Toby Lloyd reports from IPPR's recent seminar "Land Value Tax: Worth the Transition?"
The Institute for Public Policy Research is probably the foremost think tank in Britain today, with unrivalled access and influence in Downing Street. So when they organise a high level seminar entitled "Land Value Tax: Worth the Transition?' a few weeks into a third Labour term, it is surely significant. Could this represent a new interest in land tax by those close to the government? It would certainly make political sense, as Iain McLean, Professor of Politics at Oxford University, told the assembled experts and luminaries.
McLean portrayed the history of land and tax reform movements as a series of cycles: every 100 years or so, the principle of capturing land values for the community comes to dominate the agenda. Tom Paine"s "Agrarian Justice" was published in 1797: 100 years later, Henry George died at the peak of his political influence. Now his arguments are gaining force again, and have been given a new urgency by the dearth of funding for transport projects, a housing crisis and a dramatic house price boom.
At the same time, McLean said, Britain had never successfully solved the questions of local taxation: how much tax should be raised locally, and how much should come from the centre? Should local authorities be free to levy different rates of tax, and deliver different levels of services accordingly? And most of all, what form should local taxes take? Successive governments have fudged the issue, storing up trouble that inevitably explodes in periodic crises roughly every 20 years: witness the replacement of rates with the Poll Tax in the late eighties and the growing campaign against Council Tax today. Professor McLean believes that we are now coming to the top of both cycles simultaneously '’ which means the next few years could represent the best chance for reform in a very long time, just in time for the 2010 centenary of Lloyd George"s People"s Budget.
The next speaker, Dr John Muellbauer, pointed out that with Council Tax revaluation for England is scheduled for 2007, the issue can only get hotter '’ especially given the recent furore over revaluation in Wales. Muellbauer is one of the top housing economists in the country, and a regular adviser to the Treasury. His analysis of the problems and pitfalls of property taxation was detailed and coherent '’ like everyone who spoke he had nothing good to say about Kate Barker"s proposed Planning Gain Supplement. Anxious not to shock the economy, his proposals are very modest: a mild reform of business rates, making land ownership the basis for half the valuation; and the replacement of council tax with a 25% local income tax/75% property tax hybrid. Richard Brooks of the Fabian Society responded to historical and economic theorising with some hard political logic: local tax reform has always been a thankless task, and many politicians have come unstuck over the issue - remember Thatcher and the Poll Tax? Brooks warned that the political attractiveness of inaction should not be underestimated, and that the easiest thing for the government to do would be to continue with the council tax, scrap revaluation and possibly reduce the pressure by shifting the tax burden slightly towards business rates. All in all this was an interesting and stimulating event, and IPPR deserve credit for bringing the subject of land tax reform to such an influential group.
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