A land value tax would help end the housing crisis

Torrin Wilkins

March 5, 2019

The current shortage of affordable housing in the UK has made it much harder to get onto the housing ladder, with today’s young people far less likely to own a house than their parents were. This lack of housing has reduced the choice individuals have over where they live and is one of the largest issues we face as a country. Indeed, the longer it continues, the more damage it will do.

While there is no single solution to the housing crisis, there is a major policy that can help us tackle the housing crisis. This would be to replace the current system of council tax with a land value tax.

This would tax the value of the land itself rather than the council tax system of looking at the value of what is built on the land. The effect of this would be to push owners of unused land to sell it, meaning there would be more land on which new houses could be built. And while we must reform the green belt to free up more land for new developments, we also need to make better use of the land we already have.

Land value taxes have been used in a number of countries around the world, with some large success stories. Denmark is one of these and it is a useful example of how they work in practice. There, both inflation and unemployment decreased.

What’s more, as a tax, this proposal has benefits far beyond just helping to tackle the housing crisis.

First, it’s hard to avoid as land isn’t exactly easy to hide. Second, the revenue should be fairly similar each year. Third, it is a fair system where those who have more valuable land pay more. It would also simplify the workings of government by replacing stamp duty, council tax, and business rates with just one tax. Finally, it can be used as a tool to fight recessions. Unlike VAT or income tax, a land value tax does not reduce productivity. The government could increase it in the event of a financial crisis in order to boost productivity and kickstart the economy.

This tax has a very authoritative group of supporters too. Winston Churchill along with economists such as Adam Smith, Henry George, and Milton Friedman all supported the idea. It also has widespread backing today, with the Labour party considering it as a replacement for council tax in 2017, along with both the Liberal Democrats and New Liberals supporting it.

A land value tax can help to tackle the housing crisis, it has an array of other benefits, and it can also be used as a tool to counter the effects of recessions. It’s the best tax that I’ve found, and the only negative is that we aren’t using it already. Hopefully, with enough pressure, we soon will be.


Written by Torrin Wilkins

Torrin Wilkins is chair of Centre UK and Liberal Leave.


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