From the comments at Landlord-Law Blog:
just saying says:
It’s simple really. Bring in a Land Value Tax.
Jamie says:
Hardly simple!
We’re already committed to a different tax system and there could be massive implications that would dwarf the current problem of a proportion of the 9 million private renters struggling to pay the rent.
How would you deal with the repercussions of potentially wiping trillions off the housing market?
I mean, where do you start with a sweeping moronic comment like that?
Fact is, just about any form of organised society creates land values in the first place, however directly or indirectly, and just about any tax system taxes land values, however directly or indirectly. So "income tax" is in fact a crude and damaging tax on land values; land value tax is a sophisticated way of taxing incomes.
It's just a question of replacing the more direct taxes on land and buildings first* and then shifting taxes from the productive economy to land values £ for £.
And those trillions he mentions don't really exist; it's the annual rental values which are real and they would be largely unaffected. If anything, reducing taxes on the productive economy would increase them.
So if you were too timid about the tax shift, selling prices might well go up. There'd be plenty of ill-founded grumbling every year, but by and large, most people wouldn't really notice, they'd just notice that everything is getting a bit better every year.
* We could get rid of Council Tax, SDLT, CGT, IHT, Insurance Premium Tax, Stamp Duty and the TV license fee, as well as income tax on rental income and the non-dom charge (and AFAIC, additional rate income tax) and instead raise/pay the same amount of revenues with annual tax of just under 1% of current selling prices.
[Please note that the UK's private residential landlords pay about £5 billion in income tax but receive about £10 billion a year in housing benefit.]
Three-quarters of households would end up paying much the same as now each year.
The top quarter would pay more on a year-by-year basis but would no longer have to worry about the large one-off hits like SDLT, IHT or CGT (with all the associated complications, expensive tax planning exercises and sub-optimal decision making). Over a lifetime, the total tax they paid would be much the same as well. It's just a smoothing exercise which makes everything much easier to plan for; it's like the difference between the TV license fee and Inheritance Tax (both of which raise about £3 billion a year).
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