We've written here several times before about how useful a land/location value tax (LVT) might be. But when we talk about it, like most people, we tend to focus on the kind of land that should be hit up for more tax rather than that which should pay less or even be entirely exempt.
It is standard stuff to mention that if you build a bypass around a village, the price of houses in the village goes up. And if the taxpayer has put up the cash for the bypass, why should the owners of this tiny group of houses reap a windfall of tax-free cash? Makes no sense really.
But look at it the other way around.What of the people who can now see and hear the bypass where before they lived in peace? Some of them will have ended up with a little compensation. Most will have had none.Yet they will have suffered one way and another, so why shouldn't they be compensated via the tax system paying less tax on their now devalued land than those inside the village in their newly desirable homes?
Subscribe to MoneyWeek
Subscribe to MoneyWeek today and get your first six magazine issues absolutely FREE
Sign up to Money Morning
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Don't miss the latest investment and personal finances news, market analysis, plus money-saving tips with our free twice-daily newsletter
Imagine if you were out there nimbying about HS2, or a nasty new wind farm going up in clear sight of your hill-top cottage, or perhaps the way that fracking was about to ruin your sense of rural idyll. Would you complain so hard if your compensation came in the form of zero council tax for ever?
Or if it meant a 70% reduction on a new LVT that had mostly replaced income tax? Or even if the new owners of the wind farm were obliged to write you an instant cheque for £250,000? I'm rather guessing you wouldn't.
I've talked about this with a few readers over the last few years, so I was interested to see it pop up in The Independent last week albeit without reference to an LVT.
The current compensation system for those living around new infrastructure projects, says Anthony Hilton, is "geared to paying out as little as possible". That pretty much guarantees that people will oppose it, and do so for as long as possible there is generally only downside for them if they do not. So why not reward them "properly"?
It might be expensive to do so, but if it meant there would be "much less to pay out on massive legal bills and all other costs of delay", would it really end up hitting us all up for much more than it would under today's system? Maybe not.
Interesting then, as Hilton also points out in his column, that tucked away in the Autumn Statement was a decision to "run a pilot project that will share some of the benefits of the development directly with the individual households adversely affected by it."
There have been a good many hints since the last election that the coalition is unusually interested in the LVT. This is another one.
-
A junior ISA could turn your child’s pocket money into thousands of poundsPersuading your child to put their pocket money in a junior ISA might be difficult, but the pennies could quickly grow into pounds – and teach them a valuable lesson about money
-
Cost of Christmas dinner jumps 6.5% as grocery price inflation rises againThe average Christmas dinner for four now costs £32.57 as grocery price inflation increases - but what does it mean for interest rates?
-
House prices to crash? Your house may still be making you money, but not for much longerOpinion If you’re relying on your property to fund your pension, you may have to think again. But, says Merryn Somerset Webb, if house prices start to fall there may be a silver lining.
-
Prepare your portfolio for recessionOpinion A recession is looking increasingly likely. Add in a bear market and soaring inflation, and things are going to get very complicated for investors, says Merryn Somerset Webb.
-
Investing for income? Here are six investment trusts to buy nowOpinion For many savers and investors, income is getting hard to find. But it's not impossible to find, says Merryn Somerset Webb. Here, she picks six investment trusts that are currently yielding more than 4%.
-
Stories are great – but investors should stick to realityOpinion Everybody loves a story – and investors are no exception. But it’s easy to get carried away, says Merryn Somerset Webb, and forget the underlying truth of the market.
-
Everything is collapsing at once – here’s what to do about itOpinion Equity and bond markets are crashing, while inflation destroys the value of cash. Merryn Somerset Webb looks at where investors can turn to protect their wealth.
-
Value is starting to emerge in the marketsOpinion If you are looking for long-term value in the markets, some is beginning to emerge, says Merryn Somerset Webb. Indeed, you may soon be able to buy traditionally expensive growth stocks on the cheap, too.
-
ESG investing could end up being a classic mistakeOpinion ESG investing has been embraced with enormous speed and zeal. But think long and hard before buying in, says Merryn Somerset Webb.
-
UK house prices will fall – but not for a few yearsOpinion UK house prices look out of reach for many. But the truth is that British property is surprisingly affordable, says Merryn Somerset Webb. Prices will fall at some point – but not yet.
