1. Addressing The Deficit without
Increasing Taxes or Reducing Services
Dave Wetzel FCILT
President, Labour Land Campaign
Chair, The Professional Land Reform Group
General Secretary:
The International Union for Land Value Tax
Former Vice Chair, Transport for London
Former Leader London Borough of Hounslow
Former Transport Committee Chair, Greater London Council
GlobalNet21 Webinar
15 November 2011
7. And remember in 1945 the UK had to:
• repair or rebuild bomb damaged homes, docks,
bridges, roads, business premises, roads, railways etc.
• find jobs for demobilised servicemen and women.
• and shift industry from producing armaments to selling
manufactured goods to a war-ravaged world economy.
Not only did they achieve this but the 1945-51 Govt
also managed to create full employment (for the first
time after a major war), establish the welfare state,
introduce decent pensions and unemployment
benefits, improved education, and create The NHS!
8. Suppose the UK found a new rich
oil field in the Midlands?
9. Like oil-rich Middle East countries
we could not only pay-off our debts
But also IMPROVE public
services and CUT those
taxes that damage
our economy
Taxes like vat which increases prices
and income taxes which reduce workers’
spending power
10. But the UK is unlikely to find new natural resources
But we could make better use of an existing resource
But what could that be?
Our LAND
11. To produce wealth we require three factors:
1. Labour
(all mental and physical human effort in the production process)
2. Capital
(Man-made wealth used to produce more wealth
e.g. Tools, equipment, machinery, business buildings, parts etc.)
3. Land
(all the free gifts of our universe such as dry land, oceans, fish in
the sea, natural resources oil, coal, gas, ores, space, the electro-
magnetic spectrum etc.)
12. What is the return to these three factors?:
1. The return to Labour is WAGES
(salary, bonuses, peace-work etc.)
2. The return to Capital is INTEREST
(interest rates, profits, dividends, etc.)
3. The return to Land is RENT
(economic rent as opposed to rent for
hire cars, buildings, equipment etc.)
13. Who deserves to receive these returns?
1. WAGES?
surely belong to those who create wealth by working
2. INTEREST?
surely belongs to those who save and invest
3. RENT?
the rent for hire cars, buildings, equipment, domestic
appliances etc. must surely belong to those who made
these items or who fairly transferred their ownership –
But Who deserves the economic rent of NATURE?
Who deserves the RENT of LAND?
14. RICARDO’S THEORY OF RENT
As agreed by
Adam Smith
Henry George
Karl Marx
William Vickrey
and others
22. Breakeven
£200 k p.a
Profit £10k
Capital £90k
per annum
Labour £100k
per annum
Land
23. Breakeven £1.2m
£200 k p.a
Income £210k
RENT £10k £1m
Profit £10k
Capital £90k
Labour £100k
24. GDP £1.2m
£600k
£250k
Income £210k
Rent £10k £50k £400k £1m
Profit £10k
Capital £90k
Labour £100k
25. But not a good model
of the economy
What’s missing?
26. Breakeven £1.2m
£200 k p.a
Breakeven now: £260k £600k
£250k
Income £210k
Rent £10k £50k £400k £1m
Profit £10k
Capital £90k
Labour £100k
Doesn’t include Government expenditure
27. £1.2m
£600k
Breakeven now: £260k
£250k
Income £210k
Rent £10k £50k £400k £1m
Profit £10k
Capital £90k
Labour £100k
28. GDP £1.2m
£600k
Breakeven now: £260k
£250k
Income £210k
Rent £10k £50k £400k £1m
Profit £10k
Capital £90k
Labour £100k
29. £1.2m
Income
Rent £1m
Profit £10k
Capital £90k
Labour £100k
What is the 10 - 20
freehold years
price? rent
30. £1.2m
£600k
£250k
Income £210k
Rent £10k £50k £400k £1m
Profit £10k
Capital £90k
Labour £100k
x 10 yrs x 10 yrs x 10 yrs x 10 yrs
Freehold =
£100k £500k £4m £10m
31. Income £210k
Rent £10k
Profit £10k
Capital £90k
Labour £100k
x 10 yrs
Freehold =
£100k
32. Income £210k
Land Value Tax £5k
Rent £10k
Profit £10k Landowner £5k
Capital £90k
Labour £100k
x 10 yrs
Freehold =
£100k
33. £250k
Income Land Value Tax £25k
Rent £50k Landowner £25k
Profit £10k
Capital £90k
Labour £100k
x 10 yrs
Freehold =
£500k
34. £600k
Income Land Value Tax £200k
Rent £400k
Profit £10k Landowner £200k
Capital £90k
Labour £100k
x 10 yrs
Freehold =
£4m
35. £1.2m
Income
Land Value Tax £500k £1m
Rent
Profit £10k Landowner £500k
Capital £90k
Labour £100k
x 10 yrs
Freehold =
£10m
36. £1.2m
£500k
£600k
£200k
£250k
Income £210k £25k
Rent £5k £5k £25k £200k £500k
Profit £10k
Capital £90k
Labour £100k
x 10 yrs x 10 yrs x 10 yrs x 10 yrs
Freehold = £100k £500k £4m £10m
£50k £250k £2m £5m
37. £1.2m
£500k
£600k
£200k
£250k
Income £210k £25k
Rent £5k £5k £25k £200k £500k
Profit £10k
Capital £90k
Labour £100k
x 10 yrs x 10 yrs x 10 yrs x 10 yrs
Freehold = £100k £500k £4m £10m
£50k £250k £2m £5m
38. £1.2m
GDP £500k
£600k
£200k
£250k
Income £210k £25k
Rent £5k £5k £25k £200k £500k
Profit £10k
Capital £90k
Labour £100k
x 10 yrs x 10 yrs x 10 yrs x 10 yrs
Freehold = £100k £500k £4m £10m
£50k £250k £2m £5m
39. LVT HELPS AVOID URBAN SPRAWL
If land is used efficiently in towns and cities with
no empty or underused buildings or sites -
SPRAWL
Then the needs of investors and residents are
met without being forced onto less
advantageous marginal land which incurs extra
cost and inconvenience.
The disruption to the countryside is saved, urban
environments become more efficient and
journey times are reduced for transporting
goods and for individuals commuting.
Energy is saved – i.e. we help to address
climate change.
40. Why collect land rent?
• Land is a natural resource
• Land values are created by whole communities
• Landowners do not create land values
• Expenditure on public services usually leads to an
increase in land values
• The planning process often provides landowners with
huge windfalls
• Taxes on labour and capital act as a drag anchor on
the economy
41. Land Value Tax is one way to collect land rent
• LVT is a fair way of paying for public services
• LVT encourages new capital investment
• LVT promotes the use of empty sites
• LVT helps prevent urban sprawl
• LVT cannot be avoided - unlike other taxes
• LVT is easy to assess and collect
• LVT would provide automatic compensation
• LVT facilitates lower interest rates
• LVT evens out the property cycle