Killer Arguments Against LVT, Not (495)

Sobers came up with a corker recently. My thinking is that trying to establish pseudo-accurate valuations for each individual home is pointless, and we should do averaging and banding of similar homes (by size or type, or plot size or plot frontage/width etc) in each area and have same the LVT bill for all homes in the same band. We are used to Council Tax banding, and ATED (mansion tax lite) is by very wide bands. SDLT operates in bands etc. To me this makes sense.

Sobers pointed out – rather too gleefully IMHO – that in some small areas (one postcode sector or local council ward or whatever), there can be a wide range of values between similar homes. He referred to an unnamed town near him and said that semi-detached ex-council homes on a ‘scuzzy’ estate there sell for £300,000-ish while semi-detached homes in the nicer parts sell for £400,000-ish.

I’ll take his word for it that this is all true (I am sure that there are such places), that they are all in one postcode sector or local council ward, and that valuers wouldn’t pick this up and split that area into two separate valuation areas, or the valuers wouldn’t discreetly classify the ex-council homes as small semi-detached in Band C and put the nicer ones into the default Band for normal semi’s, Band D.

Therefore *drumroll* LVT would act like a Poll Tax where ‘the poor’ have to pay as much as ‘the rich’! Game over for LVT! On closer inspection this is of course nonsense on stilts, LVT is the polar opposite of a Poll Tax (it has all its advantages with none of the downsides). How can LVT be simultaneously ‘an attack on wealth’ and a poll tax? But we have seen The Powers That Be do such fear mongering on an industrial scale, expecially with the Cameron referenda (alternative vote, Scotland, EU) and I wouldn’t put it past the Mailexpressgraph to come up with this sort of shite.

I haven’t thought of a punchy slogan to rebut this yet, but credit where credit’s due.
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Another one came up in conversation with Henry Law. We agreed that local taxes are inherently regressive (which we, like most people, think is A Bad Thing, opinions differ) and so LVT would have to be a national tax at a national rate, the same as most other taxes. So instead of local councils getting central govt funding for 80% – 90% of their expenditure and topping up with a bit of Council Tax, they all get grants to cover 100% of a reasonable level of expenditure, end of.

Whether that is flat-rate, per capita funding, or with loads of extras for ‘deprived’ areas or ‘rural areas’ or wherever the government of the day wants to buy votes, like the current system is a separate debate. I always prefer flat-rate, per capita of course.

The weak argument FOR local taxes is that it encourages fiscal responsibility by local councils and/or some democratic safeguards against high spending councils. So a national LVT that is divvied up equally everywhere, same as income tax or VAT receipts that pass through central government, is undemocratic..?

How exactly are fully-funded councils undemocratic? Is a fully funded police service undemocratic? Should the police meet their finance needs with on-the spot fines? The local/national distinction is in itself nonsense, if you think about it – nearly all spending is ‘local’ to somewhere. So your democratic safeguard is being able to vote for a low-spending government (if that were possible, you can choose between high spending Labour and tax-raising, black hole spending, fiscally irresponsible Tories).

The next layer of democracy is that local councils would still be elected, and you would judge them on results. Their job is to keep as many people as possible happy within a limited budget, so they have to choose between fixing potholes or having cycle lanes; or between better old age care or more daytime nursery places; or longer library opening hours or better upkeep of parks and playgrounds. Judging them by how high (or low) Council Tax is is idiotic anyway, the level of your Council Tax depends largely on how ‘generous’ the central government is when it comes to funding your council.

(Which is why we pay twice as much Council Tax as people a few hundred yards away who are in Greater London, not Essex. So what? We paid accordingly less for the house and would be able to sell it for accordingly less. We could halve our Council tax bill by moving, but that would cost us £100,000s, so what’s the point?)