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It had to happen sooner or later. I have, I think, managed to write an avowedly Liberal Democrat blog for some six months now without once mentioning Land Value Tax, but the day has finally dawned. 

Naturally, I don’t intend to discuss LVT in any detail. I certainly approve the principle of taxing wealth rather than income, plus lots of awfully jolly clever people I know are in favour of LVT, so we in the People’s Republic of Mortimer are content to give holding support to LVT until such time as we understand what it is. No, my interest today lies in the psychology surrounding it.

It’s a running joke in the Lib Dem blogosphere (O! how we laughed!), that race to be the first one to say “Of course, if we had LVT it wouldn’t be a problem…” in response to any sort of tax-based discussion or comment whatsoever. Only the other day Our Vince guested on Lib Dem Voice for a well-deserved blast at Darling, darling!, who has belatedly been informed by his gap year intern that the Labour policy of slapping a flat levy of thirty grand on non-domiciles for keeping their privileged tax status is in fact a “bloody stupid idea”, as the People’s Republic amongst many, many others could have told him at the time.

The first – and for some time, only – response to Vince’s piece was from the LVT eggs, and was in much the usual vein. It’s like watching someone trying to smell through their ears when LVT eggs get onto tax threads. The mismatch between subject matter and chosen instrument of perception is so total that the discussion is over before it has begun. Essentially, if you believe as passionately as some do that LVT is the only viable liberal tax system and refuse to discuss all lesser proposals on their own terms, what you have is a non-debate. I have mixed feelings on this. On the one hand if you are one of the passionate LVT eggs, nursing continual frustration in your hopelessly well-read bosom that the party doesn’t wuv it just as much as you do, I can see how you want to take any opportunity to hammer home your point. You may end up coming on like Cato the Elder on the subject of Carthage* but hey, you’re a political activist, you bought into being boring a loooong time ago – at least an idealist’s issue is kept alive, and the blogs are one of the few places in the party where that is continuously true. Top banana to you.

On the other hand, this is tax policy. Tax policy tends, by its nature, to be highly practical and potent stuff. Elections are won and lost on the fine detail of it in a way that isn’t true for other areas of policy. So when a particular aspect of the government and opposition’s tax policy is so obviously flawed, and ours so obviously superior, don’t the actual circumstances of the case merit a mention? Doesn’t Our Vince merit a(nother) pat on the back for keeping it real? Doesn’t Martin Land on the LDV thread have a point, albeit an unwelcome one, when he says, “If only we could find a way of combining LVT, PR and opposition to Trident into one single policy we could truly bore the electorate to death”?

I’m not convinced that non-domiciles are a particularly good advert for LVT anyway.

“What about non-doms who don’t own property in the UK?” says I, “LVT will only trouble non-doms who have decided to settle and live in the UK to the exclusion of everywhere else. This by definition is likely to be non-doms of modest means. Rich non-doms will simply redistribute their landed assets in the most tax-efficient way. Anecdotally, plenty of internationalist non-dom bankers live in luxury rentals in Kensington and Chelsea and earn vast tax-free salaries in the city.” Yes, I said all that.

“Pah!” says they, “LVT will be passed on to the tenant in the form of higher rents.”

This is true as far as it goes, but it passes over my central point (which wasn’t that well expressed): LVT is based on ownership and stakeholding in the UK. Non-doms occupy a very peculiar position – they come here to make money from employment, not investment. They choose London (generally) as their place of employment for a reason – it is the financial capital of Europe, it is the commercial setting their career cannot thrive without. The UK’s financial industry is a resource used by many wealthy non-doms to make money – a resource that essentially belongs to the host country and its taxpayers. It is impossible, under LVT, to tax wealthy non-doms specifically on the use of that resource. Looked at that way, non-doms are possibly one of the few groups for which it is possible to make an argument for taxing income and not wealth.

After the LVT eggs and I had partied on for a bit, Diversity made a far more effective comment which I shall, if I may (ha, like you have a choice) quote in full:

In practice no tax is perfect; not even green taxes and LVT. Vince Cable’s point is that the Government’s and the Tories proposals for taxing nondoms are downright bad. Seven years and then normal tax is, as always, not perfect. However it is far less damaging than the other parties’ proposals. Once again, Vince is the competent economic manager in the House. 

* Oh, look it up. The world needs more classics nerds.