The leading tax experts who conducted the Mirrlees Review came to the conclusion that Land Value Taxation is such a powerful idea, and one that has been so comprehensively ignored by governments, that the case for a thorough official effort to design a workable solution seems to be overwhelming. In particular, the report noted, significant adjustment costs would be merited if the inefficient and iniquitous system of business rates could be swept away and replaced by an LVT (James Mirrlees et al 2011, p. 377).
Taking his cue from this Henry George Society of Devon member Julian Pratt has written a paper for the consideration of Treasury which sets out a compelling case for the replacement of Business Rates with revenue raising based on Land Value. The paper notes that the current regime of National Non-Domestic (Business) Rates (NNDR) encourages the under-use and under-development of non-domestic land and penalizes businesses that invest in buildings and other improvements, reducing their profitability and competitiveness. Replacing NNDR with Land Value Taxation (LVT) would provide more than £3 billion a year in economic stimulus as the dead weight loss of taxation under the current system was lifted. Moreover it would benefit businesses that invest in their property, reduce under-use and dereliction of land, increase business profitability and international competitiveness, regenerate deprived areas, have a counter-cyclical impact on the economy, permit infrastructure to become self-funding and reduce tax avoidance and evasion.
The paper advocates a two-stage switch over and calls on Treasury to carry out a feasibility study to further explore mechanisms for valuation, revaluation, transition and piloting.
The paper can be accessed here: Business rates reform proposal