What is land value tax?
A land value tax is a yearly tax on the value of land itself, not the buildings on it. Because land cannot move or hide, many economists see it as one of the most efficient taxes. The UK does not have one, but it is often proposed as a replacement for council tax and business rates.
The idea is linked to the 19th century American writer Henry George. He argued that land values rise because of what the community does, such as building roads and schools, not because of the owner's effort. So the community should capture some of that value. Taxing land also discourages people from leaving valuable sites empty or undeveloped. His book Progress and Poverty was hugely popular.
Economists from the Institute for Fiscal Studies to the OECD have praised land value tax. It does not discourage building or improvement, because those are not taxed. Places such as Denmark and Estonia tax land values in some form. In the UK, Scotland and Wales have both studied it, and smaller parties such as the Greens and Liberal Democrats have backed versions.
The main barrier is the transition. A full switch from council tax and business rates would create big winners and losers. Owners of valuable land in expensive areas, including some cash-poor homeowners and farmers, could face large bills. A national land valuation would also be needed, which would be a huge task. Supporters suggest phasing it in over many years to soften the impact.
Who it affects: Landowners, replacing council tax and business rates
Many on the left support land value tax as a fair way to tax unearned wealth and fund councils.
Some free-market thinkers on the right support it as an efficient tax, but many worry about its impact on homeowners and farmers.
Britain is split. Now you decide.
In Population Decides you can switch on a land value tax in your Budget and see who gains, who loses and how the economy reacts.
Play Population Decides freeCommon questions
Does the UK have a land value tax?
No. It has been proposed many times but never introduced nationally.
Why do economists like land value tax?
Land cannot move or be hidden, so taxing it does not discourage work, building or investment.
Would land value tax replace council tax?
Most proposals would replace council tax and business rates with a single land-based tax.