land tax is an indirect tax levied on the value of land and often forms part of wider property taxation. In Roman times the provinces relied upon land taxes for a considerable part of their revenue and their importance continued into medieval times. Local government relied upon land taxes (in the form of rates) for much of their revenue from the mid-17th cent. until the 1980s. Throughout the whole of the 18th cent. the land tax was the main source of government revenue. Introduced in 1693 to pay for the French wars of William III's reign, it sufficed until 1799 when the cost of the Revolutionary War forced Pitt to the even more drastic expedient of income tax. It was an object of Walpole's government in particular to avoid involvement in war so that the land tax could be kept down and the gentry content.

Land tax may be on the capital value of land or on an imputed rental value. Its physical fixity and productive potential, together with the difficulties of avoidance, means land has been seen to form a good tax base. Philosophical arguments have also been advanced since feudal times that landholding is a privilege conferred by the state and that holders are liable to tax in perpetuity. Economic thinkers such as John Locke and Adam Smith have favoured shifting much of the burden of taxation to land for these reasons. There are practical difficulties however in assessing the value of land to be taxed and in ensuring that there are no disincentive impacts on its productive use. Land taxes are in rem and unlinked to the circumstances of owners, which can lead to undesirable distributional consequences.

Kenneth Button