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April 11, 2011

PLRG hears from Adam about Mirrlees on land & property taxes

The 29 March meeting of the Professional Land Reform Group (PLRG) heard Stuart Adam of the Institute of Fiscal Studies (IFS) speak about the chapter he has spent some three years researching and writing for Sir James Mirrlees' review of taxation. Adam's presentation can be downloaded from the IFS website.

Among the highlights of this chapter, which has been available in full as a draft (electronic copy only) for nearly 5 months and should be finalised very soon, are the following:-

  • tax neutrality, i.e. no overall shift from other kinds of tax intended
  • not part of an overall more redistributive tax system - or a change in overall levels of tax
  • property transaction taxes such as Stamp Duty Land Tax are 'bad' - but simply to abolish SDLT 'would be unfair'
  • recommend conversion of business rates to a site-value-only base - but some uncertainty over 'practicalities of valuing land separate to property', so needs 'a thorough official investigation' before IFS/Mirrlees would commit to this
  • treat domestic properties like consumer goods - and therefore recommend something like VAT!

There were some extremely interesting but all too short discussions between Adam and the PLRG members present. The consensus was that this part of the Mirrlees Review (Chapter 16) offers encouragement to supporters of 'Tax Shifting' (i.e. land value capture/taxation) but that it is part of a package that is, overall, disappointing and unhelpful.

Doesn't the term "Value Added Tax" sum up the dysfunctional nature of our current tax system. Why on earth would any sensible economic policy include a tax that takes added value away from the market, thereby burdening the active economic agents, whilst there is an alternative that (Adam admits) "does not affect economic activity" and only takes value away from those who have not earned it?!

PLRG's next meeting will be in late May (date to be agreed when we have a speaker). It will be combined with our AGM.

    Posted by Tony Vickers at April 11, 2011 4:58 PM | TrackBack

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