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Land value tax has long been popular with economists. Unlike most taxes, it doesn’t discourage people from working, investing or building - and in theory it can raise money without distorting economic decisions. So why don’t we use it more?
In this episode, Helen is joined by Stuart Adam and Ben Zaranko to explain how a land value tax would work, who would gain and lose from introducing one, and why its effects can be very different for existing landowners and future buyers.
We also look at some of the big practical and political questions. Can land really be valued accurately? Would the tax be fair? Could it replace council tax, stamp duty or other taxes? And should governments capture more of the increase in land values created by new infrastructure or planning permission?
Zooming in discussion questions:
These are a set of questions designed for A Level economics students to discuss, written by teacher Will Haines.
- Explain why a land value tax may have no disincentive effects. In your answer, refer to the substitution effect.
- Is a land value tax fair? Provide one argument in favour and one argument against.
- Would you introduce a land value tax? If so, would you remove any existing taxes that are similar to a land value tax? Justify your response.
Host
Helen Miller
Helen joined the IFS in 2007. She has almost two decades of experience analysing UK fiscal policy and providing trusted advice to policymakers.
Participants
Stuart Adam
Stuart is a Senior Economist working in the Tax sector, and focuses on analysing the design of the tax and benefit system.
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