As part of my platform for the Labour leadership, I'm advocating the replacement of Council Tax and business rates with a Land Value Tax. This is something long campaigned for by the Labour Land Campaign.
We all know that council tax is a regressive tax, with those in Band H paying only three times as much as those in Band A. Rises in Council Tax are therefore hitting the poorest hardest. There is also £1.8bn in unclaimed Council Tax benefit.
Last week the Lyons Review published a report into the Council Tax review, which recommended that the large homes of the super-rich should be charged double what they are currently paying to allow for a rebate of £150 per year for the poorest. This was immediately rejected out of hand by Gordon Brown's Treasury. As David Hencke writes in the Guardian: "The man who would be prime minister threw away an opportunity for a real change that would have hit the rich and helped the poor".
A Land Value Tax (LVT) would simplify matters and accords with our sense of justice. Land is a gift of nature and its value rises according to the social and economic environment to which all of us contribute - yet only landowners benefit. For example land values in East London have risen due to the Olympics, yet it is the investment of public money that has enabled the Olympics to take place and for land values to rise. A tax on land values will return some of this unearned wealth to the community and the income used to reduce or replace regressive taxes such as council tax.
LVT is fair, transparent, impossible to avoid (you can't store land in an offshore tax haven), simple to collect, and would help tackle the growing inequality of wealth. It also encourages efficient use of land in towns and cities for jobs, affordable homes and leisure and thus avoid urban sprawl.
In 1906, Keir Hardie said "The slums remain, overcrowding continues whilst the land goes to waste. Shopkeepers and traders are overburdened with rates and taxation whilst the increasing land values that should relieve the ratepayer go to people who have not earned them". 100 years later we have an opportunity to make LVT a reality.
