Tuesday, October 13, 2009

Site Value Tax proposal draws an army of 'authors'

One particular trait of Irish policy research community is a troubling one – once a policy proposal is adopted by the governing party, the jostling and positioning begins to align various research bodies and policy advocates to claim the credit.

And so it is with the latest Programme for Government – no sooner did the ink dry out on paper as various august organizations and individuals have managed to stake a claim to fame as the authors.

I don’t know which proposal was finally used by the Green party leaders. All I know is that there is only one current proposal for Site-Value / Land-Value Tax that was produced in 2008-2009 period. This proposal was authored by me, sponsored by a group of research NGOs and is available on the http://smarttaxes.org website - a link to it here.

The proposal was publicized at a conference in April 2009 and at a public seminar in May, made public in Business & Finance, mentioned and cited in the Sunday Times and the Irish Times. I made the presentation on LVT/SVT available on my blog since April 07, 2009, and was a subject of a briefing for the Department of Finance in April 2009 which I attended. (Some links to these public domains: here, here, here).

The proposal (constituting the first volume of research on the issue) contained detailed estimates of the likely effect of the LVT/SVT on budgetary dynamics and revenue stability, as well as broad assessment of expected economic impact of such a tax.

The proposal was also delivered to the Taxation Commission as an official (and presumably logged) submission and the Taxation Commission report draws extensively in its section on LVT/SVT from this submission.

A second submission (see here), dealing specifically with the issue of using LVT/SVT to raise public investment funding was completed by me in August 2009 and made public then. It is also available on the http://smarttaxes.org website.

Both documents formed the submission on the Programme for Government by the Environmental Pillar member group, Feasta which was delivered to the Green Party and launched publicly at an event.

These are the matters of public record.

In the mean time, it came to my attention that a certain leader of one of the Social Pillar organization in the Social Partnership has been claiming authorship of the proposal. The irony has it, his own organization’s website contains no serious proposals for SVT/LVT despite having many detailed position papers on other policies. Other ‘authoring experts’ have been reported sending their CVs to the Green Party leadership in a hope of gaining a slice of action.

My research on SVT/LVT has been sponsored, kindly, by a group of private and NGO sources, cited on the submissions.


Holbrook Fields said...

I heard a commentator on Newstalk (can't remember who) say that site value tax is more appropriate for underdeveloped countries as it is easier to value sites than in a developed country. Would you have any thoughts on this commentary? Also, presumably I can take it that this would be a Green Party policy that you would support given that you proposed the idea. Thanks.

TrueEconomics said...

Yes, I would be a supporter, conditional on using LVT/SVT as a tax revenue neutral measure, to finance elimination of the stamp duty and a reduction in the upper marginal income tax rate. I would oppose introduction of LVT/SVT as a new add-on tax, given that I think that we are already facing high burden of taxation on higher value-added human capital.

As far as LVT/SVT applicability - it is suitable for developing countries, but there are plenty of examples where it applies in the developed countries.

There is absolutely no reason why it cannot be easily applied in any country. The main difficulty in Ireland is availability of data on property sales and hedonic characteristics of properties sold. This can be rectified by setting a national registry of properties.

My suggestion is to recognise that price of land has virtually collapsed, set the rate on reasonable value of land based on a fixed percentage of the site value cost relative to the property value and then adjust it as we get more information disclosure in the market over time.

On day one of introduction, we can phase out stamps completely, then gradually reduce the income tax as we build up the system of rates on land/sites.

Again, there is absolutely no reason as to why the system cannot apply in a developed country. In fact, Denmark, Australia, parts of the US (in fact older, more established locations on the East coast), Hong Kong - all use LVT already. I am not aware of which developing countries do so.

Holbrook Fields said...

Many thanks for that information and for taking the time to respond to my questions.

Unknown said...

Re others claiming the credit for your excellent work Constantin, there is a joke:

Question: "How many land taxers does it take to change a light-bulb?"

Answer: "Nineteen" -
"One to change the bulb and eighteen to claim the credit!"

Tony Vickers said...

This excellent paper makes the case for L/SVT and has clearly been effective in persuading some politicians in Ireland. But has anyone thought beyond that point?

As a geomaticist, I have studied the practicalities of property taxation for 12 years, recently completing a doctorate on Value Mapping (see www.landvaluescape.org).

Getting the policy accepted by a political party in Government is only the first step. Unless it is to remain merely "shelfware", it is now urgent (for all of us who support Land Value Capture as a tool for economic efficiency and justice) that the Minister responsible (Senator Doyle?) is offered cross-disciplinary advice and project management assistance INDEPENDENT of public officials (who are inherently conservative).

I believe I can help here, as I have excellent contacts worldwide in the relevant professions. I have already emailed Sen Doyle.

What next? The problems are only just beginning....

Skype: "thevickersfamilynewbury"