Debate Magazine

KIller Arguments Against LVT, Not (474)

Posted on the 10 December 2019 by Markwadsworth @Mark_Wadsworth

It's nice to see five time honoured classic KLNs in this morning's City AM, neatly packaged and bundled. I've a nasty feeling that Homeys use for reference:
Should business rates be scrapped and replaced with a land tax, as the Lib Dems suggest?
Sarah Collins, director of RIFT Research and Development, says NO.
At first glance, scrapping business rates will be received well by small business owners. But there’s a problem: it needs to be paid for, and to the tune of around £25bn each year in typical tax revenue (1).
The Lib Dem solution is to tax commercial landlords, which is all well and good until you realize the following.
Local councils are dependent upon business rates to fund local services. Any funding gap brought about by a miscalculation or by landlords simply domiciling their assets elsewhere (2) would leave neighbourhoods bereft of support for things like affordable homes, social care, play areas — all of which the Lib Dems say they stand up for.(3)
These same commercial landlords — the likes of British Land and Land Securities — are also invested in by pension funds (4). Tax them until the pips squeak,(5) and returns will diminish and pension pots will shrink. This will again impact the very same people whom Jo Swinson says she’s looking out for.

1) Yes, it was proposed as a replacement tax, so ought to raise the same amount as Business Rates.
2) We're familiar with the Missing Homes Conundrum. This woman is going one better with the Missing Land Conundrum.
3) There is no direct link between taxation and spending. This KLN links Business Rates with Good Things, an interesting twist on the traditional KLN that LVT revenues would be wasted on Bad Things.
4) Totally irrelevant.
a) Pension funds also own shares in weapons manufacturers (and other cartoon baddies like Big Oil, alcohol and tobacco); is this an argument against embargos on the sale of weapons to unfriendly regimes, or against fuel duty, or against preventing under-18 year olds from buying booze or fags?
b) Pension funds also own shares in retailers and other businesses currently paying Business Rates, so the gains and losses would largely cancel out anyway.
5) It's a replacement tax. You could increase any tax (apart from LVT) to a ridiculous rate; that's not an argument for or against any particular kind of tax. And in (3) above, she criticised LVT on the basis that revenues would fall.

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