Labour’s brutal Garden Tax would confiscate Middle England’s wealth
A levy on land values would be tantamount to a declaration of war on private property
There is much that is objectionable in the Labour manifesto, the party’s most Left-wing, class-baiting collection of policies in a generation. The competition for the most destructive offering is fierce: higher income tax would ruin our work ethic and cripple our competitiveness, while the widescale nationalisations would put union barons back in charge.
But one policy stands out as truly abominable: Labour is explicitly considering a Land Value Tax – or as the savvier Tory candidates are dubbing it to great effect on the doorstep, The Garden Tax. This policy is toxic beyond words – it is the philosophically pure, mass market version of Ed Miliband and Vince Cable’s infamous Mansion Tax. There are no details in the manifesto, for good reason. It’s not just the top few per cent of home owners who would be hammered under any likely version of the policy. Labour is aiming an economic weapon of mass destruction at the very foundations of British society, and hardly anybody has noticed.
On the face of it, of course, the tax sounds innocuous. Anybody who owns land (that’s most of us) would pay an annual tax based on its value, not counting any actual homes or buildings built on it; and the new levy would replace the broken systems that are council tax and business rates.
Generally speaking, over half of the value of a home is accounted for by land, with the remainder the buildings and structures. A vacant plot in a row of houses would have the same taxable value as the plots that had houses on them. Agricultural land would also be hit.
It is when one starts to play with numbers that the breathtaking scope of the potential raid becomes apparent. If your two-up, two-down is worth £250,000, based on land of £125,000, and the tax is set at a relatively modest 1 per cent a year, you would have to pay at least £1,250 year. This would be a lot more than the Band D council tax in many parts of the UK, though some taxpayers would gain.
But if your home is worth £500,000, based on £300,000 worth of land, your bill would be £3,000 a year, a sum that begins to sound terrifying. For those with substantially more expensive homes, the result would be disastrous: bills of £10,000 or £20,000 a year, even if they have little income, perhaps because they are pensioners. And why assume the tax would be just 1 per cent? What if it were 3 per cent or even higher, especially if the goal is to make sure “local government has sustainable funding for the long term”, as the manifesto claims? What if it were made “progressive”? There is a fine line between taxation and confiscation, and this would breach it, triggering moral and economic Armageddon.
Londoners and Tory-voting shires would be hammered. Council house tenants and renters would pay nothing (at least until their rents shot up). The Lefty cultural warriors would celebrate as tower block dwellers would do best and suburbanites in their semis and detached properties worst. Landlords and landowners would be finished. There would be an ecological catastrophe as gardens were sold. The property market would crash.
The tax would represent a watershed moment in British politics: it would be the first real wealth tax and a greater rupture with free-market conservatism than anything Clement Attlee or Harold Wilson ever achieved. It would force hundreds of thousands, if not millions, of families to sell their homes, and an even greater number to take out ruinous equity release plans. Many who can just afford their mortgages would be repossessed. If the compounded tax bill were rolled up into inheritance tax, some would end up paying death duties of 100 per cent.
If the misnamed Tory dementia tax damaged May, Labour’s infinitely more radical Garden Tax would annihilate Jeremy Corbyn – if only the middle classes were aware of it. So why, oh why, are the Tories not making more of it? Why is it not on every piece of literature?
The tax would end our ancient, historic commitment to private property, kill off 100 years of progress in building a mass ownership society and wage war on the values that underpin our prosperity.
People should have the right to own things, for real and forever, be they shares or land or paintings or bank accounts or gold. Global investors value the fact that we have stuck to this approach for centuries; it is the reason why we are so rich despite so much mismanagement.
We should not have to pay a continuing, extortionate fee to the state for the privilege of retaining possession of what is already ours. Taxes should be on flows – such as wages, spending or even transactions – not on assets. Taxing wealth reverses the relationship between citizen and state: rather than it being in charge of protecting our life, liberty and property, we now work for it. There are no more proud freeholders; citizens become meek leaseholders with the government in charge. Our property becomes a temporary privilege, to be used until accumulated taxes return it to the ultimate owner, the state.
With a few eccentric exceptions on the Right and among classical economists who naively believed that it would be an efficient way of raising funds, most supporters of a land value tax are quasi-marxists who want to re-engineer society.
They hate private land ownership, which they blame for much that is wrong with our economy. They are obsessed with the supposedly unfair “rents” that home owners derive from their property, and believe that taxing them is a moral imperative. The Labour Land Movement, the party’s top cheerleader for the policy, is clear: “A tax on land values is a fair tax, because the person who owns land derives benefit from something which he or she has not made.”
The reasoning is straight out of the works of Henry George and the Communist Manifesto; it is eerily similar to the thinking behind the Marxist Labour theory of value: a capitalist class is exploiting society, extracting something that it doesn’t deserve. Private land property, in other words, is theft, and the “rentiers” must be euthanised. Forget about going back to the Seventies – Corbynomics would have us leap backwards to the 1840s.