A traditional KLN is that if we collected some tax on the rental value of land and reduced other bad taxes on transactions, output, employment etc, all the wealthy foreigners with their fancy status homes in London would flee the country, leaving economic devastation in their wake.
OK.
From today's Evening Standard:
Foreign “buy to leave” property owners are not preventing ordinary Londoners from affording their own homes and in fact inject millions of pounds into the capital’s economy, a new report claims today.
It says sales of homes worth more than £2 million in central London “have not fueled a general rise in house prices” and insists that overseas buying at the top end of the market “does not play a major role” in the housing crisis.
The report, commissioned by Westminster council, suggests that owners of trophy mansions pump £2.3 billion a year into the city’s economy through spending in shops and restaurants, work on homes and employing staff.
It found that owners of homes worth more than £15 million spend an average of £4.5 million a year in London while those in the £5 million to £15 million bracket spend £2.75 million annually.
The study follows growing public and political anger over the impact that foreign buying has had on the capital’s property market. The furore has resulted in a raft of new taxes on owners of homes worth more than £2 million and the threat of a further “mansion tax” from Labour and the Liberal Democrats after the election.
Okey doke.
So let's start off with a modest LVT of approx. 1% on current selling prices (25% of the site premium), which would be enough to replace Council Tax, Stamp Duty Land Tax, Capital Gains Tax, the TV license fee and Insurance Premium Tax, as well as the annual non-dom levy of £30,000 or £50,000 per person.
So our hero in a £15 million home has to pay £150,000 a year in LVT, possibly a smidge more or less than whatever he is currently paying.
If he and his family really spend £4.5 million a year here, are they really going to notice an extra £10,000 or £50,000 a year? About as much as they would notice a tax cut of £10,000 or £50,000 a year, methinks.
I think we can rule out the possibility that Westminster Council are lying for their own nefarious reasons, party political donations from oligarchs and so on.