In this brief guide, we are going to discuss the Land value tax.
What is the land revenue tax?
Land Value Tax is a way of raising public funds by placing an annual charge on the rental value of land.
Land value tax is not actually tax in some regards but it is a payment made for benefits received. The land value tax would replace a lot of the existing tax rather than add to them.
How will Land value tax help?
Land value tax will help the Uk Government fund a lot of public sector services such as hospitals, schools, roads and other economic initiatives. The Land value tax will help the UK government reduce any GDP deficit which it currently faces.
The value of slots of land in the UK is assessed regularly and the land value tax which is charged on them is reviewed to ensure it still fits the requirements of the UK government.
When thinking about land, land refers only to the site itself and not any improvements made to the land. This means the value of your home or any structure you have erected will not be taken into account when considering land. The land value tax will assume that all neighbouring properties have been built around the same time and that their values are the same. This means a vacant site will be valued the same as a row of houses as long as they are neighbouring each other.
The value placed on the land will also be based on market data and what the land could be optimally used for within current planning regulations. If the planning restrictions on the property were reassessed and changed then the land value tax will be reassessed and changed if necessary.
The benefits of the land value tax
The Land value tax has some very good benefits. Some of those are
The Land value tax is a good source of income for the UK government and helps reduce the fiscal deficit which the Government could be facing by reducing the National debt and increasing the amount of money available to the government to spend on infrastructure and public services.
This increase in the tax charged on land will also mean that the tax on businesses and other sources of innovation and growth for the economy could be reduced proportionally to boost economic growth. This could be a reduction in tax on businesses, labour or machinery needed by businesses.
A tax on land is, therefore, a good alternative as land will be used one way or the other and the tax on land has a limited effect on the economy in comparison to other tax charges.
Land value tax isn’t a new concept it has been successfully used in other countries but the UK is yet to adopt it.
In this brief guide, we discussed the land value tax. If you have any questions or comments please let us know below.