The Ultimate Eco Tax

Karl FitzgeraldTrue Cost EconomicsLeave a Comment

by Karl Williams

Countless indigenous peoples and social philosophers throughout history have reiterated the ageless wisdom that it’s plain wrong to own land. Land is the gift of nature, and should be the equal and common birthright of all humanity, yet we find that it’s bought, sold, and monopolised like a mere commodity.

We don’t just refer to agricultural land. The locational value of urban land is built up by the amenities and services provided by the surrounding population and its tax-funded infrastructure. By rights, land-owners should repay society for their exclusive use of such valuable land, and a system of regularly assessed land value taxation (some call it community ground rent) is the elegantly-simple means. We don’t just refer to agricultural land. The locational value of urban land is built up by the amenities and services provided by the surrounding population and its tax-funded infrastructure. By rights, land-owners should repay society for their exclusive use of such valuable land, and a system of regularly assessed land value taxation (some call it community ground rent) is the elegantly-simple means.

By tapping into this natural and equitable form of public finance, we would be able to phase out punitive taxes on honest (i.e. non-speculative) wealth production. In other words, “Pay for what you take, not what you make”.

Henry George (1839-97) is the inspiration for a revived Georgist (or Geoist) movement which has again taken up this noble cause, and is calling on fellow Greens to go further in their proposed tax reforms. As well as the current eco-taxes on air, water, logging, mining and fishing rights, we should be advocating taxes on users of:

a.. land
b.. the electromagnetic spectra
c.. air flight paths and geostationary orbits
d.. any other part of the Global Common (e.g. as the Dark Night Society proposes, there should be a tax on annoying security spotlights, on stadium lights which upset nocturnal animals, and on any lights which obscure the stars)

But land is the Biggie. Because of its unique qualities, land value taxation (LVT) encourages us to put land to its optimal use thereby minimising urban sprawl and wasteful agricultural practices. Similarly, LVT prevents land speculators from holding land idle in the expectation of future, ill-gotten gains.

At the moment, we’re born on to a planet where “all the seats are taken” so that we have to pay the former generation for permission to live. Rising land prices are not “healthy” or “buoyant” for the economy – rather, it makes the whole problem worse. However, when society collects the full rent of land, the market price of the land (not the improvements on top of it) will have been reduced to around zero (brevity disallows an explanation).

When the economy is turned right-side-up, there are lots more spin-offs, including important environmental safeguards. Furthermore, both tax collection costs and compliance costs will be a tiny fraction of the immensely wasteful burden they are today. And tax evasion will be a thing of the past – you can’t hide land!

Gone, too, will be the intrusive practices of the Tax Commissioner, prying into all aspects of our activities. We should be monitoring carefully those who use natural resources, not people’s personal affairs!

We could also afford to invest in public infrastructure such as public transport, as the enhanced land values which result will be “recycled” back into the public purse, rather than enriching landowners.

We belong to the Earth, not vice-versa!

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