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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Theresa May could live to regret not putting Article 50 to a vote sooner

Today's Morning Call.

Theresa May will reveal her plan to Parliament, Downing Street has confirmed. They will seek to amend Labour's motion on Article 50 adding a note of support for the principle of triggering Article 50 by March 2017, in a bid to flush out the diehard Remainers.

Has the PM retreated under heavy fire or pulled off a clever gambit to take the wind out of Labour's sails while keeping her Brexit deal close to her chest? 

Well, as ever, you pays your money and you makes your choice. "May forced to reveal Brexit plan to head off Tory revolt" is the Guardian's splash. "PM caves in on plans for Brexit" is the i's take. "May goes into battle for Brexit" is the Telegraph's, while Ukip's Pravda aka the Express goes for "MPs to vote on EU exit today".

Who's right? Well, it's a bit of both. That the government has only conceded to reveal "a plan" might mean further banalities on a par with the PM's one-liner yesterday that she was seeking a "red white and blue Brexit" ie a special British deal. And they've been aided by a rare error by Labour's new star signing Keir Starmer. Hindsight is 20:20, but if he'd demanded a full-blown white paper the government would be in a trickier spot now. 

But make no mistake: the PM didn't want to be here. It's worth noting that if she had submitted Article 50 to a parliamentary vote at the start of the parliamentary year, when Labour's frontbench was still cobbled together from scotch-tape and Paul Flynn and the only opposition MP seemed to be Nicky Morgan, she'd have passed it by now - or, better still for the Tory party, she'd be in possession of a perfect excuse to reestablish the Conservative majority in the House of Lords. May's caution made her PM while her more reckless colleagues detonated - but she may have cause to regret her caution over the coming months and years.

PANNICK! AT THE SUPREME COURT

David Pannick, Gina Miller's barrister, has told the Supreme Court that it would be "quite extraordinary" if the government's case were upheld, as it would mean ministers could use prerogative powers to reduce a swathe of rights without parliamentary appeal. The case hinges on the question of whether or not triggering Article 50 represents a loss of rights, something only the legislature can do.  Jane Croft has the details in the FT 

SOMETHING OF A GAMBLE

Ministers are contemplating doing a deal with Nicola Sturgeon that would allow her to hold a second independence referendum, but only after Brexit is completed, Lindsay McIntosh reports in the Times. The right to hold a referendum is a reserved power. 

A BURKISH MOVE

Angela Merkel told a cheering crowd at the CDU conference that, where possible, the full-face veil should be banned in Germany. Although the remarks are being widely reported in the British press as a "U-Turn", Merkel has previously said the face veil is incompatible with integration and has called from them to be banned "where possible". In a boost for the Chancellor, Merkel was re-elected as party chairman with 89.5 per cent of the vote. Stefan Wagstyl has the story in the FT.

SOMEWHERE A CLOCK IS TICKING

Michael Barnier, the EU's chief Brexit negotiator, has reminded the United Kingdom that they will have just 15 to 18 months to negotiate the terms of exit when Article 50 is triggered, as the remaining time will be needed for the deal to secure legislative appeal.

LEN'S LAST STAND?

Len McCluskey has quit as general secretary of Unite in order to run for a third term, triggering a power struggle with big consequences for the Labour party. Though he starts as the frontrunner, he is more vulnerable now than he was in 2013. I write on his chances and possible opposition here.

AND NOW FOR SOMETHING COMPLETELY DIFFERENT

Emad asks if One Night Stand provides the most compelling account of sex and relationships in video games yet.

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Theresa May risks becoming an accidental Europe wrecker, says Rafael Behr

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Stephen Bush is special correspondent at the New Statesman. His daily briefing, Morning Call, provides a quick and essential guide to British politics.