1 Comment on SA17. THE ETHICAL CASE? By David MIlls


There is nothing moral about paying taxes. There is, however, a legal obligation to pay taxes. It is an offence to evade paying. The legal requirement is enshrined in the law. However, there can be no obligation, legal or moral, to pay more than is demanded by the law. Fairness does not come into it. If the tax system is unfair, all that is needed is that Parliament change the law. Tax is a matter of meeting requirements enforceable through the courts of law. By contrast a donation made to charity may be considered a moral act precisely because it is not a response made under threat of prosecution but is action taken as the result of a donor’s unfettered choice. Note that a charitable gift need not be “fair”, in that it can be held to be in support of an objective which some or many might regard as already adequately endowed or perhaps be intended for a dubiously worthy cause. Morality, the law, and fairness can be uncomfortable bedfellows.

People can move. Some property is fixed, but a lot is transportable. If a government wants certainty of income, surely it should be aiming to tax fixed property rather than people and entities that can be moved or hidden? What is the point of high taxation such as income tax on earnings, value added tax on goods and services, corporation tax on good profitable businesses? What messages are being sent out? How many householders have without fail insisted that their plumber or electrician supply an invoice with the VAT added to the charge? How many legislators keen to close tax loopholes have never submitted a swollen expense claim or finessed a dubious fiddle? Truly, morality, the law, and fairness can be uncomfortable bedfellows.

Taxation – a key distinction

Our Latin dictionary defines the verb, taxo, taxare, as to estimate, rate, appraise the value of anything. In modern English, this is still the meaning in the courts of law, where a taxing master is one who taxes costs by examining them and allowing or disallowing the various component items claimed.

A wider use of the word has largely taken over from the strict, etymological meaning, so that taxation today signifies a government charge on certain things to provide money for the state.

The expression, taxation of land values, may therefore mean the action of collecting a charge on the value of land to provide revenue for the state or, more simply and in accordance with the original meaning of the word, the act of appraising land in accordance with values assessed on and assigned to various plots or parcels.

The use of taxing land value in the classical Latin sense presents no difficulty beyond making clear the use intended. However, adopting land value taxation in the broader modern meaning does the policy a disservice.

The justification for allowing such a usage is that, in the U.K., that is how, historically, it has been known. In the early years of the 20th. century, there were, successively, the Land Values (Scotland) Bill, 1907, the Land Values (Scotland) Bill, 1908, and the Finance (190910) Act, 1910 (which introduced a number of land taxes, none of them actually land value taxation, even though the preliminary campaigning had indeed been for proper LVT!). Later, Section III of the Finance Act, 1931, was entitled Land Value Tax. For well over a hundred years, there have been numerous inquiries, in and out of Parliament and Whitehall, referring either to land value taxation or to its local government equivalent of land (or site) value rating.

Yet, equating LVT with taxes such as income tax, corporation tax, the council tax, the uniform business rate, capital gains tax, value added tax, import duties and excise duties, is to underestimate the superiority and singular character of the former. All of the latter are taxes on work – on the productive process itself or on trade in goods and services or on accumulated savings devoted to capital formation.

Land is not manmade but is a gift from Nature, part of our planet, Earth. No one paid to have it produced!

What each plot is worth, depends on the demand for its qualities, for the social and other benefits and opportunities it offers. Each plot constitutes a monopoly location.


Properly and, as far as practicable, fully implemented, an impost based on the assessed [taxed] rental value of land is to be viewed as a payment to the community for benefits actually received. What the landholder pays to the Exchequer is thus compensation for what he gets the exclusive right to enjoy.

Although generally known as LVT, this policy is more accurately described as a National LandRent Charge. The Land Value Taxation Campaign is therefore advocating the collection of the rent of land for public revenue purposes, to be effected by passage of a National LandRent Bill.

The basic case for the National LandRent Charge (“LVT”)

(a)  The moral, ethical argument

Whether there was a formal Creation or not, whether there was a Divine Creator or not, it is indisputable that the Earth was not made by Man.

From this it follows (i) that all men have equal rights in the bounty of Nature; and (ii) that no man can with moral legitimacy lay claim to private ownership of any part of that which Nature has freely provided. These principles are universal. Our immediate concern, however, must be to ensure their application where we have the political authority, namely within the United Kingdom.

We use the term, land, to mean the material universe apart from man and his products. The exertion of labour by man is what confers legitimacy on the claim to ownership: a man may not own what neither he nor any other man created.

(b)  The economic argument, from observation and inference

The value of land is of course influenced by such purely natural factors as the terrain, soil type, climate, and minerals. It is, though, the presence and activity of the population as a whole which actually confer differential values on sites. Land value is determined by the demand for living, working, and recreational space. It measures the advantages of a particular piece of land over that of the poorest land in use.

Land values are affected by the provision of services such as water, gas, and electricity. They are protected by the police, the fire and hospital services, and flood control. Communications (road, rail, river or sea port, aerodrome) are especially significant, and every improvement to the infrastructure will result in higher land values overall in the areas affected (though individual sites will not benefit equally, and a few may even lose value in the short run).

We notice how North America has developed in the 520 years since Columbus; how in the U.K. the comparatively recent preference for trade with continental Europe instead of the Commonwealth has affected the fortunes of East Anglia and Merseyside; how Aberdeen and its hinterland have been changed by the discovery and exploitation of North Sea oil; how the growth of service industries at the expense of much “heavy” or “smokestack” industry has resulted in the redistribution of jobs and of people; whilst at a local level, we see how oneway streets, parking regulations, and repositioning a pedestrian crossing can affect the relative attraction of competing shop sites.

 The individual landowner, in his capacity as owner of land, clearly is powerless to create his own land value, although if he were also to exert labour or provide capital he would, in those distinctly different rôles, play his small part as a member of the larger community. The landowner as such, though, performs no useful function. His sole “contribution” to the process of wealth creation is to charge labour and capital for access to what Nature has already provided free, at a price which reflects the extent of past, current, and anticipated future levels of economic activity. Values which ought rightfully to be public, have to be “bought back” from landowners before anything new can be done!

 (c)  The pragmatic argument: raising revenue in an efficient, superior way

 Essential government services must be paid for somehow. The advantages of LVT are that

 (i)    it is cheap to collect;

 (ii)   its yield is certain and potentially large;

 (iii)  it cannot be avoided or evaded; and

 (iv)  it does not add to the cost of living, because, as all economists agree, it falls on those who have a beneficial interest in land and cannot be “passed on” by them in the form of higher rents for occupiers or higher prices for goods or services made on, or sold from, the premises. In short, land is “price inelastic”.

 The revenue raised replaces existing taxes, which fall on personal earnings and on the goods and services people provide for each other by productive effort.

 Work and enterprise are rewarded. Merely holding land becomes unprofitable. Landowners, obliged to pay the LVT, need to generate the necessary income. Valuable land that is unused and underused has therefore to be put to an appropriate use.

 Recapitulating the essential concept of LVT

 Wealth is the result of the application of Labour to Land. Some Wealth is consumed. That part which is put back in to the productive process or is in the course of exchange, is Capital. Wealth is divided, Rent to Land, Wages to

 Labour, Interest to Capital. The words themselves do not matter, but the ideas do. That accountants do not distinguish land and capital, that rents are paid on buildings as well as land, that returns to labour may be called salaries or fees and include perks, ought not to confuse politicians and economists (unless they wish to be deceived, of course!). In particular it is essential to distinguish Land, Capital, and Wealth, and also therefore Rent and Interest. Clarity of thought defeats a smokescreen of verbiage.

 We are paying over land values now, but in a haphazard way and to the wrong people! Anybody renting a piece of land has obviously to pay the landowner, and site rents are included in payments made for use of buildings. If a property is being purchased with the help of a bank or building society, the loan repayments include a land value element. Even if land is fully paid for, the freeholder has to carry an “opportunity cost” which is the income forgone through having his money tied up in capitalised land rent. What happens today is that we pay land values, which rightfully are public, to the private landowner, and then suffer taxes on our private earnings, goods, and expenditure, to finance public needs. It is ridiculous. Landowners are not to blame: but the system of landlordism, is.

 Land values are not government’s to give away. Morally they belong to us all equally and in theory should be paid out on a per capita basis as a sort of reverse poll tax. It is purely for convenience that we argue that government keep them for essential public revenue requirements.

 The moral basis for LVT is payment for benefits received. The landholder pays a duty in return for exclusive enjoyment of the natural and social advantages of his site. What he achieves thereafter, he is free to enjoy untaxed.

 Land has its own ability to pay: its value is derived from and reflects its capacity to produce a return with the appropriate investment of labour and capital. LVT restores meaningful recognition that all land is vested in the Crown.

 Land value is the one thing that should never be privatised.


 Payment of a tax on fixed hereditaments can be neither avoided nor evaded. In this it is inherently superior to a tax on whatever is movable. A National LandRent Charge falls on nothing that has been man-made. Being both publicly created and sustained, the annual rental value of the land is the ideal source for public revenue requirements. LVT is good politics and good economics. Perhaps above all, it is based on sound ethics.

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