Housing bubble

Letter published in the Sunday Herald, 12 April 2009

Sir,

Isn't it odd that your astute commentator Iain MacWhirter and savvy LibDem front bencher Vince Cable both spot the problem but offer no answer when the housing bubble burst? [review SH 12.4.09] Especially in this centenary year of the Lloyd George People's Budget there might just be some clues.

First in 1909 the land owning Tory dominated House of Lords lopped off the land tax planned by the Liberal Government to raise revenue towards Lloyd George's sickness benefits and pensions plan.

Second, this led the Liberals and Labour to support site value rating, a form of land value tax for several decades. This tax aims to take the sting out of land prices driven high by house building in prime locations. Every 18 years they crash and end the trade cycle.

Third, in the 1990s I have heard Charles Kennedy recognise site value rating as an option. When did the Clegg/Cable LibDems drop that option that prevents land holders making windfall profits in the housing market from the demand for scarce site in desirable locations, locations that are formed by the fixed asset - land, the very one they can't remove?

Iain and Vince both recognise the current housing bubble is the root cause of the global trade cycle and accompanying bank crash. How about revisiting Land Value Tax LVT, not to replace the local Income Tax LIT which both SNP and LibDems want to introduce, but as a new source of revenue that can steady housing markets in future?

Sparing families the grief of negative equity and its sad retinue could be replicated in each country. And finally the Scottish Parliament did not rule out any such option in its recent debate on financing local government.

Yours

Rob Gibson SNP MSP Highlands and Islands,
4 Grant St., Wick, Caithness KW1 5 AY