Since 2015 I’ve been developing a model of Annual Ground Rent called AGFRR (Annual Ground, Floor, Roof Rent). It’s simple and has the potential to replace all existing UK, Scottish and local taxation, provide a Universal Citizens’ Income of around £200 per week and give all of the people of Scotland a financial stake in our nation. It would substantially increase public expenditure for reconstruction and reduce the burden of taxation on almost all personal and business taxpayers.
The simplicity lies in the arithmetic, which requires no fancy actuarial calculations or guesstimates of income or corporation tax receipts or consumption taxes such as VAT. Using AGFRR, government calculates its budget at the start of a year then it divides the budget amount by the square meterage of the country.
I address ability to pay and there is then an adjustment for a rate per square metre according to four land types.
Example of AGFRR for the budget of an independent Scotland
- Public Expenditure by Scottish and local government and agencies per GERs 2018/19 – £43,198,000,000
- Add ten per cent to increase public services and infrastructure – 4,319,800,000
- Add estimated share of reserved UK public expenditure per GERs 2018/19 – 32,140,000,000
- Add cost of Universal Citizens’ Income of £10,000 for every Scottish resident including children – 55,000,000,000
- Total public expenditure by Scottish and local government and agencies – £134,657,800,000
I’ve used four land types to illustrate, but you could have as many variations as parliament decides. I show the AGFRR take as a percentage of the total.
|Land types||% of Scotland’s land mass||area of Scotland’s land mass in m2||rate per m2 in £||share of AGFRR||£|
|Urban and buildings||8.04% X 2: 16.08%||13,640,000,000||9.74||98.67%||132,853,600,000|
Note: as most properties have more than one storey, the urban and buildings land type is doubled to show the relevant area charged.
Illustration of AGFRR on certain land types with no reliefs or exemptions
|Small flat in 3 storey tenement & share of common areas||£930|
|Single fronted shop in 4 storey tenement & share of common areas||£686|
|3 bedroom semi detached villa||£4,285|
|Secondary school with two sports pitches||£430,000|
|Premier football stadium of pitch, four stands with covered training pitch and car-parking||£684,255|
|Bowling club with two greens and clubhouse||£49,415|
|400 acre arable farm with farmhouse and agricultural buildings||£84,893|
|8 storey city office/hotel block||£344,000|
|100 acre rough grazing farm with farmhouse and agricultural buildings||£8,000|
|45,000 acre estate mostly rough grazing with some woodland, castle and outbuildings||£8,468,000|
All public and private owners of land will be liable to pay AGFRR. The source of all these untapped funds is land and property unused or not stewarded for generations. Parliament would decide which reliefs (if any) should be given for educational, social, sporting or charitable facilities.
AGFRR has particular relevance now; while government steels itself to wonder how the UK will pay for public spending, AGFRR provides the source of the cash without borrowing.
Land is constant. It can’t be taken off shore. The Land Register of Scotland and General Register of Sasines ensure AGFRR can’t be avoided. A property owner can calculate and Revenue Scotland can collect with ease. Miscalculation by a land owner is regulated by everyone’s return being public and algorithmic spot checks. Failure to pay over three years empowers the Revenue Scotland to repossess the land.
Landlords are responsible to pay AGFRR to Revenue Scotland but can reclaim it from their urban tenants or half from their agricultural tenants.
Almost all the key elements to introduce AGFRR are in place: Revenue Scotland; the Land Register of Scotland with its cadastral plan and the General Register of Sasines. All that’s missing is an AGFRR website so owners can go online to calculate their liability, make their return and pay AGFRR over ten months. There is no new technology involved.
As AGFRR can provide the funds for an annual Universal Citizens’ Income of around £10,000 for all men, women and children no one is left behind, and to cement that inclusiveness up to ten per cent of everyone’s UCI could be invested in the Scottish Investment Bank so that we all have a financial stake in our economy, while entrepreneurs have at least £5.5 billion of Scottish money each year to borrow.
AGFRR can be introduced now under section 80l of the Scotland Act 1998 without HMRC’s consent, but its real benefit lies with independence.
Look at the effect of AGFRR on a person on average annual earnings of £26,500 living alone in a 3 bedroomed villa. The first column (Devolution without AGFRR) illustrates his income and outgoings under the existing UK and Scottish taxation systems. The middle column (Devolution with AGFRR) illustrates his financial position if AGFRR is introduced under Devolution. The third column “Independence with AGFRR) illustrates his financial position if AGFRR is introduced in an independent Scotland to replace all existing UK and Scottish taxes.
|Income or (tax deduction)||Devolution without AGFRR||Devolution with AGFRR||Independence with AGFRR|
|ADD: Universal Citizens Income||£0||£10,000||£10,000|
|TOTAL INCOME BEFORE ALL TAX AND/OR AGFRR HAS BEEN CHARGED||£26,500||£36,500||£36,500|
|LESS: (Income tax and National Insurance)||(£4,000)||(£2,144)||£0|
|LESS:(Vat and other consumer taxes)||(£4,900)||(£4,900)||£0|
|LESS:(Council Tax and Water Rates)||(2,400)||£0||£0|
|LESS: (AGFRR on 3 bedroomed semi detached villa)||£0||(£3,262)||(£4,285)|
|NET INCOME AFTER ALL TAX AND/OR AGFRR HAVE BEEN PAID||£15,200||£26,194||£32,215|
Britain is broken, let’s escape Westminster’s old ways, redesign our tax system and we could use AGFRR to boost the nation’s prosperity.
Further reading: https://annualgroundrent.scot