(Title Image: Wales Online)
A few months ago, Finance Secretary, Mark Drakeford (Lab, Cardiff West), announced that he’d chosen a vacant land tax from a shortlist of options for new taxes in Wales (following the devolution of tax-varying powers).
Yesterday, he provided AMs with an update as work on the constitutional necessities and evidence base was already underway. A formal request for the necessary powers will be made in the autumn and a law to establish the tax could be tabled in early 2019.
The goal will be to discourage landowners from “banking” vacant land to profit from price speculation, which will hopefully bring forward developments more quickly. In 2015, it was estimated 400 stalled sites across Wales had prevented the construction of 7,600 homes.
Similar taxes have been introduced in the Republic of Ireland and some communities in the United States.
Shadow Finance Minister, Nick Ramsay AM (Con, Monmouth), was cautious but not obstructive, saying “there were sound reasons” for the tax with the amount of banked land “staggering”. He was a bit sceptical on whether a tax would solve the problems by itself and would hope lessons are learned from Ireland – which has been criticised by estate agents there and also led to fears of a return to “boom and bust” property development.
Simon Thomas AM (Plaid, Mid & West Wales) said his party wouldn’t oppose the tax, but wanted to be sure all factors leading to land banking were being properly taken into account. He hoped the advisory group established to look into it wasn’t going to be “behind closed doors” and will be available to give evidence to Senedd committees and was curious as to how a tax would fit in with mooted plans by UK Labour for a Sovereign Land Trust (which hasn’t been ruled out by the Welsh Government).
Neil Hamilton AM (UKIP, Mid & West Wales) believed a vacant land tax was a good way to “test the (tax devolution) system”, but it had to be sensitive to the economy – such as coping with rises and falls in property values. He was, nevertheless, concerned that the legislation will be highly complex and focus on a very small number of incidences of land banking.
Mike Hedges AM (Lab, Swansea East) believes the tax is needed to change behaviour (by preventing people holding on to land to see the value rise). He also, somewhat bizarrely, used a strawman by saying the tax shouldn’t be seen as “a tax on front gardens” (which he claimed the opposition would portray it as) but would only apply to large tracts of land with existing planning permission.
Shadow Housing Minister, David Melding AM (Con, South Wales Central), wasn’t convinced the tax would be a productive way to control land supply. He echoed Neil Hamilton’s comments about needing a system that’s flexible enough to take into account property market conditions so people aren’t penalised during a downturn – to which the Finance Secretary offered assurances that wouldn’t be the case.
Finally, Vikki Howells AM (Lab, Cynon Valley) said there were numerous examples in her constituency of disused land lying at the heart of a community kept in appalling conditions, which can often be hell for those living next to them. She wanted derelict buildings included as “vacant land” under the tax – the Finance Secretary saying in reply that regeneration and tackling dereliction was as important as addressing landbanking.