.