.

Tax has been defined as the appropriation by State coercion of the citizen's property. Those who escape the tax net through exemptions are not privileged, according to this view. Rather, it is those who bear taxes who are losing their proprietary rights: all taxation is theft.

True reform, to restore justice, would extend not abolish -exemptions. And governments should cut their expenditures accordingly instead of wasting the millions they bully Out of us".

Let us agree, however, that there is some minimum level of necessary government expenditure that requires financing. We must then ask not only which incomes or products deserve relief from tax, but also what alternative source of income would best substitute for existing taxes to finance the minimum level of spending.

In my view, the answer lies in a closer examination of the nature of different forms of property over which individuals claim rights. The most fundamental property right, one that should be accepted by all who reject slavery, is the right to oneself, to be a free man; to own oneself.

A corollary of this premise would appear to be that whatever an individual produces should be his property. The labourer produces wealth, and so earns the right to own that wealth, or the wealth received in fair exchange with other producers, including producers of capital goods.

There is, however, one class of asset which is owned by individuals who have themselves neither produced it nor bought it from anyone else who has produced it.

That asset is land in the broad sense defined by economists to include all of nature's free gifts: soil, space and minerals.

None of this was created by man and so it is impossible to justify individual rights over the gifts that nature once bestowed on all.

Land that was once communal property has passed, through force or fraud, into the hands of individuals who thereafter bequeathed or sold it to others.

When a common thief passes on or sells stolen property, the receivers do not have a legal title to the goods. They are required to return the property to the rightful owners, no matter how innocent or ignorant they mayhave been of the original crime.

Should we not apply the same principle to the greatest theft of all, the theft of common property from the community?

The return to the community of the gifts of nature could be accomplished by requiring that those who use these re~ources should pay the community for the privilege. Those who, for example, wish to use valuable space in central London would pay rents to the state instead of to private landowners.

Rebates could be conceded to landowners for a limited number of years to avoid excessive hardship to those who have been heavily dependent on such incomes, or who have only recentiy bought private property rights in such land for enormous sums.

Landlords who also own buildings or other improvements would rightly keep the income associated with these man-made assets. Separate assessments for unimproved site values and the value of improvements are made routinely, with few major difficulties, in many countries.

Similar principles can apply to the division of incomes from North Sea oil operations: one part is economic rent, and other parts are payments of wages and interest for the labour and man-made capital employed.

When taxes are imposed on labour, capital and production, the supply of each is discouraged. The supply of each is elastic.

There is, however, a natural floor to the after4ax level of wages and interest, and as taxes are imposed the pre-tax level of wages and interest rates rise.

The supply of land and natural resources being fixed, however, rents can and do fall.

In this way, the ultimate incidence of all taxation falls on land rents.

As a result, official statistics that purport to show the share of land rents in national income reveal a quite low share in many advanced, highly taxed economies (about 10% in the UK).

If the tax system were reformed by removing taxes from labour, capital and commodities, however, the share of rents in national income would automatically rise. For pre-tax wages and interest would fall to give the same or higher post-tax incomes for workers and capitalists.

The owners of land and natural resources could then be asked to hand over the rising rents to the state. The payment would not be a "tax", hut a payment for the privilege of using assets that are naturally common property, whose value is created not by individuals but by the community. It would provide the state with a narural source of income which, unlike taxes on labour and capital, is paid in return for benefits directly received.

Unlike taxes on labour and capital, the payment of rents to the state is not an "invasion of proprietary rights". It is the restoration of proprietary rights to the Community.

Accompanied by the reduction or abolition of income taxes and VAT it would also be a restoration of true freedom from State coercion and theft.