New Scottish Green Land Tax Bill to Replace Council Tax and Business Rates - Greens Say Land Value Taxation is Fair, Good for Business Efficiency and Will Help Tackle Poverty
Fri., March 12, 2004. 00:00.
Green MSPs today launched a Bill in the Scottish Parliament to replace Council Tax and Business Rates, and introduce a fairer and more effective local government finance system based on the value of land.(1) Greens say that raising tax from land value and not the property on it, will have many more social, economic and environmental benefits than the much criticised and unfair system of council tax. (2)
In the last Parliament, Green MSP Robin Harper won a campaign to get the parliament to investigate Land Value Taxation. Similar forms of local taxation exist in many other countries including Denmark, South Africa, Jamaica, some Australian states and some cities in the United States.(3)
Greens say a system of land value taxation would benefit those on low incomes whilst also supporting small businesses and enhancing links between local government and local taxation. The system would reduce speculation in land and 'landbanking', where speculators hold land without developing it while waiting for planning permission or an upturn in property prices.
The proposal would also free up rural land for community benefit, reward more efficient businesses, be much easier to administer and more difficult to dodge than income tax based systems. The Bill would raise the same amount of revenue as the current tax and rate system, but could also be more easily adjusted as appropriate for service provision.
Mark Ballard MSP, Green Speaker on Finance and Local Government, who has lodged the Bill, said: 'I am pleased to be putting forward this progressive Bill to reform the unfair system of Council Tax and Business Rates. It will target the asset rich, not the poorest in society and is an inherently fairer system all round. It will drive efficiency throughout the land-use system, make more land available and resist speculative planning proposals which distort the market. It will offer public benefits, which are currently captured by private interests.
'I hope the Bill consultation process will help to inform the ongoing debate over local government finance reform and be considered as a possible opportunity to break up the polarised arguments over local income tax versus minor tinkering of Council Tax.'
Peter Gibb, Chief Executive of the Henry George Foundation, who has been working with Mark Ballard to prepare for the Bill, welcomed the move and said: 'We have examined the different options for local government finance in Scotland and believe that taxing land values would bring significant economic, social and environmental benefits. It would certainly a more progressive and effective tax, rather than adding another complexity to income tax.' (4)
NOTES TO EDITORS
1. Various proposals for changing Scotland's system of local taxation have recently been put forward. These range from minor modification of the status quo, to the wholesale replacement of the existing systems by alternatives such as a local income tax.
The Green Bill is known as the 'Reform of Council Tax and Business Rates (Scotland) Bill.
The draft text of the Bill proposal is as follows: to reform local taxation; to shift the base of assessment away from whole-property value and onto land value only; to update and rebuild tax databases; to change liability to pay tax; to amend the arrangements for rebates, exemptions and discounts; to introduce new payment methods for low income taxpayers; to increase the frequency of reassessments; to improve the banding system; and to alter the balance of funding with central government grant
2. The key reform it proposes is shifting the base of assessment away from whole-property value and onto land value only.
The major provisions of the Bill:
- the basis of assessment shall be land value
- the 'liable person' shall be the owner not the occupier of the property
- rebates on second homes, exemptions on empty property and discounts on underutilised property shall be abolished
- the existing Council Tax and Non-Domestic Rates databases shall be rebuilt to enable the reforms
- a new means of payment shall be introduced whereby, in cases of low income or insufficient liquidity, liable persons may elect to defer payment
- the interval of reassessment will be yearly
- The reforming Bill is proposed in pursuit of fairness, productivity, equity, convenience, democracy, enterprise, efficiency, precision, environmental sustainability, the avoidance of dispute and the removal of macro-economic distortions in the national economy.
Key benefits of the Bill:
- Council Tax and Business Rates will be part of same system
- Those most capable of paying will pay more
- Low income households will pay less
- Exemptions and discounts for pensioners
- Free up derelict and underused land and empty properties
- Tax falls on property owner, not occupier
- Will stabilise the housing market
- It would finally create a comprehensive land register
- Those who use land efficiently, pay less
- Difficult to dodge, easier to collect
3. Similar forms of local taxation based on land values exist in many places around the world, including Denmark, South Africa, Jamaica, some Australian states and several cities and communities in the US. Along with several smaller cities in the east, Washington DC, Pittsburgh and Pennsylvania all successfully tax land. In 1981, Harrisburg, Pennsylvania, was considered the second most distressed city in the nation by a federal agency. 13 years later, after having implemented a land value tax the number of businesses had doubled and the market value of private real estate had quadrupled.
4. About the Henry George Foundation
The Henry George Foundation is an independent economic and social justice think tank and public education group, dedicated to exploring and promoting principles for a just and prosperous society and a healthy environment.
The Foundation's primary concern is the development of sound relationships between the individual in society, our communities at large (from local to global) and our natural resources. The Foundation's focus is the root of those relationships as they manifest themselves in social science and economics.
The Foundation is injecting fresh and intelligent thinking into a broad range of social policy agendas. It puts forward practical and innovative solutions to seemingly intractable social problems. Its collaborations and partnerships engage and inspire the work of others. The Foundation aims to put people at the heart of economics.
For further information and background briefing pdf call the Green MSP Press Office on 0131 348 6360
or 0790 99 33 074
Contact the Scottish Greens' press team on 07909 933 074.