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Protests at empty building tax

The property industry is making a final attempt to get the government to abandon the tax on empty commercial buildings, claiming it could prevent development and lead to urban wastelands.

The tax, which begins today, will force owners to pay business rates on unoccupied buildings. The threatened "constructive vandalism" would lead to a repeat of the de-roofing epidemic which occurred during the last recession. Whether property owners would get away with it this time is another matter, because of the recent anti-tax-avoidance legislation, which, logically, constructive vandalism should fall foul of. We shall see.

The British Property Federation has issued a statement which, strangely, claims that properties are empty because there is no demand for them at a particular time or place... extra tax burdens will do nothing to change that.

One must hope that nobody will be fooled. Unless the location is sub-marginal there is ALWAYS a price at which a property can be let to a tenant. It might not be as much as the owner is hoping for but that is another matter. And if the legislation works as intended, not only will it raise useful additional revenue, but also property owners will let quickly at a lower rent rather than hold out to get the best the market can offer. As this means that businesses can move into premises that would otherwise be standing empty, it must be a good thing.

It is a pity, however, that the government refuses to enact the most necessary property tax reform of all - to base assessments on the annual values of sites alone and exempt buildings and developments. In that situation there would be no need to legislate specifically on vacant buildings or to look to anti-avoidance legislation as the same tax would be payable regardless of whether there was a building on the site or not. The tax liability could not be avoided by knocking down buildings.
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