Today the United Nations, in defiance of powerful vested interests, voted unanimously to return all land, worldwide, back into public ownership.

The One Land Tax, which is one of the UN’s 2020 Vision Development Goals, promises to end the cycle of boom and bust which has afflicted developing nations for 300 years.

The agreement provides a framework through which UN member states can safely phase out all existing forms of taxation and replace them with a single land tax.

“This decision provides a radically different solution to an unsolved problem” commented UN Secretary-General Ban Ki-moon.

“Complex tax regimes have left citizens bewildered. The One Land Tax will simplify everything. You will no longer be asked to pay tax on monies earned, on food, drinks, medicines, on homes, on savings & investments, fuel, travel and road use, on inheritance, or on unemployment benefit."

There are undeniably advantages to the proposed One Land Tax. Firstly, it will be easy to calculate and collect, but much harder to evade.

Secondly, the amount charged will be transparent and easily understood, since the amount paid will be proportionate to the tangible benefits of living in the community in which an individual’s land is situated.

Thirdly, the tax will leave both workers and businesses with more disposable income and less dependent on loans.

NGOs have welcomed the One Land Tax for its potential to devolve power and to revive local participation in democratic decision making. One immediate benefit will be that communities will be able to invest in their own priorities without first going cap in hand to central government.

The One Land Tax is to be collected in its entirety by local councils. A proportion, no more than 50% of monies collected, will be forwarded to central government. With increased responsibility devolved to local and regional councils, central government will be free to refocus on issues of more long-term strategic concern including improvements in infrastructure, defence, food and energy supply, and global security ...

ablemesh.co.uk 01 January 2010

By Dr Adrian Wrigley, Neale Upstone and Robin Smith (10th Sept 2008) – SystemicfiscalReform.Org

Systemic Fiscal Reform is a radical programme for the reform of taxation, subsidies and welfare. It is designed to stabilize economies, improve quality of life, and facilitates the transition to full environmental sustainability.

The reforms mainly comprise the abolition of cumbersome and wasteful tax, welfare and subsidy systems, together with abolishing the bureaucracies which implement them.

In their place, a simple integrated tax and welfare system is introduced. This includes retaining a number of existing taxes which have been found to operate effectively where they have been tried.

The wasteful burden of personal and corporate tax returns is generally eliminated.

Key Reforms

No Income or Corporation Taxes – Replaced by a Land Value Tax

Income Tax and Corporation Tax are to be abolished (along with all payroll taxes, National Insurance payments and Gains taxes).

In their place a Land Value Tax is levied on landowners, equal to the value of their land, but excluding any buildings, crops or other improvements.

The land values are calculated using a standard procedure applied by local assessors. Landowners generally pay the annual fee in regular monthly instalments to their local government.

No Value Added or Sales Taxes – Replaced by a Carbon Tax

VAT and sales taxes are to be abolished. In their place, a uniform Carbon Tax is levied on all extraction and importation of fossil fuels.

This Carbon Tax is in proportion to the pollution and climate change potential of the fuel when used in the normal way.

No Estate (Inheritance), Gift, Transfer or Stamp Taxes

Estate taxes such as Inheritance Tax and Accession Taxes are to be abolished. All Stamp Duties are to be abolished, including those on share and real-estate transfers.

No means-tested welfare benefits – Replaced by a Citizens’ Income

Welfare benefits based on poverty and joblessness tests are to be abolished. Any welfare payments based on disability are retained.

Universal Welfare-a Citizens’ Income

All resident citizens and lawful residents are entitled to claim a universal welfare payment called the Citizens’ Income. Such payment is made monthly by the local government, and may be directly used by home owners and their families to offset or cancel out their Land Value Tax obligations.

Citizens’ Incomes for those in prison and state-funded care are retained by the state to help pay the costs incurred. Those in state-funded education will have an amount deducted from their Citizens’ Incomes to help pay for the education costs.

Subsidies abolished

Many tax-based subsidies cease to exist with the abolition of Sales, Value, Income and Corporation taxes. For example, tax exemptions on aviation, fuel, public transport, education and food simply disappear.

Business subsidies such as investment relief, tax rebates, pension relief also disappear.

Explicit subsidies including those on energy and carbon emissions trading schemes should be abolished.

Banking subsidies are withdrawn by removing banks’ rights to create new money in the economy (seignorage) in exchange for increases in debt.

Effects of Systemic Fiscal Reform

General economic effects

Widespread effects are certain, because Systemic Fiscal Reform addresses core economic issues, such as the costs and benefits of business activity, land ownership and employment.

* Enterprise is promoted by removing the tax and administrative barriers to employment and business activity. We get free trade within nations.

* Bureaucratic activity such as tax accounting, planning and advice are eliminated. Workers in these sectors move to other work, entrepreneurship, early retirement or reduced hours.

* The ‘black’ and criminal economies no longer gain an unfair tax advantage.

* High value-add products such as software, music recordings or consultancy fall in cost as their tax burden falls.

* Fuel efficiency is promoted by raising the costs of fuel and goods particularly in energy-intensive industries.

* Labour intensive goods such as restaurant and other services, recycling, and education become less expensive.

* Economic output grows rapidly where real value is delivered. Waste is reduced.

Effects on housing, homes and land

The Land Value Tax has far reaching and revolutionary effects: property speculation ends; new and second hand houses become a comparable market to second hand cars reflecting their size, efficiency, condition and quality; urban land values fall, encouraging regeneration of poor and derelict land and housing; property price inflation becomes similar to that of other goods; housing becomes and remains affordable, contributing to a drastic shift in social mobility.

Effect on poverty

The universal welfare payment will virtually eliminate poverty. All in society benefit from the “social dividend” created by a thriving society and effective government.

The poverty trap will be a thing of the past, with financial barriers to employment removed. Elderly home owners with insufficient income to pay their Land Value Tax will be able to “roll up” payments secured on their house value, while others will choose to move house.

Universal Welfare is as significant a step forward for society as universal healthcare or universal education has been in most developed nations.

Effect on oil prices

By imposing a rising Carbon Tax on imports and production of oil, coal and natural gas, demand will be progressively reduced, improving the balance of payments (trade deficit) considerably.

Suppliers will be forced to accept lower prices or reduce output (or both).

If this policy is implemented by the major energy consuming nations, a substantial fall in international fuel prices will occur.

A Carbon Tax is particularly attractive to nations such as the US or the UK with rising dependence on fuel imports.

Effect on politics

At present, government spending on local amenities brings direct windfall benefits to owners of nearby homes and land.

The spending is mainly taken from workers’ taxes. This misalignment of taxpayer and beneficiary is at the heart of many political conflicts and failures.

Systemic Fiscal Reform ensures the beneficiary of local spending (i.e. landowner) is the taxpayer, eliminating this fundamental conflict.

Any excess benefit over spending is returned through the Citizen’s Income.

Conclusion

Systemic Fiscal Reform answers the challenges of today and of the future. It resets the creeping state control and interest in every aspect of household and business life while ensuring an efficient, equitable, stable and free society.

Claverton-Energy.com  11 November 2008

Lib Dems will feel the pinch

... a combination of rising inflation and negligible growth in earnings means real incomes are being squeezed.

If workers respond by securing higher pay awards, the Bank of England will raise interest rates, thereby threatening recovery.

If they tighten their belts, that too will threaten the recovery because consumer spending is responsible for around two thirds of gross domestic product.

And if they borrow more to bridge the gap between income and spending, it will – as they say in the movies – be deja vu all over again ...

physiocrat
19 May 2010, 10:45PM

What Osborne most definitely should not do is raise VAT. It is as much of a Jobs Tax as National Insurance, and can only push people out of work, which will also add to the government?s benefit bill. It will also mean that the government will have to put up benefits rates as these are linked to retail prices.

The Chancellor should begin with a bit of a tax cut, by raising thresholds for Income Tax and National Insurance to the equivalent of working a 40-hour week at the national minimum wage, on the principle that people earning subsistence wages should not have to pay tax. This was, after all, a Liberal Democrat manifesto committment, and it needs to be implemented as quickly as possible.

This of course, leaves the Chancellor short of cash, so what should he do? Income Tax it is less harmful with a higher rate of tax and a higher threshold, so he should raise the standard rate of income tax to compensate for the higher threshold. Paradoxically, by raising the threshold, more people would work, leading to a reduced benefits bill, more production and more tax income for the government. A virtuous circle.

But the really big opportunity for tax rises that would not harm the economy is through raising property taxes. The Council Tax is the wrong sort of property tax, but the rate is only three times that paid on band A properties, even though top band (band H) properties are worth six times band A. By any standard, that is unfair and regressive, so there is scope for increasing this differential factor, gradually or in one go if necessary.

Business rates could also go up, but the difficulty here is that upwards-only rent revision clauses prevents tenants from renegotiating, which means that significantly higher business rates could drive firms out of business. A small increase, however, might be feasible, but reform must wait for legislation that declares upward-only rent revision clauses illegal. This now applies to new leases in the Irish Republic, but the Labour government was going to introduce this legislation and then caved in to pressure from property owners.

Longer term, ie within a three-year period, no more, the Chancellor should switch to land value taxation for a substantial proportion of public revenue, initially by converting Council Tax and UBR and then by merging them into a single national tax. This would put the government in a good position to repay debt without harming an economic recovery which will, at best be fragile.

The real question that then has to be asked is whether the landowning interests really have the welfare of the nation at heart? If the minority of the people who actually own Britain are not willing to make sacrifices for the greater good, why should anyone else be expected to?

Guardian  19 May 2010

Tobin tax is an irrelevancy and a potentially damaging one.

The underlying problem is the creation of credit for land purchase, usually concealed inside entities such as property, securities or houses.

Which can only be prevented by the collection of the rental value of land and its use as the principal source of public revenue. Otherwise we are just laying in the foundations for the next boom-bust cycle.

The money appears to be made this way...

* Shift it from A to B and it grows
* Shift it from B to C and it grows again
* Shift it from C back to A and it grows yet again

Yet this money has not come from nowhere at all. This bubble-like growth consists of money, credit, foolishly created by bankers, for land purchase, on the security of land prices which have themselves been pumped up by lots of other people in this so-called "industry" playing the same game.

But land price is not the same thing as land value. The value of land is the rental stream it will yield. The price of land is what people will pay to get their hands on the rental stream, and as the bubble grew, the price became unrealistic in relation to those rental values. So by about 2006 the bubble was ready to implode.

It is not just house (the land on which houses stand) prices which bubbled. Much security trading is actually also trading on the land values which comprise a substantial proportion of their value - the supermarket chains, for instance, are essentially real-estate empires and much of their income is economic rent, plus a monopoly component squeezed out of their suppliers and customers. This income from securities consists, to a greater or less extent, of land rent and the price of securities is the capitalisation of that revenue stream.

You will not read any of this in standard economic textbooks or in the writings of those who have been brought up to think along standard lines, so the whole issue is misread and only the downstream phenomena are addressed, like the obscene pay enjoyed by the moneyshifters. If the problem is to be addressed at source, one is forced to repeat the usual mantra - tax the rental value of land.

Posted by physiocrat
30 Aug 09, 12:39am

Observer 30 August 2009

Land Value Tax

"This, Mr. Emmott [in the chair of the Ways and Means Committee to which the budget was addressed], is a War Budget. It is for raising money to wage implacable warfare against poverty and squalidness. I cannot help hoping and believing that before this generation has passed away we shall have advanced a great step towards that good time when poverty and wretchedness and human degradation which always follow in its camp will be as remote to the people of this country as the wolves which once infested its forests."

... for many of us it is for what ended up not being taxed that this budget is most remembered.

The debate surrounding this budget, with speeches up and down the country by Lloyd-George himself and more notably perhaps Winston Churchill, must be one of the best documented in history, for it was a first attempt to implement some permanent form of Land Value Taxation ...

The course of that "implacable war against poverty and squalidness" was set and as we know today, continues now and will continue until we learn to stop taxing production and honestly gained incomes and start instead to undermine the fundamental inequities of the economic system that traps so many in inescapable poverty, as people like Lloyd-George, Churchill, J S Mill, Henry George, and many of the individualist anarchists of the nineteenth century, like Benjamin Tucker knew only too well.

A century is long enough - real poverty reduction will never be achieved by redistributing the power of real economic growth but in eradicating these fundamental inequities that prevent people from bettering themselves. Alistair Darling, you have no hope of matching Lloyd-George.

Learn from them, or give it up!

Jock's Place 29 April 2009

The Land Question

Budget Statement - 29 April 2009

Land Price as a Cause of Poverty

We have now lived through 10 years of New Labour and a massive housing boom. The two are inextricably linked and the latter goes to the heart of understanding why there is still an excluded underclass in Britain.

Gordon Brown said in his budget speech of 1997: "I will not allow house prices to get out of control and put at risk the sustainability of the recovery."

Since then house prices have tripled, adding £2.5 trillion to the wealth of those owning residential property - equivalent to two years' national output.

Last year Tony Blair said: "There is a group of people who have been shut out of society's mainstream and we have not yet found a way of bringing them in properly." He fretted about the issue again in last week's new year message. Labour has been rattled by its inability to narrow income inequality.

Might there be a connection between that huge untaxed wealth gain and the fact that the excluded people Labour are concerned about are generally living in rented property? You bet. Does economics offer insights into what could be done? You bet.

The government's response is to try and raise the share of home ownership from 72% now to 80%. But how they think someone on £15,000 a year can afford the average of £150,000 that first-time buyers are paying is beyond me.

The problem, they imply, is not so much that property prices have risen so fast but that not everybody can share in the gains. But as Martin Weale, director of the National Institute of Economic and Social Research, puts it: "People say that not everyone is benefiting from house price rises. The problem is that house prices are rising in the first place."

Residential property is an unproductive asset. If all houses rise in price, we do not, as a society, get richer. As Mr Weale noted in a fine paper last year, rising house prices do not create wealth, they merely transfer resources from people who will own houses in the future to those who own them at present.

Rising house prices have also led to a huge rise in debt, a drop in savings and a "crowding out" of investment in more productive enterprise ...

Even allowing for Britain's lack of housebuilding and its rapid population growth, Mr Weale thinks house prices here are 20% or 30% above the level that can be explained by the supply and demand.

The gap could be down to the fact that house price gains are not taxed, meaning it is has a tax advantage over any other type of asset, even after stamp duty and inheritance tax are taken into account. Last year, inheritance tax and stamp duty raised £8bn, just 2% of the £340bn that house prices rose by in total, which is nearly four times the total NHS budget. The idea that these taxes are too high is laughable.

And people withdrew about £45bn of this untaxed capital gain last year to spend on things such as second homes, new cars and deposits for their children's houses. Was that money available to renters? No chance ...

So what is to be done?

Mr Harrison, Mr Weale and other economists say the burden of taxation needs to be shifted off income and profits and on to those untaxed gains in property values.

In short, we need a land value tax ...

Guardian 08 January 2007

Summary of UK property market

Since 1970 the average house in the UK has increased by more than 35 times, from an average price of £4,874 in 1970, to £172,788 in 2004.

The biggest winners since 1970 have been homeowners in London who have seen the value of their homes increase by over 40 times. The next largest increase has been seen in the South West region with house prices increasing by 40 times

Homeowners in Scotland have seen the smallest rate of growth in the UK. House prices have risen by 23 times during the past 35 years.

Homeowners have seen the greatest annual real rate of increase in house prices under Ted Heath’s Conservative Government between 1970 and 1974. During his term in office, house prices in the UK rose by an average of over 13% per year in real terms (i.e. after adjusting for retail price inflation). Coming a close second has been Tony Blair’s current Government where the real annual increase in house prices since 1997 has been just over 10%. (See Table 2)

Homeowners saw the slowest annual real rate of increase in house prices under Harold Wilson’s Labour Government. Annual house prices actually fell in real terms by 13% between March 1974 and April 1976.

Home ownership has risen from 45% in 1964 to its current level of 70%

britsandmortar.com

According to the retail price index £4874 in 1971 (*) would have been worth £44,872 in 2004. That's an increase of approx 9 times, against approx 35 times for housing.

From 2004 to January 2007, average house prices have gone from £172,788 to £205,286, an increase of £32,498, or 18 per cent.

"For a period of one hundred fifty years after the [Norman] Conquest, the whole of the revenue of the country was derived from the land. During the next one hundred and fifty years it yielded nineteen-twentieths of the revenue. For the next century down to the reign of Richard III it was nine-tenths. During the next seventy years to the time of Mary it fell to about three-fourths. From this time to the end of the Commonwealth, land appeared to have yielded one half of the revenue. Down to the reign of Anne it was one-fourth. In the reign of George III it was one-sixth. For the first thirty years of his reign the land yielded one-seventh of the revenue.

From 1793 to 1816 (during the period of the land tax), land contributed one-ninth, from which time to the present [1845] one-twenty-fifth only has been derived from the land.

... Thus, the land which anciently paid the whole of taxation paid now only a fraction.

... The people had fared better under the despotic monarchs than when the power of the state had fallen into the hands of a landed oligarchy who had first exempted themselves from taxation, and next claimed compensation for themselves by a corn law for their heavy and peculiar burdens."

Jock's Place

In Boom Bust, I trace land values over four centuries. They move in 18-year cycles, identifying a clear pattern of turning points in the economy. Embedded in this process is a 14-year house-building cycle, terminating in feverish land speculation. During the last two years of the construction cycle people recklessly expose themselves to the Winner's Curse.

In the land market, a rise in demand cannot result in an offsetting increase in supply in places where people want to live and work. So prices are driven to dizzying heights by speculators, who outbid each other with offers for tracts that cannot yield an economic return. The market stalls and the house of cards comes crashing down.

The timetable is dictated by a financial mechanism, at the heart of which is the rate of interest on mortgages. From 1714, this was pegged by the markets at 5 per cent. Today, the MPC is contemplating raising its rate of 4.75 per cent in response to inflationary pressures. The return of the rate to 5 per cent will mark the final phase of the property cycle. Many house buyers who think they are about to pull off great deals this Easter will pay a heavy price in the recession of 2010.

Observer 27 March 2005