Labour’s plans for a new ‘land value tax’ will clobber high streets and town centres, Conservatives warned today. The unreported small print of the Labour manifesto calls for a new tax to be levied on business, and for the first time, new research has calculated the punishing effect on high streets and shops.
- Land value taxation has long been a pet policy of Jeremy Corbyn and John McDonnell to raise more money from taxes and hit “unearned wealth”. John McDonnell’s favourite think tank, the New Economics Foundation, last month asserted that land value tax could be used to increase municipal taxes on business by up to £5 billion a year. They argue that land is under-taxed.
- Business rates are currently based on the building and the land. Land value taxation only taxes the land. High streets and city centres have the highest land values, and land makes up a higher proportion of property value. Taxing land alone will hike the tax burden on these areas. The New Economics Foundation say that land value taxation will “particularly hit businesses in high land value areas (such as town centres)”. By contrast, under business rates, the size of the building is more important in determining the tax bill. Yet, under Labour’s new tax, internet retailers’ warehouses on cheap industrial land would pay far less than at present.
- An average shop of 205 square metres will pay £8,250 in business rates from next year under Conservative proposals. Based on land value figures by the independent Investment Property Forum, and a 3 per cent land tax backed by both the New Economics Foundation and the Labour Land Campaign, a high street shop outside London of the same size could pay £38,130 a year. London shops would pay even more, as land values in London are even higher. The Forum’s research has found that high street retail has the highest land values. Land value tax would thus cost more. Liberal Democrats also back Labour’s new land tax.
- By contrast, Conservatives are increasing business rate relief for shops, pubs and retail premises, cutting £5,000 a year off the tax bill of an average shop in England, and are pledging broader reform of business rates.
Robert Jenrick, Secretary of State for Housing, Communities and Local Government, said:
“A Conservative majority government will get Brexit done, and support local high streets by cutting their business rates. Corbyn's Labour Party will hike up taxes on local firms across the country and wreck the economy. This is a new tax on high streets that will clobber struggling shops.”
Commenting, Therese Coffey, Secretary of State for the Department of Work and Pensions, said:
“Corbyn’s Pension Tax will see ten million savers facing a huge bill forcing them to delay their retirement for almost three and a half years.
“This is just one of the ways a Corbyn government would hammer hardworking people on top of his plans to hike up taxes by £2,400 a year, as well as the cost of his plan for unlimited immigration and the chaos of 2020 being dominated by two more referendums – one on Brexit and another on Scottish independence.
“Only Boris Johnson and the Conservative Party can get Brexit done with a deal, get parliament working again and turbocharge our economy to unleash Britain’s potential.”
Read more about how this Pension Tax will impact millions of savers (PDF)