5 ms·

I'm shocked that there is no property tax in the UK. It seems like the only way to ensure land is maximally utilized.

mattgibson 9y ago
There is stamp duty land tax, but it's only charged on sales over a certain threshold: https://en.wikipedia.org/wiki/Stamp_duty_in_the_United_Kingdom https://en.wikipedia.org/wiki/Stamp_duty_in_the_United_Kingd...
waqf 9y ago
Lack of property tax doesn't prevent a free market from operating, and ideal free markets cause optimal utilization (which admittedly is not the same as maximal utilization, but then, why would you want the latter?) Now stamp duty, that is something which prevents land in the UK from being optimally utilized.
- soVeryTired 9y ago
  Ideal markets cause pareto-efficient utilisation, not optimal utilisation. But those markets have very little to do with markets in the real world.
  - waqf 9y ago
    Right, but I still don't understand what underutilization problem is solved by property tax that isn't already solved by the fact that you could sell your underutilized land and receive money — unless your goal is to increase utilization beyond what's efficient.
    - blackguardx 9y ago
      People aren't rational actors. This has been demonstrated in many econ experiments. Tax is a pain that is reoccurring. The government even reassess the value of your land periodically. Many people don't do this and may not know their land is underutilized. It is essentially a little nudge every year. In this case, maximum utilization means maximum economic output, which is good for GDP and good for the country. It may not be the best for the local society, though. That part is hard to quantify and controversial.
    - jdavis703 9y ago
      Why are there abandoned buildings, parking lots and urban farms in downtown and near downtown neighborhoods in most US cities? I lived in a converted former warehouse that sat empty for decades because the owner had a dream that a factory would eventually rent the space again. It took the owner's death and his son inheriting the property for it to be put to "efficient use" again.
      - Spooky23 9y ago
        Worthless property is worthless and the carrying cost is low. If you have the capital, sitting on low value property can make you a lot of money. Also, if you are a real estate investor, you can "launder" your profits to avoid taxes. That's why old shopping plazas will degrade until there is only a kung-fu place and a dollar store. It literally has a value sopping up real profits from thriving holdings with paper losses.
      - panglott 9y ago
        The Georgist argument is that the problem is property taxes aren't based solely on land value, and this creates excessive deadweight loss from taxation. https://en.wikipedia.org/wiki/Georgism https://en.wikipedia.org/wiki/Georgism Under a system of pure land value taxes, an empty lot downtown would be taxed at the same rate as the highrise next to it, and taxed much higher than an empty lot in the outskirts—a huge incentive to put that empty lot to more productive use. The proliferation of parking lots is a regulatory/zoning issue.
    - digi_owl 9y ago
      Why do so many places in London owned by foreigners that never live there? As old Marx put it, a commodity has two values. A use value, and a exchange value. In the case of land, usage would mean building on it, farming it, or some such activity. But even if nothing like that happens, the exchange value remains. Meaning that someone out there is willing to trade you for it.
    - Spooky23 9y ago
      It isn't really. In a discussion about problems with urban property in the US, an HN thread would decry property tax and wax on about land value tax.
DanBC 9y ago
Do you mean this? https://en.wikipedia.org/wiki/Property_tax_in_the_United_States https://en.wikipedia.org/wiki/Property_tax_in_the_United_Sta... I guess one English equivalent is the "Council Tax". https://en.wikipedia.org/wiki/Council_Tax https://en.wikipedia.org/wiki/Council_Tax And there are "business rates" for commercial properties. https://en.wikipedia.org/wiki/Business_rates_in_England https://en.wikipedia.org/wiki/Business_rates_in_England
dogma1138 9y ago
There are council taxes which are payed yearly (usually in monthly installments) depending on the value of the property these taxes average over a 1000 GBP a year for residential properties, (there are different schemes for businesses properties and agricultural land). There is also a registration (stamp) tax any time you want to register a property in your name, these start on properties higher than 125K GBP however you would be very hard pressed to find anything beyond a parking space or a storage lot for that low in the UK. On average when you purchase a property you will pay about 4% of it's value in tax. So saying that there isn't a property tax in the UK is a bit of a stretch.
- falsedan 9y ago
  A property tax is levied yearly on the value of the land; council tax was once a fair approximation to one but the various freezes have caused it to veer far away from the actual fair market value of the properties. And of course, it's paid by the occupier, not the owner.
  - redblacktree 9y ago
    > it's paid by the occupier, not the owner. This is true of property tax in the US as well. Not directly, perhaps, but renters are most definitely paying the property tax for their landlords.
    - to3m 9y ago
      Council tax is paid directly by the tenant, who is liable for it personally, and whose name appears on the demand.
      - dogma1138 9y ago
        Not exactly, most rent contracts require you to register with the council and pay the tax bill but there is nothing that prevents the property owner from paying the bills for you. If you rent via an all inclusive scheme then you are not liable for it personally. As long as someone is paying the tax and no discounts (single occupancy, benefits etc.) are applied on the tax the council doesn't really care who and how many people live on the property.

There is stamp duty land tax, but it's only charged on sales over a certain threshold: https://en.wikipedia.org/wiki/Stamp_duty_in_the_United_Kingdom https://en.wikipedia.org/wiki/Stamp_duty_in_the_United_Kingd...

waqf 9y ago

Lack of property tax doesn't prevent a free market from operating, and ideal free markets cause optimal utilization (which admittedly is not the same as maximal utilization, but then, why would you want the latter?) Now stamp duty, that is something which prevents land in the UK from being optimally utilized.

soVeryTired 9y ago
Ideal markets cause pareto-efficient utilisation, not optimal utilisation. But those markets have very little to do with markets in the real world.
- waqf 9y ago
  Right, but I still don't understand what underutilization problem is solved by property tax that isn't already solved by the fact that you could sell your underutilized land and receive money — unless your goal is to increase utilization beyond what's efficient.
  - blackguardx 9y ago
    People aren't rational actors. This has been demonstrated in many econ experiments. Tax is a pain that is reoccurring. The government even reassess the value of your land periodically. Many people don't do this and may not know their land is underutilized. It is essentially a little nudge every year. In this case, maximum utilization means maximum economic output, which is good for GDP and good for the country. It may not be the best for the local society, though. That part is hard to quantify and controversial.
  - jdavis703 9y ago
    Why are there abandoned buildings, parking lots and urban farms in downtown and near downtown neighborhoods in most US cities? I lived in a converted former warehouse that sat empty for decades because the owner had a dream that a factory would eventually rent the space again. It took the owner's death and his son inheriting the property for it to be put to "efficient use" again.
    - Spooky23 9y ago
      Worthless property is worthless and the carrying cost is low. If you have the capital, sitting on low value property can make you a lot of money. Also, if you are a real estate investor, you can "launder" your profits to avoid taxes. That's why old shopping plazas will degrade until there is only a kung-fu place and a dollar store. It literally has a value sopping up real profits from thriving holdings with paper losses.
    - panglott 9y ago
      The Georgist argument is that the problem is property taxes aren't based solely on land value, and this creates excessive deadweight loss from taxation. https://en.wikipedia.org/wiki/Georgism https://en.wikipedia.org/wiki/Georgism Under a system of pure land value taxes, an empty lot downtown would be taxed at the same rate as the highrise next to it, and taxed much higher than an empty lot in the outskirts—a huge incentive to put that empty lot to more productive use. The proliferation of parking lots is a regulatory/zoning issue.
  - digi_owl 9y ago
    Why do so many places in London owned by foreigners that never live there? As old Marx put it, a commodity has two values. A use value, and a exchange value. In the case of land, usage would mean building on it, farming it, or some such activity. But even if nothing like that happens, the exchange value remains. Meaning that someone out there is willing to trade you for it.
  - Spooky23 9y ago
    It isn't really. In a discussion about problems with urban property in the US, an HN thread would decry property tax and wax on about land value tax.

DanBC 9y ago

Do you mean this? https://en.wikipedia.org/wiki/Property_tax_in_the_United_States https://en.wikipedia.org/wiki/Property_tax_in_the_United_Sta... I guess one English equivalent is the "Council Tax". https://en.wikipedia.org/wiki/Council_Tax https://en.wikipedia.org/wiki/Council_Tax And there are "business rates" for commercial properties. https://en.wikipedia.org/wiki/Business_rates_in_England https://en.wikipedia.org/wiki/Business_rates_in_England

dogma1138 9y ago

There are council taxes which are payed yearly (usually in monthly installments) depending on the value of the property these taxes average over a 1000 GBP a year for residential properties, (there are different schemes for businesses properties and agricultural land). There is also a registration (stamp) tax any time you want to register a property in your name, these start on properties higher than 125K GBP however you would be very hard pressed to find anything beyond a parking space or a storage lot for that low in the UK. On average when you purchase a property you will pay about 4% of it's value in tax. So saying that there isn't a property tax in the UK is a bit of a stretch.

falsedan 9y ago
A property tax is levied yearly on the value of the land; council tax was once a fair approximation to one but the various freezes have caused it to veer far away from the actual fair market value of the properties. And of course, it's paid by the occupier, not the owner.
- redblacktree 9y ago
  > it's paid by the occupier, not the owner. This is true of property tax in the US as well. Not directly, perhaps, but renters are most definitely paying the property tax for their landlords.
  - to3m 9y ago
    Council tax is paid directly by the tenant, who is liable for it personally, and whose name appears on the demand.
    - dogma1138 9y ago
      Not exactly, most rent contracts require you to register with the council and pay the tax bill but there is nothing that prevents the property owner from paying the bills for you. If you rent via an all inclusive scheme then you are not liable for it personally. As long as someone is paying the tax and no discounts (single occupancy, benefits etc.) are applied on the tax the council doesn't really care who and how many people live on the property.