Mehdi Hasan: Time to talk about land taxes

An important contribution from the FT's Samuel Brittan.

Samuel Brittan, often described as the "doyen of British economic journalists", has an important column in today's Financial Times, provocatively entitled:

Tax England's green and pleasant land

Brittan - despite his background as a Thatcherite and monetarist - has been one of the most vocal, consistent and well-informed opponents of austerity economics in recent years. Today, he says:

Whatever one thinks of fiscal austerity, governments will need a new source of income in future if only because of demographic trends.

So what does he propose? A land tax. Indeed, as the Lib Dem Business Secretary Vince Cable argued at his party's annual conference in September 2010:

It will be said that in a world of internationally mobile capital and people it is counterproductive to tax personal income and corporate profit to uncompetitive levels. That is right. But a progressive alternative is to shift the tax base to property, and land, which cannot run away, [and] represents in Britain an extreme concentration of wealth.

I'm not sure it's an either/or question, of income taxes versus land taxes, but Cable is correct to point out that the latter are harder to dodge, avoid and evade. And while a land tax is progressive and fair, and a potential means of redistributing wealth, it's also a mainstream and sensible proposal.

"[F]ar from being an outrageous Bolshevik idea," explains Brittan in today's FT

the case for a land tax is one of the oldest and least disputed propositions in economic thought. The underlying theory was developed at the beginning of the 19th century by the highly respectable David Ricardo. Many chancellors have said that they would jump at a tax that had no disincentive effects on work or enterprise but had a strong redistributive element. The problem was that the amount of preliminary work required would take more than one parliament and any credit for the measure would redound to their successors.

He continues:

A land tax is one of those subjects - basic income is another - which divides commentators into a great majority who never mention it, and a minority who talk of nothing else. The result is to give supporters a cranky appearance, while the eyes of chancellors of either main party glaze over if you as much as mention the subject.

The basic point is that the supply of land, with rare exceptions such as reclamation in the Netherlands, is fixed. But because of its scarcity owners can command an income over and above the normal return to the enterprises placed upon it. Gross UK trading profits of non-financial and non-oil corporations are running at over £200bn per year or about 20 per cent of gross domestic output. Some part of this - we do not know how much - is not true profit but the return on land. There is one way in which the supply of usable land can increase. That is when land, previously off limits, is newly released by local authorities for development. The consequent increase in value, say some land tax campaigners, is created by "the community", which is entitled to a share of the increment. But to argue in this way is to sell the case short. The case for a land tax is valid even for land which always was available for development or which remains in agricultural use.

My editor Jason Cowley made the case for a land tax in a New Statesman cover story in October 2010:

An annual land value tax would not only provide a new and fairer source of income, Wetzel said, but would encourage owners of empty buildings and empty land to put their properties to good use. Towns and cities would become more efficient and the need for urban sprawl would be reduced.

Meanwhile my NS colleague Rafael Behr addresses the issue of land taxation, and the wider rows and divisions over taxation and the forthcoming Budget, in his politics column this week. Clegg, he writes

clings to the idea of a "mansion tax" on houses worth more than £2m.

That policy is toxic for Tories, whose safe seats are dotted with fancy real estate. The prospect of sizing up the nation's housing stock for a new tax threatens also to make ordinary households look wealthier than they feel. Labour, by contrast, is open to the idea. The mansion tax is being actively debated in Ed Miliband's office, partly because the leader's freshly advertised enthusiasm for fiscal discipline needs reinforcing with revenue-raising measures and partly because, with parliament on course to stay hung at the next election, there are strategic reasons to flirt with Lib Dem policy.

Privately, senior figures around Miliband admit to being impressed at how effectively Nick Clegg has set the terms of pre-Budget debate and put the Tories on the defensive. Although Labour harbours no affection for the Lib Dems, there is recognition of a shared interest in branding the Conservatives as defenders of inherited privilege and hoarded wealth.

A senior Labour figure told me recently that the the party leadership plans to focus on "taxes at the top" in the coming days and weeks. Good. It's a case I made in the Guardian just a fortnight ago - and I do hope that land taxes, mansion taxes and the rest feature as part of the impending discussion. Perhaps the shadow health secretary can chip in again. And David Miliband too. Oh, and from the right, ConservativeHome's Tim Montgomerie.

I leave you with Brittan's concluding line from his excellent FT column:

If politicians really want to think about the unthinkable, as they sometimes claim, here is a place to start.

Mehdi Hasan is a contributing writer for the New Statesman and the co-author of Ed: The Milibands and the Making of a Labour Leader. He was the New Statesman's senior editor (politics) from 2009-12.

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The UK press’s timid reaction to Brexit is in marked contrast to the satire unleashed on Trump

For the BBC, it seems, to question leaving the EU is to be unpatriotic.

Faced with arguably their biggest political-cum-constitutional ­crisis in half a century, the press on either side of the pond has reacted very differently. Confronting a president who, unlike many predecessors, does not merely covertly dislike the press but rages against its supposed mendacity as a purveyor of “fake news”, the fourth estate in the US has had a pretty successful first 150-odd days of the Trump era. The Washington Post has recovered its Watergate mojo – the bloodhound tenacity that brought down Richard Nixon. The Post’s investigations into links between the Kremlin and Donald Trump’s associates and appointees have yielded the scalp of the former security adviser Michael Flynn and led to Attorney General Jeff Sessions recusing himself from all inquiries into Trump-Russia contacts. Few imagine the story will end there.

Meanwhile, the New York Times has cast off its image as “the grey lady” and come out in sharper colours. Commenting on the James Comey memo in an editorial, the Times raised the possibility that Trump was trying to “obstruct justice”, and called on Washington lawmakers to “uphold the constitution”. Trump’s denunciations of the Times as “failing” have acted as commercial “rocket fuel” for the paper, according to its CEO, Mark Thompson: it gained an “astonishing” 308,000 net digital news subscriptions in the first quarter of 2017.

US-based broadcast organisations such as CNN and ABC, once considered slick or bland, have reacted to Trump’s bullying in forthright style. Political satire is thriving, led by Saturday Night Live, with its devastating impersonations of the president by Alec Baldwin and of his press secretary Sean Spicer by the brilliant Melissa McCarthy.

British press reaction to Brexit – an epic constitutional, political and economic mess-up that probably includes a mind-bogglingly destructive self-ejection from a single market and customs union that took decades to construct, a move pushed through by a far-right faction of the Tory party – has been much more muted. The situation is complicated by the cheerleading for Brexit by most of the British tabloids and the Daily Telegraph. There are stirrings of resistance, but even after an election in which Theresa May spectacularly failed to secure a mandate for her hard Brexit, there is a sense, though the criticism of her has been intense, of the media pussy-footing around a government in disarray – not properly interrogating those who still seem to promise that, in relation to Europe, we can have our cake and eat it.

This is especially the case with the BBC, a state broadcaster that proudly proclaims its independence from the government of the day, protected by the famous “arm’s-length” principle. In the case of Brexit, the BBC invoked its concept of “balance” to give equal airtime and weight to Leavers and Remainers. Fair enough, you might say, but according to the economist Simon Wren-Lewis, it ignored a “near-unanimous view among economists that Brexit would hurt the UK economy in the longer term”.

A similar view of “balance” in the past led the BBC to equate views of ­non-scientific climate contrarians, often linked to the fossil-fuel lobby, with those of leading climate scientists. Many BBC Remainer insiders still feel incensed by what they regard as BBC betrayal over Brexit. Although the referendum of 23 June 2016 said nothing about leaving the single market or the customs union, the Today presenter Justin Webb, in a recent interview with Stuart Rose, put it like this: “Staying in the single market, staying in the customs union – [Leave voters would say] you might as well not be leaving. That fundamental position is a matter of democracy.” For the BBC, it seems, to question Brexit is somehow to be unpatriotic.

You might think that an independent, pro-democratic press would question the attempted use of the arcane and archaic “royal prerogative” to enable the ­bypassing of parliament when it came to triggering Article 50, signalling the UK’s departure from the EU. But when the campaigner Gina Miller’s challenge to the government was upheld by the high court, the three ruling judges were attacked on the front page of the Daily Mail as “enemies of the people”. Thomas Jefferson wrote that he would rather have “newspapers without a government” than “a government without newspapers”. It’s a fair guess he wasn’t thinking of newspapers that would brand the judiciary as “enemies of the people”.

It does seem significant that the United States has a written constitution, encapsulating the separation and balance of powers, and explicitly designed by the Founding Fathers to protect the young republic against tyranny. When James Madison drafted the First Amendment he was clear that freedom of the press should be guaranteed to a much higher degree in the republic than it had been in the colonising power, where for centuries, after all, British monarchs and prime ministers have had no qualms about censoring an unruly media.

By contrast, the United Kingdom remains a hybrid of monarchy and democracy, with no explicit protection of press freedom other than the one provided by the common law. The national impulse to bend the knee before the sovereign, to obey and not question authority, remains strangely powerful in Britain, the land of Henry VIII as well as of George Orwell. That the United Kingdom has slipped 11 places in the World Press Freedom Index in the past four years, down to 40th, has rightly occasioned outrage. Yet, even more awkwardly, the United States is three places lower still, at 43rd. Freedom of the press may not be doing quite as well as we imagine in either country.

Harry Eyres is the author of Horace and Me: Life Lessons from an Ancient Poet (2013)

This article first appeared in the 20 July 2017 issue of the New Statesman, The new world disorder