Land is valuable because of the services provided to it by the community. There is no rent on a mountain top or in a desert – because there are no people. But where there is a big population of customers and workers, with roads, railways, an airport etc, the rent is huge. The community created that value so it belongs to them. For individuals to pocket it is theft.
On the other hand, a person’s wages, profits from business or income from capital are his/her own. The community has no right to pillage them for taxes. So the proposal is to shift taxation from earnings to land rent. Land value taxations is an idea as old as Moses. He wrote in Leviticus 25, “You shall not have freehold in land. The land is mine, for you are strangers and sojourners with me.” The only way anyone could hold land in ancient Israel was by leasing it from the state for 50 years, and that lease money was the government’s income.
Every 50 years a fellow climbed onto the gate of the Temple in Jerusalem and blew a trumpet. At that moment all leases ended and the land was put on offer again.
The success of the port of Hong Kong was based on a similar system. Land could only be held on lease and that was the government’s money. Industry, trade and endeavour of any kind were not taxed. So the economy was, and still is, booming.
LVGT is the easiest of all taxes to collect. They did it once in New York, to find out who owned the land. Landlords had to come in and pay the tax, marking off on the map the land they owned. After two weeks, if tax had not been paid on any piece of land, it would belong to the first person who came in and paid for it the next day. Even billionaires came in, eager to pay. Not one square metre of New York changed hands. You just can’t hide a piece of land. This is a tax you cannot avoid by cheating.
This would have been an easy way to tame the commercial farmers in Zimbabwe without destroyed them. If they had to pay the rent to the community, then those huge farms would have quickly broken up. The farmer would only keep what he could definitely cultivate and make a profit on. Millions of hectares would have been made available to small farmers. I understand the MDC 2008 election manifesto embraced the idea of LVT – what a sensible move.
Business would rapidly become more profitable as all other taxes would be cancelled. Zimbabwe could become more than just the region’s bread
-basket, it would be the most competitive country in Africa. – Dr Richard Lamerton, UK.
Post published in: Letters to the Editor