The Liberal Democrats’ Action for Land Taxation and Economic Reform (ALTER) policy has been formulated with a view to its being part of a more sustainable and just resource based economic system. Their justification for Land Value Taxation is that land value is created by the efforts of the community at large and not the land holder. Land values rise because settlements are created and developed. With agriculture, land value is also a reflection of the natural advantages of a locality such as favourable climate or soils, which no land holder can claim to have created. Land Value Taxation regards land value as a public resource and hence the natural fund out of which public expenditure should be drawn.
In his Foreword to The Case for a New People’s Budget Vince Cable states: ‘Land Value Taxation has far-reaching effects on breaking down monopoly land-holdings, on encouraging new enterprises and raising the levels of earnings, on recovering the cost of major and minor public works, on supporting small-scale farming and the cultivation of marginal land, on stabilising house prices and, perhaps most importantly, reducing the disparity between the rich and the poor.
‘These are large claims but they spring from a fundamental view that the wealth produced over the centuries by the efforts of the community is reflected in land values and is therefore a proper target for taxation.’