The simplest way to transform our high streets

Posted on 04-05-21 by Heather Wetzel Number of votes: 3 | Number of comments: 6

Taxes and the economic rent of land are inversely related; subsidies increase land value and therefore increase the rent and selling price of land whilst taxes reduce land value by the amount equivalent to the taxes levied to the occupier of a site.
Over half of the UK's net wealth is in land – over £5trillion – yet none of that wealth is generated from the act of owning land, only from our combined demand for its use which varies according to each location's access to roads, public transport, public services, homes, jobs, businesses, soil fertility etc.
It is increasingly recognised that UK property taxes are not only inefficient but can be avoided and are unfair to good businesses, responsible developers, homeowners, commercial and residential tenants and those unable to afford to rent or buy (including the growing number of young adults continuing to live with their families for economic reasons).
Because land rent and taxes are inversely related, any subsidy, Business Rate freeze/reduction, low interest mortgage scheme etc for businesses will ultimately capitalise into land value thereby pushing up the price of business premises to rent or buy – excluding new start-ups or forcing closure of those businesses working at the margin.
Business rates are unfair and avoidable. They are roughly assessed on the building (including fixed plant) as well as the location value, which means responsible businesses and landowners that have environmentally sound, attractive and well-maintained buildings pay higher rates than occupiers of similar but neglected buildings. However, they are avoided by owners of empty buildings and idle development sites; registered charities enjoy an 80% discount that is not enjoyed by public sector schools, NHS hospitals etc! Penalising owners of well-maintained and well insulated buildings is wrong as is penalising heavy industry by including plant in the business rate assessment. There are many methods of lowering the business rate levied that make the scheme complicated and unfair.
The considerable number of commercial landowners that do not have to pay business rates on their property means they receive the physical and financial benefits of public services such as transport, roads, education, health, police, the fire brigade etc. without paying their share for them and their land increases in value through no effort on their part - leaving others to pay their share of business rates.
Many commercial would-be tenants cannot afford to rent or buy premises yet they equally contribute to sustaining and creating land value as taxpayers and as investors. They are denied access to affordable business premises because of rising land prices that make premises (and homes) to rent or buy even more unaffordable whilst those who have bought or are buying their premises (or home) see the land their building is sited on rise in value through no effort on their part. Everyone pays taxes to some degree and because our taxes pay for public services that make our towns and cities more prosperous, surely it is just that non-property owners should also share in the economic benefit of land through a fundamental shift in taxation off earned incomes and onto the unearned incomes that go to owners of land and other natural resources?
Current business taxes are a barrier to new businesses and enterprises starting and existing ones expanding. Land and buildings in areas of low investment due to these inefficient business taxes, remain idle denying the community affordable homes and business premises.

Referring to: Economy, Business and Trade

The Economy, Business and Trade Policy Commission develops Labour's economic and business policy, including industrial strategy and international trade.

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