From the Grauniad today:
The answer to business rates? A tax on land | Letters
Britain’s business leaders are demonstrably the modern Bourbons, forgetting nothing and learning nothing. They permanently complain about the manifest iniquities of business rates, but completely fail to grasp the obvious alternative despite it being regularly set out and available for more than a hundred years (Retailers warn budget will cause ‘unnecessary loss’ of jobs and shops, 27 October).Very simply – one taxes land, not property. When one reads of property prices rising it is not that bricks and mortar have increased in value but the land. Why? Because they stopped making it aeons ago and its supply is limited. Also, the value of a site is largely dependent on the planning permission it holds, ie the decision of the public authority. The value of my house in Leeds is double what it would be if one applied general inflation rather than land value inflation. Why should I have this potential windfall?
If a business increases its profitability it is penalised by an increase in its business rate, whereas taxing land encourages its profitable use as its valuation is on its “maximum permitted use”. Furthermore, taxing property encourages huge enterprises and many public utilities to hold land banks for future use because they pay nothing in rates. Taxing land values discourages such unprofitable holdings and encourages their use. Spreading the tax base reduces the rate of tax charged.
The practicalities of valuing land are relatively straightforward, even with transitional arrangements during a changeover. The switch lacks only the political will to introduce it. It became Liberal party policy in 1893 and Lloyd George put it into his radical 1909 budget, only to see it defeated in the Lords. It is high time the Confederation of British Industry, Chambers of Commerce and other organisations for business stopped mere complaining and put all their weight behind this much overdue change.
Michael Meadowcroft
Leeds
It does seem a little hard to explain in simple words, so ubiquitous is the idea of “owning” a commodity no one made or can make today. What people want is to own the economic output of land, as some used to own people and the work they did or a factory and the products it makes, with ever lower labor costs. I wouldn’t put land ownership on par with slavery but look at the inequality and chaos that results from it, the transfer of wages income paid as rents to speculative investment funds that go to buying up more land. There is a deep moral question being asked as we see more people fighting over a scarce and finite commodity while some get wealthier with no effort.