|
A dissenter's view: no land taxation without land information |
|
|
|
Placing more of the tax burden on those who are wealthy accords with natural justice, and since land is an element of wealth there appears to be merit in taxing land. But Peter Dale asks whether Land Value Tax is the answer.
It is clear that land values depend in varying degrees on the permitted land use, the state of the national or local economy, on other externalities, and only to a limited extent on actions taken by the landowner.
Real property value has many different interpretations. It may be an estimate of the anticipated income from any development. Such estimates are often imprecise. The value of a building can be calculated on the basis of construction costs although the over spend on many projects (such as the new Scottish Parliament whose estimated cost has risen from £40m to over £240m) gives the lie to the accuracy of such estimates. But of course Land Value Tax is not about valuing buildings or businesses, but rather about the value of the land itself.
The literature on LVT blurs the edges between ownership, value and use. In some respects the attempt to see land holistically is welcome. For too long we have divorced ownership and tenure from the value and use of land.
We have separate disjointed institutional arrangements and professional responsibilities for tenure (lord chancellor plus lawyers), value (chancellor of exchequer plus surveyors) and use (central and local government plus planners).
The planning process for example has consciously avoided discussion on land values and many planning decisions are based on the perceived best use of space without reference to blight or betterment.
The problem is that we know little about land values per se, other than through some market information (much of which has traditionally been kept secret).
The price of any property is what people are willing to pay what it is worth to them, not to society. Although location is deemed to be the most important element in valuation, in reality it has to date not been modelled scientifically. Land values do not form a continuous surface that can be mapped accurately. The value of the narrow strip of land that is the only point of access to my property is worth a great deal more than the bit of garden at the back. All that the market knows is that I bought my house and garden for a combined price of land plus building. The differentiation between the value of land and the value of buildings is unclear.
Land value data have not been available to form robust models. However clever Geographic Information System technology may be, the calculation of land values will depend on unreliable data and uncertain algorithms. LVT will be based on a degree of guesswork by a professional and be incomprehensible to the ordinary citizen.
As a citizen I can calculate what I have earned and hence what income tax is due. When I buy goods I know how much VAT I pay. When I buy or sell a house I know the price paid and hence can calculate the level of stamp duty (which is of course a one-off wealth tax). But my LVT will be based not on tangibles but on computer data models in which I have no idea about the reliability of the data or the algorithms used for interpolation. Unlike other forms of tax, LVT for the average citizen will be taxation without information. That is a basic injustice.
Peter Dale is a past President of Federation Internationale Geometrique (1996-2000) and until last year was professor of Geomatics at University College London. He lives in rural Ayrshire.
|
