The Piketty Issue
The IU View July 2014
In the UK a Land Value Tax Bill had its first reading in the House of Lords on 11 June. This stage is a formality that signals the start of the Bill’s journey through the Lords. The Second reading – the general debate on all aspects of the Bill – is yet to be scheduled. Here I a Summary of the Land Value Tax Bill [HL] 2014-15:
A Bill to require the Secre- tary of State to commission a programme of research into the merits of replacing the council tax and non-domestic rates in England with an annual levy on the unimproved value of all land, including transitional arrangements; to report to Parliament within 12 months of completion of the research; and for connected purposes.
Download the IU View July 2014
For updates on status of the bill: http://services.parliament.uk/bills/2014-15/landvaluetax.html
From AUSTRALIA Karl Fitzgerald, Project Director, Earthsharing Australia informs us that the latest report by the Australian Bureau of States on the System of Environmental Economic Accounting was recently released and it is of great interest…. land of course is king in valuation terms at 80% of environ- mental assets. The productive value of the economy was up 67% but waste more than doubled that at 147%. Over a decade iron ore up $359bn, black coal up 936% but brown coal down 65% (good news regarding carbon intensity). Their mineral and energy resource rents were similar to my findings.
However, we are both in pursuit of the value of water licenses… I have been in regular contact with the report leader Dr Michael Vardon re the Total Resource Rents of Oz report and hope to interview him soon on the Renegade Economists to learn more about valuing the earth so the public can understand how much there is to share.
IU Vice President Jane McNab in Australia reports: This (link below) interview with Paul Abbey, the head of tax at Price Waterhouse Coopers in Melbourne, aired on the Business show on ABC TV. (ABC is a government run TV station.)
http://www.abc.net.au/news/2 014-04-28/in-the-studio-with- paul-abbey/5416880
“I hadn’t before realised that Paul Abbey was so supportive of the Henry Review and land tax reform,” says Jane. “It is good that he cites the ACT case, but it actually doesn’t come into play until June this year.”
Stuart Dunstan, Secretary of the Georgist Education Association Inc., of Western Australia writing to John
C. Massam of Perth:
Thanks for being vigilant and observing this very important letter from David Airey, President of the Real Estate Institute of Western Aus- tralia. It’s one of the most significant articles seen in the West Australian for the past seven years that points in the same direction as Georgism. What GEA Members need to realise is the opportunity it gives us to play our own tune, and I hope that we will stop and consider that. Seeing the real estate association’s president agree with a land tax gives confidence that we are not out in a wilderness on our own and that the pillars of society are looking for changes that all should embrace.
Prosper Australia posted a commentary on the article with these quotes from Airey:
REIWA calls on the Government to have a serious look at broadening the land tax base to all property owners with a view to abolishing stamp duty altogether.
The benefit to property owners is the simplicity of a modest, annual land tax as opposed to “bill shock”, when hit with a huge stamp duty tax in the tens of thousands when they transact.
Emer O’Siochru IU Vice President for IRELAND received an invitation from The Centre for Economic Empowerment (CEE) to the launch of a research report on a Land Value Tax (LVT).
The invitation states: LVT would be an alternative to Northern Ireland’s existing rating system. It would aim to prevent land speculation, ensure a more stable housing market, and support economic growth. Report authors Andy Wightman and Ronan Lyons will present their research findings and outline proposals for implementing LVT in Northern Ireland to be followed by a roundtable discussion.
Professor Dirk Löhr, IU Vice President for Germany, sent us two papers about the Henry George Theorem written by a group of orthodox German researchers at the Leibniz Institute for Economic Research at the University of Munich.
The moral principles and factual functional details of Henry George’s proposal for a Single Tax on land values is really wonderful in theory, but there is one snag that has stopped it being introduced in practice. That is that most people (particularly the landowners) see it as yet another damn form of taxation!. No politician can possibly expect to do well, if he is asking the general public for what seems like more tax money. As Georgists, we know that it is not more money but a transfer of national income from the other ways our tax payments are currently being collected, to taxation being applied only on the valuable sites of land.
The process of making such a transfer of national income to the land values is necessarily long, difficult and so complicated that an elected government with a term of only 4 years or so would not have sufficient time for it to be fully developed, nor for the certainty of success in the years to follow, when they may no longer have control of national policy. So we have to find a better way of getting this kind of bill accepted by all political parties and once it has begun, to be applied so that it would not later be opposed. An example of such a bill might be the extra-political response to a war breaking out between its home country and some other country, where all members of parliament would agree on what to do in order to develop good fighting capability. But for Georgist policy to be adopted is not like fighting a war, so firstly what we need is an agreement between political parties for certain policies to be adopted by all sides as being outside the specific policies if these parties, buy generally good for the whole of our democratic institution regardless of which party supports them.
One such idea for the introduction of such a policy for less directly getting the Georgist claim across is to stop calling LVT a tax. Instead, it would be by getting the landowners to accept the sale of their property to the government, . when the time for it is felt by them, or when the ownership passes by inheritance to a new owner (who presumably is faced with paying an inheritance tax too) ). This would not offend the landowners because the buildings and other development would be sold as before, but without the cost of the land being passed on to the new property occupier and user. Property here would not include the land, only the developments on it.The property would be much less costly when its ownership is being transferred. Instead of the land being owned it would be occupied and a lease-fee paid to the government for its use. This annual lease fee would be about a fiftieth of the price of the sites, which would then replace the so called tax that is pivotal to the previous Georgist argument. Communal land ownership councils work on a similar basis, but their introduction is too slow and ineffective over most of the useful sites being owned today. I have added my poem about a more stealthy Georgist cat on another of the comments of this website.