Land value tax 'should be examined'

Government should be looking into the implications of land value taxation as a possible means of resolving problems with other ways of earning revenue on property, the Business Secretary has said.

Business Secretary Vince Cable says the Government should look at plans for a land value tax.

Vince Cable said there were many potential problems with the idea, which taxes land itself rather than the property or people on it - but told a fringe event at the Liberal Democrat Party Conference the idea should be examined.

But he said it was one of the options "floating around at quite a high level".

The Lib Dem Alter (Action for Land Taxation and Economic Reform) group produced a film outlining the policy for the event, and said its introduction could fund the reduction or even abolition of other taxes.

Mr Cable, who arrived late after a delayed plane and 10 minutes in the wrong meeting, said: "There are a myriad of practical problems... I think the first stage is to get Government looking at it seriously, looking exactly at the problems and evaluating them.

"Those of us in government would just like to get to that first base, for this to have proper examination... the next step is for the Government to look at all these practicalities."

The Business Secretary added: "I don't think any detailed work has been done on it but it is part of the awareness, it's one of options that's floating around at quite a high level."

Mr Cable said there was a "growing sense existing tax bases are difficult to nail down", with avoidance on corporate and other taxes leading to the need for a reliable tax base.

He said stamp duty was "highly inefficient and unsatisfactory", council tax was unpopular and business rates were increasingly unsustainable.

Mr Cable added: "There does seem to be a remarkable level of cross party interest in this, quite a few Tories are interested in it, a lot of Labour people, people with green interests.

"Why does nothing ever happen? It's a question I know Alter have been grappling with for many years and it's a question we have to try to confront. One of them is there isn't currently an established system of large scale land valuation... so very few people have much of an idea about what the impact would be.

"There is an element of the fear of the unknown of what this would mean in terms of distributional impacts and the impacts on particular individuals. Any fear of large loss is a massive deterrent to politicians doing anything very much.

"We also start with a massively distorted market in land where land valuations are very, very highly determined by what planning allocation has been given. Housing value as opposed to agricultural value is enormously different so once you start taxing it, do you start taxing land with planning permission or without?

"It's the fault of half a century of accumulated distortions and unfairnesses and at some point we are going to have to grapple with it."