SADIQ KHAN backed a land value tax (LVT) yesterday as a way out of London’s housing crisis.
A report by the London Assembly’s planning committee said the tax — which would replace existing property taxes — could result in more than 276,000 new homes being built on under-used land in London.
London Mayor Mr Khan welcomed the recommendations of the report but said he didn’t have the powers to implement them in full.
Even a pilot scheme — which he called a “good” idea in principle — would require primary legislation, Mr Khan predicted.
He said City Hall was already pushing the Treasury for further devolution of fiscal powers.
The planning committee report says LVT would ensure that the community benefits when land values increase as a result of public investment. Currently, buyers of land hold onto it until it makes them enough profit.
Under the scheme, owners of land would be liable to pay the tax. The cost would be determined by public authorities who would decide on the land’s value in its “optimum use,” rather than its actual or current use.
Carol Wilcox, secretary of the pro-LVT Labour Land Campaign, welcomed Mr Khan’s support of the scheme.
She said the proposal was “key to solving the housing crisis in London and the rest of the country as well as reducing wealth inequality.”
Authorities such as those in Glasgow and the Vale of White Horse District Council, Oxfordshire, have also backed a land tax.
In 2004, Liverpool City Council asked the government to consider carrying out trials towards establishing LVT.
Labour shadow housing secretary John Healey said: “I’m interested to see how a wide range of ideas like a land value tax might shake up the system and help build the genuinely affordable homes we need.”
Outside of Britain, LVT operates in Denmark and Estonia based on the market price of the land, while Finland has a range of land taxes including higher taxes on summer cottages.
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