Stewardship Economy
 
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If it's such a good idea, why aren't we doing it already?

Hasnít it been tried before and failed?

If a charge or tax on land is such a good idea, why hasnít it been done already?  Hasnít it been tried before and failed?

From the time of the earliest written records, in Mesopotamia, public revenue was raised from lands that were designated to support religious and state institutions.  But as palace rule weakened around 2300 BCE the royal and public landholdings passed into private ownership (Michael Hudson 2000:9).  People have a powerful temptation and a long history of capturing the rents from land and natural resources  for their own private benefit.

      The British, unable and unwilling to challenge land ownership at home, understood the advantages of raising state revenue from land rather than from conventional taxes and put this into place in many of their colonies.  Land Value Taxation has been applied in Australia, New Zealand, South Africa and the state of Pennsylvania.  Other countries that have made successful use of relatively low levels of Land Value Taxes include Denmark and the Baltic States.

      In Singapore and Hong Kong  the state does not use Land Value Taxation, but it does retain the freehold of much of the land and derives a great deal of its revenue from leases (The How? Supplement: Chapter 2), providing the economic basis for their vibrant low-tax economies.

      In the UK a range of taxes has been applied to land including the Council Tax,  Non-Domestic (Business) Rates, Development Land Tax  and so on.  None of these has taken the form of a tax on the market rent of land and all have had quite predictable adverse economic impacts  (The How? Supplement: Chapter 2 & Tony Vickers 2007: 69).

      Charges amounting to 100 per cent of the market rent of land are untried, though the auction of licences to use the radio spectrum   provides an example of the application to the environment of a charge equal to 100 per cent of the market rent.

Doesnít this belong to an agricultural age?

Land may be important in an agricultural society, but surely not in an industrial or knowledge-based economy?

Access to land can certainly be a matter of life and death in agricultural economies.   But land values play a central, if often unrecognised, role in the functioning of industrial and knowledge-based economies.  The value an acre of land that is occupied by factories, shops, offices or homes dwarfs that of an acre of agricultural land.

      ĎLocation, location, locationí are said to be the most important factors identified by estate agents as determining the value of a home; and everyone is aware of the enormous differences in price for the same sort of house in different parts of a country.  The same is true for commercial and industrial land.  Land value is largely determined by location and the presence or absence of planning restrictions.

      Land and natural resources are important in all economies.  The practical and ethical issue of who should benefit from them is a key choice, no matter what the level of complexity of the society.

      In a globalised world it is difficult to tax capital, business and high earners, as these are all highly mobile.  Raising revenue from land and the environment is, even at a very pragmatic level, increasingly essential in the 21st century.

Isnít it wacky?

Donít orthodox economists regard Land Value Taxation as Ďwackyí, an object of fun rather than a serious proposition?

Orthodox economists have reasonable and serious criticisms of the impact of Land Value Taxes on the land market and land use, particularly about the erosion of the tax base,  destruction of the land market and the reduction of profitability.  However stewardship deserves serious consideration, as it provides a unifying theory and practice that can inform a wide range of contemporary issues;  and these criticisms are addressed by the mechanism of the new land market. 

      Land Value Taxation is used in several countries around the world, albeit at no more than 20 per cent of market rent.  The UK government is currently interested in using land value gains to finance transport infrastructure projects and the Scottish Executive has debated Land Value Taxation.


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