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BACKGROUND

The idea of a land tax is nothing new. History records many instances where different forms of land tax have been successfully used to assist with land reform and to bring about an equitable distribution of land and opportunity. This has been the most efficient way of leveling the playing fields.

PROPOSAL

It is proposed that all indirect taxes and taxes on wages and production, which inflate the cost of production and the price of goods, should be replaced by a land tax.

This land tax should apply to all land according to its natural qualities and its locational advantages as expressed in land values operating in a free market under the new conditions.

The total amount of revenue collected from a land tax should be, as near as possible, equal to the amount lost by removing the other taxes. The land tax should not be seen as an additional tax.

JUSTIFICATION AND BENEFITS

There are many reasons why this change in the tax structure is essential to the implementation of the Reconstruction and Development Programme (RDP), and the levelling of the playing fields. Some of the most important are:

• A land tax is the most equitable form of taxation as it complies most closely with Adam Smith's canons of taxation, one of which is, that "The subjects of every slate ought to contribute towards the support of government as nearly as possible in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state." A land lax collects most from those who enjoy the greatest benefits from society and removes all tax burden from those who receive the least.
  
• It provides the most effective and just means of levelling the playing fields between the privileged and the unprivileged.
  
• This proposed change in taxation can assist with the Government's Reconstruction and Development Programme at the least cost to society.
  
• A land tax will be the easiest and least expensive tax to collect and the most difficult to evade. It will reduce the manpower necessary for revenue collection and the cost to business of maintaining the currently unproductive mandatory records. High level skills will be redirected towards improved production rather than tax avoidance.
  
• Since land cannot be hidden and its value is established in an open market, a land tax is therefore the most transparent tax system, avoiding both favouritism and the incentive towards corruption.
  
• Unlike other taxes, a land tax encourages best use of land in accordance with the consent of the community. It encourages increased production at lowest cost and provides a large incentive to full employment and full land utilization. This makes it the most sustainable tax as it will constantly increase the tax base.
  
• The removal of all taxes from the least productive land will stem if not reverse the tide of migration from rural areas to the cities. It will encourage the growth of rural communities and villages, providing a better quality of life.
  
• The change to a land tax must be accompanied by security of tenure which is necessary to promote capital development and economic growth. Only by producing wealth will it be possible to pay the land tax.
  
• The price of goods will be reduced when existing taxes on production and at the point of sale are abolished. This will improve domestic markets, reduce inflation and promote foreign trade.
  

GRAPHIC DEMONSTRATION

Five slides showing;

1. Production curve and rent
2. Natural and economic rent
3. Land withheld from use
4. A destructive taxation scenario
5. Revenue from rent

SUMMARY

The very act of removing all taxation from production on marginal land and from labour will encourage increased production and the employment of additional labour. Much of the land presently beyond the current margin will be made economically productive and support an increasing number of families. This will assist with the implementation of the Government's RDP policies.

The collection of state revenue based on a percentage of the market value of land or a larger percentage of the annual rental value will change people's attitude towards land use and ownership. It is the most efficient way of bringing about a redistribution of land and of opportunity. In addition it will play a major pan in reducing the present wage gap.

The proposed change in taxation would pave the way for rapid and sustainable economic growth with full employment, reduce inflation and minimize the need for foreign capital.

"The earth is the Lord's and the fullness thereof "The land shall not be sold for ever."

SUPPORT MATERIAL

Liviticus25 v.10

"And ye shall hallow the fiftieth year, and proclaim liberty throughout all the land unto all the inhabitants thereof: it shall be a jubilee unto you; and ye shall return every man unto his possessions, and ye shall return every man unto his family." v. 14. "... ye shall not oppress one another."

Adam Smith: "The Wealth of Nations", (1776) pages 306 -318.

Four maxims with regards to taxation; (Brief summary)

• 1. The subjects of every nation ought to contribute towards the support of the government, as nearly as possible, in proportion to their respective abilities; that is, in proportion to the revenue which they respectively enjoy under the protection of the state.
  
• 2. The tax which each individual is bound to pay ought to be certain, and not arbitrary.
  
• 3. Every tax ought to be levied at the time, and in the manner, in which it is most likely to be convenient for the contributor to pay.
  
• 4. Every tax ought to be contrived as both to take out and to keep out of the pockets of the people as little as possible over and above what it brings into the public treasury of the state.
  

Many examples are given by Adam Smith of land taxes which varied from ten to fifty percent of the annual rent of land. Such land taxes were common in the eighteenth century and in earlier times.

Henry George: "Progress and Poverty", (1879) pages 421, 263 and 433.

"The tax upon land values is, therefore, the most just and equal of all taxes. It falls only upon those who receive from society a peculiar and valuable benefit, and upon them in proportion to the benefit they receive. It is the taking by the community, for the use of the community, of that value which is the creation of the community. It is the application of the common property to common use. When all rent is taken by taxation for the needs of the community, then will the equality ordained by nature be attained. No citizen will have an advantage over any other citizen save as is given by his industry, skill, and intelligence; and each will obtain what he fairly earns. Then, but not till then, will labor get its full reward, and capital its natural return.

"A consideration of the manner in which the speculative advance in land values cuts down the earnings of labor and capital and checks production leads, I think, irresistibly to the conclusion that this is the main cause of those periodical industrial depressions to which every civilized country, and all civilized countries together, seem increasingly liable."

This is the secret which would transform the little village into the great city.

Godfrey Dunkley; "That All May Live, (1990) pages 29 -42. (Description of graphs)