Business rates, public toilets and land tax

We should be taking a much deeper, longer-term look at reforming the whole of land taxes in this country. This is perhaps not the moment—but if not now, when?

First, I want to talk about taxing online businesses. They were already outdoing physical businesses before the pandemic, but now, our rapid transition to a digital life over the past 12 months has concentrated commerce into a very small number of online businesses while small high street businesses are really struggling—much more than they did before. It is obvious that we need some sort of online sales tax so that online businesses do not have unfair tax advantages relative to physical businesses. The revenue should go to the local authority of the delivery address. It is a real pity that the Bill does not include such a measure, because this is an opportunity not to moan but to encourage local businesses, which is what we should be doing.

It is good that the Government are finally delivering on their promise to scrap business rates for public toilets. Public toilets are important for everyone, but they are especially important for people who might need to use the bathroom more due to age, illness, disability and a whole host of other reasons. Should we be doing more to support their provision? Rather than just scrapping business rates, we could employ a negative rate so that public toilets could earn a rebate based on their rateable value. Businesses and premises that allow the public to use their toilet for free—that is, without needing to buy anything—would therefore benefit. The Explanatory Notes give the example of a toilet in a library premises not being eligible for the zero rate. This is a missed opportunity to encourage more premises to make their toilets readily available to the public. Of course, if, like the Victorians, we were prepared to build new public toilets—or even open the Victorian ones—we would not need to do this.

Finally, I shall talk more broadly about the old system of land taxation. It is a long-standing and fundamental policy for the Green Party that all land should be subject to a land value tax, which would share the unearned value of land use among the community. A policy of taxing land value would act as an incentive to encourage good stewardship and to reduce corporate land ownership—and, of course, the practice of land banking. It would encourage the best use of all land, compatible with the agreed permitted use, encouraging urban land to be used to its full extent and discouraging land ownership for investment purposes only.

A policy of taxing land value would bring many benefits to a large majority of the population, whether urban or rural, including owner-occupiers in small or medium plots and those who do not own land. Taxing land value thus contributes to the creation of a decentralised and sustainable society. Eliminating speculation in land and stabilising prices should make land more available at cheaper prices, enabling more workers’ co-operatives, small-scale enterprises and other community ventures to flourish.

The key difference of a land value tax compared to business rates and council tax is that the tax is levied on the unimproved value of the land itself, not the rentable value of the buildings placed on that land. The level at which the tax would be levied would be based on the full value of the current permitted use of the land, so permitted use would mean, for example, that the taxable value of land deemed by the community to have special amenity or habitat value would inhibit use for a possible greater financial return. When it is considered desirable to change the use through the land use planning framework, this new permitted use would then form the basis of the assessment, so communities would be able to keep what they see as valuable land, which might be open space or habitat for animals, without incurring huge costs.

I would love to hear the Minister’s views on land value tax and for him to take the issue away to explore further with officials. We should be taking a much deeper, longer-term look at reforming the whole of land taxes in this country. This is perhaps not the moment—but if not now, when?

Read the whole debate on Hansard