Business would benefit from a switch to a simple Land Value Tax - London Business News | Londonlovesbusiness.com

"Prices are inversely related to taxes: the main point of taxing cigarettes is to make them more expensive so people will smoke less. Other taxes are primarily designed to raise revenue such as Income Tax but the same inverse relationship applies; the key figure when deciding whether or not to take a job is the net take-home wage, not the gross."

"According to the Office for National Statistics, over half (£7.1 trillion) of the UK's net wealth (£13.1 trillion) is in "non-produced assets", i.e. land. But none of that is generated from the act of owning land, only from society's demand for its use which is conditioned by the location's access to roads, public transport, public services, workers, homes etc. The Business Rates system encourages business models based on keeping potentially useful sites idle (and therefore untaxed) while local land values rise,"

"Similarly, a business owner thinking to set up shop somewhere will have to consider the Business Rates bill as well as the rent (and the former can be a substantial fraction of the latter). This is why any reduction the UK Government makes to Business Rates will simply raise tenants' rents because landlords always charge as much as the market will tolerate. This makes it difficult for new start-ups and forces closure of businesses operating at the margin."

Taxes increase prices and reduce consumption; for example, cigarette taxes aim to make cigarettes more expensive so people smoke less. Income and other taxes affect decisions through net take-home pay rather than gross wages. Business Rates add to firms' costs and are routinely passed on via higher rents, disadvantaging start-ups and marginal businesses. Over half of UK net wealth is land value, which arises from societal demand and infrastructure rather than ownership. The current Business Rates system incentivizes keeping useful sites idle, contributes to high-street blight, and distorts the geographic distribution of economic activity.

Read at London Business News | Londonlovesbusiness.com