Mark Wadsworth

This is a spare 'blog in case my main 'blog at markwadsworth.blogspot.com isn't working

The Daily Mail outlines the advantages of Land Value Tax

From The Daily Mail (our new weekend paper of choice as it has the best weekly TV guide):

Take a short trip on the metro to [Athens’] cooler northern suburbs, and you will find an enclave of staggering opulence. Here, in the suburb of Kifissia, amid clean, tree-lined streets full of designer boutiques and car showrooms selling luxury marques such as Porsche and Ferrari, live some of the richest men and women in the world…

One of the reasons [the inhabitants] are so rich is that rather than paying millions in tax to the Greek state, as they rightfully should, many of these residents are living entirely tax-free. Along street after street of opulent mansions and villas, surrounded by high walls and with their own pools, most of the millionaires living here are, officially, virtually paupers.

How so? Simple: they are allowed to state their own earnings for tax purposes, figures which are rarely challenged. (1) And rich Greeks take full advantage. Astonishingly, only 5,000 people in a country of 12 million admit to earning more than £90,000 a year — a salary that would not be enough to buy a garden shed in Kifissia… (2)

With Greek President George Papandreou calling for a crackdown on these tax dodgers — who are believed to cost the economy as much as £40bn a year (3) — he is now resorting to bizarre means to identify the cheats. After issuing warnings last year, government officials say he is set to deploy helicopter snoopers, along with scrutiny of Google Earth satellite pictures, to show who has a swimming pool in the northern suburbs — an indicator, officials say, of the owner’s wealth.

Officially, just over 300 Kifissia residents admitted to having a pool. The true figure is believed to be 20,000. There is even a boom in sales of tarpaulins to cover pools and make them invisible to the aerial tax inspectors. (4) ‘The most popular and effective measure used by owners is to camouflage their pool with a khaki military mesh to make it look like natural undergrowth,’ says Vasilis Logothetis, director of a major swimming pool construction company. ‘That way, neither helicopters nor Google Earth can spot them.’(5)

But faced with the threat of a crackdown, money is now pouring out of the country into overseas tax havens such as Liechtenstein, the Bahamas and Cyprus. (6)

1) Yes, getting people to declare their incomes honestly is difficult, and even if they did, a tax on incomes still has huge dead weight costs…

2) … but working out the value of land that people own is relatively simple.

3) The DM confuse ‘cost to the economy’ with ‘the government collecting less in tax than you’d expect’ and use the “s” word, but hey.

4) They haven’t learned the lessons of the Window Tax. It’s entirely unnecessary to know exactly what is built on any plot of land to work out the location value of the land to within a tolerable margin of error (certainly by Greek standards), it doesn’t matter whether an individual house has a swimming pool or not (and if you wish to make swimming pool owners pay more in tax, then it’s easier to slap a tax on mains water usage).

5) Most pictures on Google Earth are several years old, it’s too late to try and camouflage your swimming pool now.

6) So what? A lot of that money will come flowing back to pay the LVT bills, won’t it? And if not, the Greek can recover the tax arrears by selling off the plots of non-payers or renting them out. Which, coincidentally is more or less the opposite of their plan to sell off even more state-owned land.

But no doubt, all these millionaires will manage to track down a Poor Widow or two to use as a human shield: surely it’s far more important to allow them to live out their days in peace than try to plug the budget deficit or anything?

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