A Blueprint for Smart Tax in Britain

In this third and final year of a research project to help prepare Great Britain for land value taxation (LVT), work focused on an inner city area of Liverpool and plans to introduce Business Improvement Districts (BIDs) in England and Wales. The aim was to produce a ‘blueprint’ for the city council to adapt the Government’s BID proposals into a pilot implementation of LVT.

A commercial property valuer produced site valuations for some sixty land parcels and these were combined with information about business rating in the area. A Tax Effect Demonstrator (TED) was created from these data and tested on business representatives and regeneration experts in the city, in presentations which also used a specially produced ten-minute video about LVT and BIDs. Telephone surveys of the business community in Liverpool city centre were also conducted on the subject.

The city council maintained its support for ‘Smart BIDs’ and was given a costed business plan with recommendations to use self-assessment and reserve powers of compulsory purchase of sites in a prospective BID. The plan was to be presented to Government, with a request for permission to implement it as part of a national LVT trial, at a conference in the city in November 2003.

Unfortunately the Government failed to allow BIDs to impose a levy on property owners, so that they will only be able to use persuasion and contract law to secure funds from land values. Nevertheless the study concluded that BIDs could form the basis of a national LVT trial, which could commence but not be completed without further primary legislation, unlikely for at least three years.

The study has also enabled indicative costs for a first national land valuation to be estimated. Converting British property taxes (council tax and non-domestic rates) to LVT need not result in any net increase in tax administration costs, if the tax reform is carefully planned as part of the creation of a modern national land management system. Most of the costs would fall to other e-government projects to which Government is already committed.