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We already have an annual land value levy

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Brian Chance

Joined: 09 Nov 2008
Posts: 115
Location: Croydon Surrey U.K.

PostPosted: Fri Nov 08, 2013 4:03 pm    Post subject: We already have an annual land value levy Reply with quote

Council tax is currently based on 1991 house values which do not reflect current land values and it is usually regarded as obsolete and useless for collecting annual land value tax now. However, it is suggested that it could nevertheless be used as a provisional lead into LVT provided that simple and reasonable changes are made.

Homes remain in the same band as their values increase. It follows that band values must increase in proportion to the increase in home prices. Adopting the multiple of 2.86 as used in the Mirrlees report for the increase in home prices since 1991, the top council tax band now commences at £912,000. The existing council band structure could therefore still be used as a basis for assessment in proportion to current values up to about £1million, which is at least ten times the value of the average home in the lowest band. At present, the tax on the highest value home is never more than three times that on the lowest. The reason is the arcane calculations in ninths which are interposed between the bands and the actual assessments. These are hardly ever mentioned, possibly because they are difficult to explain (a brief summary is given below). All that is necessary is to alter the numbers of ninths for each band so that the multiple from the lowest to the highest is increased from three to a figure proportionate to the band widths, which is at least ten. This would bring council tax close to the same percentage rate on all homes. Two or three additional bands could be added at the top to replace the mansion tax with a logical progression in council tax.

House prices are not annual land values, but any change would in any case have to be made by such small steps that the effect would be much the same at first. Because land prices have increased more than building costs, a tax based on total value would increase more gradually than a pure annual land value tax. This would ease the transition, which would be an additional advantage.

The change could start next April without any revaluation. It would be introduced as a preliminary to a full scale revaluation using land values, which with the necessary legislation could take several years. It is an easy way to retain council tax as a valid proxy for LVT until the pure form can be established.

A gradual and progressive change to council tax as suggested would give a flying start in bringing economic justice to land ownership.

Figures are attached to illustrate the potential benefits. They are calculated to collect a total of about the same as the current income from council tax. The rate works out at 0.7% of home value. Larger sums could be collected without altering the numbers of ninths, while retaining a common rate of assessment.

Brief explanation of council tax ninths.

There is a datum of nine ninths at band D, with six ninths at band A rising to eighteen ninths at band H, hence the multiple of three. The datum is fixed by working backwards from the total sum to be collected that has been negotiated with the government. This total is divided by the total number of ninths according to the bands of all the homes in the area, to arrive at the value of one ninth. Band D is then set at nine ninths. The rate of change in the datum from year to year is then manipulated by further negotiations.

C T Ninths Revision 071113.xls

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Esperanza Denise

Joined: 17 Aug 2016
Posts: 1

PostPosted: Wed Aug 17, 2016 7:13 am    Post subject: Reply with quote

A land/location value tax (LVT), also called a site valuation tax, split rate tax, or site-value rating, is a levy on the unimproved value of land. dissertation writing service uk It is an Ad valorem tax that, unlike property taxes, disregards the value of buildings, personal property and other improvements.
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