Land Reform: another way is possible

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By Johnny Marten

The movement for land reform is gathering speed.  It feels like exciting times. First came news of a suite of reforms by Nicola Sturgeon and the appointment of a Minister for Land Reform.  Next followed grass-roots organising such as the new Scottish Land Action Movement, the Land Reform Revenue Group (LRRG) and a workshop in Birnam to galvanise around the Government consultation.  Such grass roots organising is an essential presence in tackling Scotland’s inequitable land ownership system and promises to move things beyond the political sphere. This momentum presents the opportunity to dig deep within our ideas and ideologies so we can figure out how to achieve transformative change.

Silver bullet or silver tongue

At a recent conference in Glasgow members of the LRRG explained to attendees that zero-rating income tax and “replacing the revenue with a new charge on location rents” would “boost employment by 55,000 jobs,” make everyone in Scotland 2.4 times richer and generally bring the land monopoly tower of cards tumbling down.  Fiscal reforms are “central to land reform” as put by Andy Wightman. It appears that we have a silver bullet.

The LRRG gave evidence to show how taxes weigh heavily on the poor and encourage the hoarding of urban and rural land. Dr Sandilands explained that “the failure to capture the social value of land and its rents as the primary and most natural of State revenues has meant that governments have turned instead to taxation.” I.e., there is a fairer way for the State to raise money that could lead to greater equality, including in land ownership. However, such amendments to the neoliberal State may be skirting around the edges. Henry David Thoreau wrote that “there are a thousand hacking at the branches of evil to one who is striking at the root.”  The land reform agenda hacks at the branches of inequality when it fails to challenge the status quo more fundamentally.

This is apparent from the LRRG’s position that the “social value” should be destined to serve as “the primary and most natural of state revenues.”  It is evident that society fails to capture the social value of land, but what lacks is vision as to how society could change.

What kind of society is possible?

Looking to other movements for social change, the writing of social justice activist and barrister Rhada D’Souza is informative in rethinking our approach to land reform.  Writing on human rights, she poses that:

“The state is not the same as society, however. Society is a condition of human existence. States are one of many ways of organising social life… By conflating society with state, [human] Rights foreclose debates on what kind of society is possible or desirable…”

By focusing on changes to the State structure we are distracted from challenging the foundations of inequality and from grass-roots means of social organising.  Activists depend on Government reforms to bring about changes to their lives when real-time changes often stem from social interactions on the community level.  Significant changes to the fabric of social relations are boxed in by considering the State as the only way to organise and the only way to change.  D’Souza goes on to write that:

“When activists organise they necessarily invoke social solidarities which are based on social relationships. [Human] Rights to the contrary focus on the relationship between State and citizens.”

Similarly, limiting the land reform debate to changes within the current state system “forecloses the debate on what kind of society is possible or desirable.”  Directing our attention towards reforming the collection of “state revenues” stalls discussion on whether the land ownership system is desirable at all.

The private ownership of land gives individuals the power to extract wealth from others by controlling the means to produce wealth.  This power gives rise to the injustices inherent within our system of social organising: concentration of land ownership, speculation, rise in land values, lowering of wages and transfer of wealth from the poor to the rich. The absolute right over private property in land comes from Roman property law, giving the owner the ‘freedom’ to do as they want with their property.  However land isn’t the same as other property.  It was made by no person, and no further land can be created.  It is an absolute necessity for the basic ingredients of life.

The land reform debate needs to challenge whether land should be owned at all and imagine other possibilities.  As put by attendees of the Birnam workshop in their ‘declaration’, “the land – all the land – belongs to everyone and to no-one.” This statement is refreshing in a debate clouded by minor reform and such an ideology is essential to constructing a society based on equality.

Are we making progress?

Perhaps more fundamental than this, the land reform movement neglects to challenge the myth of ‘progress’ as a desirable path for human interaction with the earth.  The philosophy of progress considers the continual expansion of (industrialised) economic activity towards a pinnacle of technological advance both desirable and feasible.  However global climate change, extreme inequalities in wealth and cycles of economic collapse are surely indications that such a path is destructive and unsustainable.  The use of land primarily in the pursuit of profit and ever increasing profit at that is clearly detrimental to human and non-human life.  The Dark Mountain Project outlines the concept:

“The myth of progress is founded on the myth of nature. The first tells us that we are destined for greatness; the second tells us that greatness is cost-free… Both tell us that we are apart from the world; that we began grunting in the primeval swamps, as a humble part of something called ‘nature’, which we have now triumphantly subdued…We imagined ourselves isolated from the source of our existence.”

Without attempting to tackle the myth of progress the land reform debate fails to approach the relationship between humans and the land.  It is ironic that a movement to create a more just system of land use perpetuates a myth that we are somehow separate from the earth.

Something credible

Fiona McKenzine, author of Places of Possibility, comments that community ownership breaks down the “seemingly unassailable property norms,” to be replaced by something “more socially, environmentally and economically generous…”  She theorises that “community land ownership interrupts the givenness of private property and thereby the process of privatization at the centre of neoliberalization.”  She argues that by owning land as a community people become part of the land they live on – and that this has repercussions for how people behave and relate towards their environment.

In England and Wales, Community Land Trusts (CLTs) have largely taken the form of community owned housing projects.  This model has created an open and democratic structure for providing affordable housing in the long term by “retaining an equity share in each property so they don’t succumb to the extremes of land speculation,” according to the  CLT network.  There are now over 150 CLTs in rural and urban areas realising an alternative path to housing needs.

In France the organisation Terre de Liens buys farm land to remove it from the commodity market and keep it in organic, productive use. By renting it to food producers on long-term favourable leases, they are creating a system where land is virtually un-owned and the user pays the community for fair use of the land. With 100 farms and growing this is a successful model which “protects agricultural land as a common good” and “holds it in trust for the next generation.”

These are just some examples of alternative models to the private ownership of land.  They illustrate how it is possible to realise different ways of social organising.  In doing so they challenge the foundations of our relations to each other and to the earth.  The land reform movement should shake the platform which supports our unequal society by creating new spaces and realising new ideas.  We need to challenge the status quo of land ownership.  The risk of neglecting this is reform which looks much the same as what went before.



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87 replies

  1. Interesting article with little nuggets of possibilities, however its spoiled by the philosophical rhetoric. The phrases “rose tinted specs” and “it just isnae gonnae happen” both spring to mind. Its all very well reaching for the ultimate goal but in reality it would lead to zero movement on the issue. Their needs a more pragmatic view on whats both possible and probable that can actually be delivered – in other words a healthy dose of reality.

    Before anyone goes off on one – I do support land reform but it has to be done in a gradual pragmatic way so that public opinion goes with you. Scotland is a rural country and many many jobs are tied up in the rural economy – beware of unintended consequences.

    Now the Terre de Liens – what a grand idea – replace the terminology with the soon to be devolved “Crown Estate” and you have a vehicle for the Scottish Government to buy and let land with similar powers to that of the forestry commission – in modern parlance a “Farming and Rural Commission” as it were. So we now have the structure for the Govt to purchase land on behalf of the people and let out to the benefit of the local community and economy.

    How to fund it and purchase land from willing sellers – Very much agree with the Land Revenue valuation scheme – it means that land that is not being used to its full potential would in effect be forced to sell out ie sporting estates / tax loophole land holdings. Properly run rural businesses should be able to survive the tax through economic activity.

    Could go on – but I would love to take a 10,000ha estate and let it to young farmers and rural businesses and run it properly and integrated for the local benefit. I bet you , you could repopulate the glens and townships with men and beasts rather than a few grouse and some tweed coats. Do a case study on it over a 5 year period and I bet the results would be startling.

    • “So we now have the structure for the Govt to purchase land on behalf of the people and let out to the benefit of the local community and economy.”

      Land reform means different things to different people – more so than most policy areas. Some see it as breaking up large landholdings and giving individuals more opportunity to own land, others for private community organisations to own the land, others for the state to own the land and lease it out.

      One example of contending agendas is the move to give tenant farmers the right to buy the land they lease. Community owners might resist this, but it could become law under the planned Land Reform Act.

      Another is that farming is tending towards larger units as being more economic to run, and the subsidy regime supporting this, so there is actually a reducing number of farmers. Redrawing the subsidy regime to encourage small farms would run into a lot of opposition from the sector.

      • The problem with small farms is that they tend to be uncompetitive in what is becoming a global food market with globally set commodity prices. Unless the small farms are all members of cooperatives which market their produce then the costs of marketing and selling and the option for retailers to divide and conquer make the small producers uneconomic.

        The idea of small farms is nice but that doesn’t make it viable. Every small hill farmer running a small sheep flock is competing against huge Australian and New Zealand sheep stations with up to 100, 000 sheep. These farms are each like small towns providing employment for dedicated shepherds, mechanics, cooks. In the shearing season large gangs of dedicated shearers descend on them, staying in dedicated bunkhouses built and dedicated to this. They are highly specialised with sheep handlers, at least two levels of fleece handlers/assessors and general roustabouts who constantly clean up etc. Gangs earn enough money in a season to spend the winter somewhere warm living on their savings. Huge numbers of sheep get sheared in the most efficient and high quality manner.

        Freezing works (that all face Mecca) dot New Zealand so sheep do not have to travel long distances from farm to slaughter for meat. Container ports are similarly distributed by government planning so that the sheepmeat doesn’t travel far before being put on a ship for export. To the world.

        Now how can a single hill farmer with maybe 100 sheep compete in the marketplace? Especially if she has to do all the marketing of her produce. Not everyone can have some rare or special flock producing such high quality meat that top restaurants snap it up. Such a market is limited.

        That is not an argument against land reform, nor is it an argument against subsistence farming like crofting just that the clock cannot be magically turned back to some golden age. This is part of the thinking that gave us the expensive, resource intensive have that is the organic food movement.

        BTW the NZ dairy company Fontera that grew out of the NZ dairy board controls vastly more of the international dairy market than NZ produces. This is because it is a compulsory cooperative, dairy farmers have to sell their milk through it, or used to have to and it used that power to buy international assets. That is the power that cooperatives can give individual farmers but in the UK they have been very slow to catch on while the world runs ahead of them. Similar systems work in the kiwifruit, pipfruit and stonefruit sectors in NZ.

        • sheep are of course not natural here and before sheep farms and grouse moors in areas like Liddesdale,there were people subsisting off what they grew on the land.meat is not essential for life and in the to.e of Burns for example was rarely eaten by the majority.Liddesdale was estimated to have supported a population of between 3000 -4500 before the majority were cleared for sheep farming and grouse moors.(from evidence given in 1800s to parliament

    • agreed fff, entire land use culture could do with new infusion. Why are more upland farmers not also foresters? why are there so few local enterprises other than farm contracting? why are gamekeepers so sacred (’cause they have guns)? why are there not more wetland enterprises or micro-hydro schemes? etc blargh. Total lack of imagination coupled to beauracratic kafka-land governance ruins our landscapes, that and any of the versions of monocultures we currently see.
      I doubt we’ll see quick change amigo. The dream continues . .

  2. Great idea to get ownership of a 10,000 acre estate and prove the case for job creation and the public good. We could crowd fund in the first instance? £1 a skull (average) for whole population gives a down payment of £5m+ ……………..lets do it!

    • I have worked up a bit of an idea about how to do something like this on a smaller scale as a pilot. Would you be interested in taking a look?

    • Is there room for an adapted form of the old and long lasting mezzadria scheme? For example, as in the mezzadria the Scottish government supplies all that is needed to change the nature of land use. The supplies help individuals or, more likely, groups to change the use of a piece of land to a form deemed of benefit to the local community and the country.One example might be to change a contaminated brownfield site into an uncontaminated area so that house building could take place. Another example might be the clearing of some Forestry Commission land to take it out of forestry use and into agricultural use.

      All of the tools and machinery needed are supplied by government as is planning and advice. The individual or group, as in the mezzadria, carries out the work and is paid for it. On completion, the individual or group has the opportunity to buy the changed land and use it for the purpose agreed at the start of the project. The value attached to the land for the purpose of the sale would be that which applied to the land in its original condition. Agreements for the conditions of sale may be made prior to the starting of any work.

      sam

    • Jean – shouldn’t need to crowd fund …. the devolved crown estate would have the resources to do it just as the forestry commission has the resources to purchase land for forestry. It just needs the political will to make it happen and show others what could be possible !

  3. I’ve read a small amount about Land Value Tax but I’m a long, long way from being an expert. Can someone explain to me how “….everyone in Scotland [would be] 2.4 times richer…”

    Genuine question.

    • Everyone would not be four times richer. However, there would be large distributional and efficiency changes.

      1) Land ownership by value is very concentrated towards the top 1% of households. On a UK basis a LVT would result in the average UK household being around £11K better off in their pockets (net) every year.

      http://kaalvtn.blogspot.co.uk/p/tax-calculator.html

      2) Taxing income/capital distorts incentives to produce. It transfers wealth from producers to non-producers and only penalises people for what they contribute to the community. This shrinks output, which is called a deadweight loss.

      As Land is a non-produced factor of production, it capitalised value into selling prices/rental income only represents a transfer of wealth from producers to non-producers. Again this distorts incentives, causing over consumption and mis-allocation of property resources, causing deadweight losses and a shrunken economy.

      Taken together, some economists have calculated the deadweight loss from taxation and capitalised rent shrinks the UK economy by 48% GDP. An enormous loss of economic out put.

      An LVT kills two birds with one stone. It de-capitalises land rent, and reduces/eliminates taxes on output.

      Good things happen when we align incentives. A better economy and a fair distribution of the factors of production.

    • If you look at Keir Hardie’s bio on Wikipedia you will see him described right away as a “georgist”. This is the basic philosophy behind Land Value Tax. The wikipedia entry describes it in some detail:

      http://en.wikipedia.org/wiki/Georgism#Political_figures

  4. I can’t see how a tax on land values would work today. Land values are too steep and too uneven. They bear no relation to the actual wealth of most owners. Take urban land. Take tenements. At least 25% of the population of Scotland lives in a traditional tenement. The land value of the tenement and its pertinents like the back green in most major Scottish cities (where these tenements tend to be) would be several million pounds, but there might only be eight or ten co-owners. The land value isn’t anything these co-owners can ever realise; they’re not going to collectively band together to sell their tenement flat which in most cases is their home, to developers to demolish and rebuild. That is just impractical. So though their land value notionally rises, along with the value of their flats, they are never going to realise that value. They might of course sell their flats, but never the land. So the land value is, so to speak, passive, and purely abstract and notional.

    But if taxation was to be based on land values, you would find that these owners, who are not likely to be rich people, but really rather ordinary people, nurses, teachers, office managers, that strata, are going to be asked to pay astronomical sums. That’s just because urban land values have risen due to urban pressures, and legislation.

    For instance, planning laws. Undeveloped greenfield land is cheap, for no other reason than there is no planning permission to build on it. But as soon as a bit of land has planning permission for a house, the value of it, thought it might be no more than 30′ x 40′, is in five or six figures. An entire bit of rough hillside, distant from a town, covering several hectares, with no water supply, power, or sewerage, road, or planning permission, but magnificent views, could, if it were offered for sale, sell for a tiny fraction of that because there would be no planning permission to build on it.

    So the upshot would be total chaos and unpheaval.

    Henry George, who started all this land tax business in the 19th century, was an American. Land was and still is literally dirt cheap in America. George could see that what made land increase in value was the economic development that went on around it. A bit of pristine virgin wilderness, could be got for a few dollars. Stick a road next to it, and its price increased a hundredfold. You can see how his theory was broadly right, but to apply it to historical situations where development has been going on intensively for centuries, as it has over most of Europe, and especially on the small overcrowded island of Britain, and it really won’t work.

    • Firstly, a LVT is really only recouping the location value back to the community who creates it.

      Just like those who own Rolls Royce cars, income does correlate very strongly to those living in Rolls Royce locations. Common sense tells us this, but plenty of studies including the ONS confirm it.

      Of course, any genuine hardship cases who prefer not to move should be offered roll up and deferment.

      The rental value of land, which an LVT is based on, can of course be realised at any point. By renting it out.

      LVT is far simpler and less costly to administer than income/capital taxes.

      http://localtaxcommission.scot/submissions/

      Read the submission by Mark Wadsworth.

      Also his work on LVT here

      http://kaalvtn.blogspot.co.uk/

      It is very simple and completely fair.

      • LVT is not a tax. It is a user fee. If you want to use the land for your own purposes (when the land belongs to all) you pay a user fee to the community. Simple and fair. And the user fee rises depending on where the land is, and how much added value is provided nearby by other users or the public.

        User fees on mineral wealth extracted is another no brainer.

        • And a tenement which is multi level, mutli occupancy building is an efficient use of valuable land and so the cost is spread amongst a lot of residents/landlords and thus becomes affordable. Also the tax is not the full value of the land but a value derived from the land’s value along with its location, planning designation etc.

          One option for building owners in such a system is to recruit more people to help pay it. So it incentivises them to build up, to add stories. It makes out of town garden developments expensive places to live, not tenements. Around here in the East of Dundee a lot of agricultural land has been given over in recent years to such developments. Residential land is not productive, agricultural land is but the present system means it makes financial sense for the owners of agricultural land to sell some off for development. This is crazy.

          Meanwhile the council has been forced to expand two local primaries to accommodate the increase in local population at great public expense.

  5. Can’t remember if it was the FT or the Torygraph recently advising property investors to look to Ireland now that Mugabe has taken over in Scotland.
    Whatever can they mean?

    • They’re just being idiotic of course. But Henry George’s land tax idea is wacky.

      I could see that if a society in its infancy, as in the early days of America, began by basing its fiscal system on land rather than on income or other kinds of wealth that can grow or be created, rather than wealth based on a fixed supply, like land – that this could work. As the whole economic system would develop around that basis. But I can’t see how you can retrospectively introduce it into an advanced society and economy.

      • Fully agree MBC.

        I’m very well paid and own a nice house near Edinburgh. Each year I pay tens of thousands in PAYE income tax. There is no way that you could ever extract as much tax out of my quarter of an acre land as I pay in income tax – and what about the retired couple down the road who would be faced with the same bill as me?

        The new knowledge based industries don’t consume a whole lot of land either. I don’t know how many acres Apple sit on but I bet that it’s not much per $ of profit!

        • I was rather seeing it the other way around, but yours is also a good example.

          I was thinking of one of my neighbours, a retired teacher, a single mum, now on a pension, paying only a few hundred pounds a year in income tax, plus a couple of thousand pounds in council tax. Yet the land value of her 1/8th share in a tenement in a nice part of Edinburgh would be huge, so any tax based on that land value, which as I’ve said, is only notional wealth, not real wealth, as she is not going to sell the land on which her flat is built because she needs a roof over her head to live in, would presumably also be huge. And she wouldn’t be able to afford it. She’s have to sell her flat and find a bothy or a caravan somewhere to live in, because that’s the sort of land value that would match her tiny income.

          The high value of the land is not her fault. Neither does she benefit from it in any way.

          • The other thing that struck me after I hit ‘Post Comment’ was how much land low revenue/margin businesses consume vs. how much high revenue/margin businesses do. And if your business is (example) an internet betting site you might consume zero land in your market.

            Try taxing acres of cyberspace!

          • Essentially it’s pre-modern thinking, land tax. Fine in the middle ages. But not now.

        • The point is that your tax bill will go down but it will go up in other areas as the perverse incentives the article talks about are removed and people realise the earning potential of land which will get put into more efficient and productive use. For eg Supermarket land banks will become unaffordable with a LVT in place as it will cost them big to hold that land. Also giant stores that take up huge amounts of land and the giant carparks that accompany them will also become less economic. Advantaging the high street again. The owners of such retail parks will be forced to build on their carparks and subsidise public transport links to allow customers to shop there.

          It will advantage online selling and swapping retail barns for a smaller presence that uses technology to show customers goods that can be delivered.

          The use of land for productive enterprises will be favoured over residential property (which is the modern default). Free carparks will just about disappear as they will be a major cost to retailers. Better to sell the land or build on it. Cities will become denser as it becomes cheaper to live in denser housing. Interspersed enterprises will stud them as perverse economic incentives evaporate and new ones are taken up. These productive enterprises will pay your share of the tax.

          Employment will become cheaper as the removal of personal taxation will remove administration costs. The effective uptick in salaries as taxation is removed will render the need for pay rises moot for several years, the increase in personal spending power will boost business. Perverse marginal taxation rates for beneficiaries and those being promoted or considering another job will disappear.

          Making money will become easier as much less to none will be taken by the state for many people so they will naturally seek make more of it.

          Tax avoidance becomes very much harder. If no beneficiary owner of land can be found or is willing to be identified then the land can be taken by the state in lieu of unpaid taxes and returned to community ownership. Meaning owning it offshore will become pointless. Someone will have to pay for the privilege of owning it. Since wage and salary earners will be relatively untaxed except as property owners their incentive to avoid tax as some do by becoming ‘contractors’ employed by offshore entities instantly becomes an expensive and pointless system. You cannot hide your property ownership and if you try it will get taken off you for unpaid taxes.

          Oh and government subsidy for local government will just about cease as council’s income from LVT increases. Central government is richer/less in need of tax from the release of this burden and local councils are released from much implicit central govt control that comes via funding.

          It will thus become necessary to vote in local elections as how prudent/rapacious your council is will impact you much more, especially if you live in a large spacious detached property (I live in a modest two story semi that fills much of the space). It will help to make it sensible for property rich but cash poor elderly people to downsize as happens a lot back home in NZ. Near where we used to live a house like ours was bought, demolished and two retirement units at right angles to the road were built on the space. The developer made a profit as the land was subdivided and sold to two new owners. My mother has downsized twice since my father died, gradually bestowing furniture on my sisters (not worth shipping it to Scotland). The downsizing helps to fund a comfortable retirement and means her progressive physical impairment is not made worse by trying to maintain too large a property. Her last move was to buy a unit in a retirement village with serviced units that makes excellent and dense use of the site it sits on. The house I spent my teenage years in was on 1/3 of an acre with 5 bedrooms and fitted a family of 6 with an economically active parent and teenage children (my income increased steadily throughout my teens).

  6. I can’t afford to buy my own home and I certainly can’t afford to buy any land.

    I live in a tenement in Govan – reform as much as you like, it makes no difference to my life.

    • Itchybiscuit, radical reform of land relations – particularly fiscal reform – WILL make a difference to your life. It will enable to to either a)pay a much lower rent or b) buy your own home. What keeps these two things unaffordable is the value of land which is currently pocketed by rentiers and has led to a level of private debt in the Uk approach £1.5 trillion.

      • Thanks for the reply Andy – I’m Ivor.

        Let me put this another way. I can barely afford to feed myself or heat my home. Saving a few pounds a month on rent won’t really help with that and if I can’t really afford to heat/eat (yes, in winter it’s a choice), how could I possibly afford to buy my own home? I suppose the point I’m trying to make is that there are far more urgent priorities for the Scottish government other than land reform. It must sound marvellous if you have ‘skin’ in the property game but it’s rather weak beer in my opinion.

        • Nothing is going to change fast but the lack of affordable housing is (in substantial part) due to land values. One specific reason is a change in the law in 1959 that meant that councils wanting to buy land for housing had to pay the future use value (housing) rather than existing use value (typically agriculture). The Scottish Law Commission is consulting on reform in that area. The Land Reform Review Group (the LRRG – the acronym used in the article is incorrect – it should be SLRG) proposed measures to reduce the value of land also. These will take time to work up and develop into policy and legislation.

          I think the Scottish Government needs to go far further in its proposals but what it is proposing is a start. One of the long term goals should be affordable housing for all.

          • Andy, down here in east Ayrshire we have vast swathes of land churned by opencast, un-restored (but an interesting ecological experiment!). FCS was going to lend/swap land prior to SRGS and ATH before they wrapped. How can this be turned into some sort of indigenous land-ownership-small holder-habitat project? Interesting resolution of centuries of disruption? How to progress this?

  7. There’s plenty of more detailed stuff around if you want to look – Andy Wightman’s blog is a good place to look for land reform info – but the short version is that you get rid of income tax altogether which instantly makes people richer. You replace that with a “tax” on the value of all the land in the country. If that’s a poisonous hole in the ground like a former chemical plant or something, it won’t be worth much, but if it’s premium housing land on the edge of Glasgow, it’s worth a fortune so you pay a much higher tax. The benefit is that people won’t speculate on land prices – they’ll just get on and do something with the land they have. Also, as in the possible case of the large sporting estates, it’s not worth paying the enormous land tax on them if you’re not making much money, so it’s more economical to do something more productive with the land, which presumably creates jobs and so on. With it being an unavoidable tax, there being an absolute, constant, fixed amount of land available to be taxed and the gains both to people’s incomes and to increased productive use of the land, it could potentially be an enormous economic boost.

    I think the philosphical language is important. It’s true that the perfect can be the enemy of the possible, but in a case like this we need to be thinking further ahead than just the next step. The author of this article is absolutely right to point out that land is the ultimate source of value and since it can’t be created out of nothing, it has to be considered a shared resource. We all have a share in land staying healthy. If the soil dies, we all die. The end goal of land reform MUST be to move towards a permanently sustainable, equitable relationship with our environment. That is a precondition for addressing all the other problems we face as a society and as a species.

    If you’re interested in some of these ideas, I strongly recommend looking at http://www.geofflawton.com to get some idea of how we can work better with the land on the way to a better way of doing things. Please do have a look.

    • For the sporting estates, I’d say they are in part the accidental result of changes in economic activity.

      For agriculturally mariginal land like the hills, there is only a very limited choice of economic activity: sheep farming (in decline), possibly some forestry or shooting. Whatever the activity chosen, it’s not going to be a big earner and therefore the land tax payable will be low.

      • big earner? on what timescale? we need to move away from quick return mentality in land-use issues. Subsidies removed, do both forestry and hill beef not outperform hill sheep over time?

  8. The first logical step is for the Scottish Government to declare that the land belongs to the people; that it is now prepared to discuss where we go from here.

  9. I’m ok with the Duke of Buccleuch paying my taxes.

    • He isn’t paying your taxes. He is paying you compensation for the right to exclude you from Land that no one created.

      You have as much moral claim to use Land as any other man. Only paying compensation to those excluded gives you the moral right to exclusive use and occupation.

      Or, another way of looking at it, is as Land is by definition a non produced factor of production, we should all own it equally.

      So, we are all equal share landlords in other words.

      Which sounds is fair enough to me.

  10. Mrt T and MBC seem to misunderstand the concept of land value rating. Land values are already a component of property values and thus people already pay tax on land values. Land value rating involves them only paying tax on the land component. Work I carried out for the Scottish Green Party showed that most householders would be better off compared to the council tax.

    If you are going to tax domestic property (and it should be taxed – for only 4 years since the formation of the Scottish nation has it not been), then land value rating is an option. If you wish to learn more about it there are plenty links here – http://www.andywightman.com/hot-topics/lvt I would also recommend reading Chapter 16 of the Mirrlees Review – linked at same page.

    The Commission on Local Tax Reform has been established by the Scottish Government and has begun work to explore alternatives to the Council Tax. Land value rating is one such alternative. http://localtaxcommission.scot/

    • Hi Andy. I think I’ve got the basics but I’m very sceptical about claims that everybody will be better off and that income tax could be abolished.

      I’m very well paid and taxed on PAYE, living in a house in about .25 acres. The young couple that back on to me live in a plot about .15 acres, 60% of mine. I don’t know their exact circumstances but I would be very surprised if they currently pay income tax equivalent to 60% of my payments. And I don’t think the neighbouring wife works but mine does. The danger is that as you try to limit the number of elements that you tax the more of these situations surface.

      The other part that I see as an issue is the concept that ‘they’re not making any more land’. Maybe they’re not, but there’s loads of it just south of the border. What stops me from putting an office in Carlisle (no land value rating) and filling it with staff from Dumfries (no income tax)……

      What I DO like is that it will drive landowners to utilise their land. The owner of a brownfield site in Edinburgh won’t sit on it for long – they will need to build on it and make it pay. I’m not so certain that it will make a big deal of difference up in the highlands. My only personal knowledge is of an estate up in Wester Ross where I’ve rented a holiday cottage from time to time. I know that it is hemorrhaging money, and there’s not a lot of economic activity you can do unless you’re going to charge the Munro baggers.

      • You are right to be skeptical. I am too. I have yet to see data which suggests we could eliminate income taxes. But in principle, its the right direction of travel. Tax unproductive activity and unearned income before you tax earned income.

        • Aye, the abolition of income tax is something I’ve seen suggested. It would be pretty radical and a big jump to take in one go, but if we even started to move in that direction then not only is it the right thing to do but also enables the Scottish Government to begin cutting income tax without any loss to their budget, thus giving Scotland an enormous competitive advantage.

          • It also has the advantage of making employing someone both cheaper and sensible if they can be put to work earning your enterprise money. As taxes are reduced it becomes cheaper to administer their pay and they will need much less if any govt top ups. The cost/benefit of employing someone will also be clearer. More money in the pockets of wage and salary earners means more customers.

  11. Maybe try this site for an overwiew

    http://www.landvaluetax.org/

    It is a subject that makes my brain hurt, and someone will need to distil it down to a suitable headline for it to gain any public traction, so meantime I keep reading this and the download summary document it offers.

    Donald

  12. If I can offer a historic perspective here, historically the main tax imposed on the lieges that supported the government was the land tax. I believe land is still taxed and still delivers revenues. But as Britain transformed from an agricultural to an industrial society, increasingly wealth was not generated primarily through land and agriculture, but through industry, trade, business and enterprise, including financial services. Mr T (above) gives the more recent example of wealth created via the internet, which requires no or very little land at all. As the nation’s wealth steadily grew from non-landed sources income tax was introduced in the early 19th century and this steadily became the principle support of the Treasury until VAT, a tax on buying and selling transactions, was introduced after the last war. I believe a vast amount of government wealth is now accrued via VAT.

    I just can’t for the life of me see how wealth (and therefore taxation) can be calculated on the sole basis of land in a hyper-modern economy.

    • Only aggregate demand for Land gives Land it’s value. Nothing else.

      Aggregate demand comes from the scaling effect of agglomeration economies. So, as networks, markets and people become larger and more interconnected aggregate demand gets higher.

      Which is why as we have seen with canals, railways, telegraphs, telephones, internet, each advance has seen larger rises in aggregate land rent. As the World becomes a Global economy, land values will rise even more steeply.

      We only stopped taxing Land and starting taxing income/capital because the wealthy elite saw it in their interest to do so. And they have consistently blocked any reform to a shift towards a fair economic system.

  13. Because ALL value in society ultimately derives from the land – either from things grown on it or things dug out of it or even from the wind and water flowing over it. Also, it’s not about how much land you own (which is irrelevant if the land is intrinsically unproductive or low-value), but about the value of that land to society. Brownfield sites in major cities will be worth more than patches of bare rock on the islands, for example.

    For what it’s worth, I think there’s a problem with establishing what happens to people who abuse their soil and therefore reduce the value of their land (and, y’know, kill everything) but that’s a relatively trivial point. On your point, if someone can make money from his wits and his laptop then the theory goes that he’s entitled to every penny he can make. The only money he owes to the state is for the rental of the land, since the state is the custodian of that land for the people who “own” it.

    • Well that’s plain wrong though, isn’t it? A billionaire making vast amounts through clever use of cyberspace should be taxed on his wealth and earnings not the land he is sitting on. The pensioner sitting in a flat they own in an inner city area would be required to pay tens of thousands of pounds annually whilst he would pay zilch. If you think that’s fair, go for it. But there won’t be many following you.

      • Can you provide an example of a “pensioner sitting in a flat required to pay tens of thousands of pounds”? How do you work out this figure?

        • Andy, I was basing it on the cost of urban land in highly developed urban areas like major Scottish cities. Perhaps you can explain if I have got the principles wrong?

          A small brownfield site near me in Edinburgh sold for £5 million to developers in 2008. Whilst the vast site of Craiglockhart hill up at Craighouse including all the elaborate Victorian buildings on it sold for £10 million in 2012. This is because of planning law; the former scuzzy site is valuable because it is a brownfield site which has already been developed and covered in concrete, therefore development, high density development, is permissable. This affects the price developers are willing to pay for it, as they have the confidence to know that planning permission is likely to be granted for intensive development yield a high rent/profit per square foot. The other site, the beautiful one, was cheap, because there were no planning permissions to build on it. Thus development was a gamble. Crazy, I know. But planning law makes a huge impact on the value of land.

          To get back to our pensioner, if there were tenements on that land, then as I understand it the value of that land, and the buildings on it would be very high. Millions. It would be sod all use to the pensioner, as they are not planning on demolishing their building to sell the land, but a tax based on the value of that urban land would be high. Granted, they could sell their flat, but that would only be a part of the value of the land they co-own. And then where would they live? To realise the full value of the land, they’d have to get the other co-owners to agree to sell up the whole site, so basically, that’s not going to happen. The pensioner has a share in highly priced urban land which for all practical purposes they can’t actually sell. But they would still be taxed on it, as they co-own it.

          A similar pensioner, perhaps living in a remote tumbled down cottage in Shetland, would have the same income as the pensioner living in the Edinburgh tenement, but because the value of their land is far, far, less, being remote from economic activity, with few economic opportunities, they would not be faced with the same tax bill.

          • The market value of a tenement flat includes the value of the land it sits on and which is shared with others. There is no separate value that cannot be realised. Your example from Shetland is not comparing like with like. A Shetland pensioner with the same income as an Edinburgh pensioner will pay exactly the same tax bill on their income. But they will face different tax bills on their land – as they do right now with council tax. A billionaire who rents a flat in Edinburgh will pay exactly the same rent as a person of more modest means renting the same house and so they will pay just the same tax. That’s fair because it’s a tax on land not on income.

            Is your idea that every tax we pay should be modified by our income? So if I have a low income I would pay little or no tax (VAT, duties etc) on things I buy but you who might earn a lot more than me pays a much higher rate of eg VAT?

          • Well said Andy, and would someone earning £50,000 pa pay twice as much as someone earning $25,000 for the same hotel room, car parking space or a litre of petrol? Sadly the erroneous term land tax is being used, when of course, we should be talking of land rental value or similar. Whatever the switch would mean, as we said at the SLRG conference, ”you keep what you create and pay for what you receive’

  14. MBC will put up the usual somescreen. He will try to distract you with shouts of “look over there”. – ignore it!
    Land reform is long overdue and the important thing is to get it moving. The tweaks can come later.

    • No, I’m all in favour of land reform. I just don’t think you can base all taxation on the ‘silver bullet’ of land. Land ownership is only one element of wealth, and it’s a variable one.

      Look at bankers and stock brokers. Don’t you think they should be taxed for the wealth they personally earn from selling and buying shares? Shouldn’t the business activity of banking and insurance be taxed? My point is that in 2015 wealth is created from invisible as well as visible sources.

      But it’s still wealth, and it should be taxed.

      • I’m going to cut these comments out & frame them. For the first time – maybe the only time – MBC and Mr T are in reasonable agreement and get a joint mention in another post: andywightman says “Mr T and MBC seem to misunderstand the concept of land value rating.”

      • The bankers and stockbrokers are among those most likely to have both their business premises and domestic residences on the sites with the highest land rental values and they can’t transfer these to an offshore account.

  15. I would argue that that’s quite a different issue. Wealth “created” from financial transactions is not wealth “created” at all. The problem there is inadequate regulation of the transactions, not inadequate taxation. Besides, it’s self-evident that very rich people don’t pay tax on their income, or at least not as much as they theoretically should. However, if they own a flat in Kensington, they’ll pay a nice whack of land value tax on it. If, as you suggest, they’re making tons from the internet, they’ll be paying tax on the land covered with their server farms, or the factories producing the goods they’re selling online.

    I think maybe you’re raising a moral point with a perfectly reasonable counter – I earend my money and the government has no right to take any of it. Disagree if you like, but that’s the argument. With land, the whole point is that it’s a finite supply and private property rights can’t really apply in the same way to land as to anything else.

  16. I do feel obliged to stick my oar in on this debate about LVT. So, I live in a tenement with a land value of about £1MM – about the same as a shipping magnate’s barren shooting estate in the middle of no-where.

    I earn £120,000 a year, the guy next door earns £18,000 a year. Income tax is abolished, and we both pay the same LVT (!?!).

    Correct me if I have it wrong, but if that is the case, it is way beyond stupid.

    • Where is this tenement you live in where the land is worth £1 million?

      • If it’s a tenement flat you live in, you’d only pay a fraction of the land tax/revenue since you’re only occupying a fraction of the space above that land. Also, land value of £1m for one tenement block? Do you want to do a swap? I’m currently trying to sell a bridge…

        • Ten flats at about £220,000 each is actually more like £2.2MM for the value of the land. Maybe you can half it for development costs. Sorry, but I think £1MM is on the low side.

          • Neil, you said that you live in a tenement with a land value of £1 million but your flat is worth £220,000. So the land value associated with the value of your flat is not £1 million. If you have 10 flats each worth £220,000 then the tenement block is worth £2.2 million – that includes the land value. Tenements are an efficient use of land and land values tend to be around 20% of the property value so your land value is around £44,000. That equates to a rental value (at 5% discount rate) of £2,200 which equates to maximum LVT liability (100% of rental value of land).

            Such a property is in Band D and currently pays £1,169 council tax. Under figures I calculated in my report for Scottish Green Party, a Band D property would pay 8% in LVT than in Council tax.

          • Sorry – that should be 8% LESS in LVT than council tax.

          • Andy, you’re missing out the back greens and front gardens. So in the illustration just given of a tenement of ten flats each worth £220,000 each = £2.2 million, that’s just for the buildings. Since most back greens are actually bigger than the footprint of the tenement, that would come to at least £4.4 million. So the land value is £88,000 by your calculations. So maximum rental value would be £4,400.

          • That’s not true. When you pay £220,000 for a tenement flat that includes the value of any “pertinents” ie backgreens. Were any planning authority to approve of building new tenements in backgreens (I know of no such examples), then of course tenement flat prices would go up but not by much actually because backgreens are common property and you need everyone’s consent to sell them. Most folk value the view and greenspace.

          • It all points to a lack of tightness in the concept of land and land values. And it also confirms that land values are 100% a social construction determined not only by economics in the wider sense that Henry George argued for, but, also, more particularly, in Scotland in 2015, by planning law, feu charters and title deeds. In our case our feu charter and deeds say categorically that no permanent buildings may ever be constructed in our back green. Would that therefore exempt that piece of ground from ever being included in LVT? Yet, other economic activity could feasibly still go on there. So the land isn’t potentially entirely without economic value. For instance, a hard-up neighbour was once running an (unofficial) kindergarten there. Around the corner, another ground floor flat does run a legal kindergarten as a small business, and the back green and front garden ground provide valuable play areas for kiddies, which presumably allows the business owner to carry on her business more successfully and with more appeal to local mums than if the kiddies were indoors all the time. Would that constitute a reason for inclusion of these pertinents in LVT? But even without a business or building going on in back greens, the amenity they provide arguably adds considerable value to the flats. Therefore I can’t see that there is a hard and fast case for excluding it from LVT merely on the grounds that there is no direct commercial benefit to owners. Like I say, it all points to a need for tightness in what would be LVT rateable or not. What I am driving at is it would be unfair to introduce sweeping changes, as folk will need time to adapt. It’s a radical change, and should not be rushed.

            In Norway for the purposes of local tax they tax you on what land you have, i.e., attached to your house, or elsewhere, (some people have grazing land or part-shares in forests) but at a far lower rate than the space occupied by your buildings. And within buildings they make a distinction between free floor space in main apartments and utility space occupied by things like cellars, hallways, staircases, cupboards, attics, verandahs, which are not really living areas as such so are tax exempt.

            Another thing. Whether to tax land and buildings in this way is not centrally decided. It’s up to local kommuner. Some are harder up for funds than others. Not all kommuner have it. There is central legislation empowering kommuner to act in this way if democratically arrived at but no obligation to do so. The kommune can also decide at what rate it wants to tax land value at. It can even decide to lower the rate if it feels the revenue raised has met its target. Often the tax is time limited and is raised specifically for certain projects, e.g. a new school. A newly elected kommune could decide to abandon it if enough voters voted for that.

      • Edinburgh. That’s what urban brownfield land costs. Millions per hectare. Aberdeen will be even higher. Glasgow slightly less.

  17. Sorry, LVT to me, looks like serious wealth redistribution from the less well off to the wealthy. Me and the shipping magnate are much, much better off, and the guy next door is shafted. It seems to verge on the obscene, and appears to take libertarianism into a very dark place.

    Would all those guys next door just accept that? Personally, I very much doubt it.

    Also, I can’t figure out what it has to do with land reform. I thought that was a property ownership issue, with the main problem being unused urban land. You could sort that out with a time limit on development.

    • Who has shown that LVT could eliminate income tax? It is theoretically possible that this could be achieved over a period of time but it will take a long time. And it is not a redistribution from the less well-off to the wealthy. The data on wealth inequality makes very clear that the better off own disproportionally more of the wealth (including the wealth that derives from economic rent) – so that notion is just not true. Land reform is about changing the relationship between society and land. That relationship is legal, economic and political. Fiscal reform of land is a core part of land reform.

      PS – do you think that because you earn £120,000 and your neighbour earns £18,000 that it is fair that you pay the same council tax, VAT and fuel/alcohol duties? Or should all tax come out of earned income?

      • Also, if your neighbour is only earning £18,000, it’s highly unlikely he owns a piece of your phenomenally expensive tenement block. He’s probably renting, so his landlord would be paying the tax and very possibly he’d be paying no (or less) council tax and income tax as a result.

      • Sorry Andy, looking back at your replies I see you are not proposing the replacement of income tax.

        Would it just replace the Council Tax? If that is the case, I can’t see it making much difference to the majority of the population where land value is based on the value of the property you can build on it. I can’t see the link between land value and property value being broken without the introduction of Marxist/Leninist Socialism.

        Someone with £1MM of grouse/deer moor quite likely has a £1MM lodge on it, so no change in that situation. The only thing I can think of is it would really hit farmers with 10Ha of barley and a farmhouse? Would they be given larger subsidies?

        To answer your question ‘should all tax come out of earned income?’ – no, it shouldn’t, for reasons that I am sure you are just as aware of as me – why did you ask? Sorry, I was baffled by posters on here talking academic language, for reasons known only to themselves, that I couldn’t understand but they did seem to suggest that income tax should be abolished.

      • I hope Johnny Marten has read the last sentence of your first paragraph.

  18. To quote one of the few sensible things SLAB have ever said “the landowners’ day is over, it is done.”

  19. Some of the thinking on this seems to echo the early modern economists, like the physiocrats, who saw agriculture as the basis of all economic activity. It has been some time since that was the case, and it is a challenge for rural areas that agriculture can now be carried on so efficiently and with so little labour required.

    But I’m interested in what the effect would be on urban greenspace (parks, gardens, allotments, etc.) – for private owners the effect of being taxed on the development potential of the land would be to develop it or sell it for development.

  20. Is ability to pay a Land Value Tax going to be taken into account? Is this what they do in other,more social democratic countries with a better standard of living? How much of this thinking fits in with EU law? I think it’s maybe a bit of a distraction from the fact that pay differentials in this country are disgraceful.

  21. I have a dream. It is winning massively on the Euro Lottery. After that I would buy up almost all of South Arran and turn it into an oak forest. There would be absolutely no economic advantage to me in doing so. Why should my dream be subject to tax? Obviously the estate created would be open to all, indeed I would ensure that any residents or farms were protected.

    Would that dream, or more realistically fantasy, require me to find annual cash to support that re-wilding?

    And before anyone else says it, “look a (red) squirrel.”

    It is surely the purpose to which land is put that matters most in this discussion. Or, alternatively, the extent to which massive land owners are essentially exempt from taxation on their holdings. It is, kind of, the elephant in the room is it not?

    • I don’t understand. You suggest that there is an issue with “massive land owners .. essentially exempt from tax” but you would like to be a massive landowner (all of south arran) and pay none also? Exemptions from taxes are perfectly legitimate tools of public policy but they have to be well-designed.

      As for your argument that there would be no economic advantage to you in pursuing this dream – you would own an asset worth many millions of pounds financed by unearned income (lottery winnings). That sounds to me like a huge economic advantage – you would be one of the richest people in the country.

      • Andy,

        Would you be happier if I just handed it over to some sort of state exempt quango?

        Anyway, if you want to genuinely subscribe to what is, after all, a fantasy on my part, I have a few questions for you.

        My intention was quite clear. It was to head South Arran in the direction of being a wilderness. It was not to reverse that for future profit. It was to preserve, or indeed expand, the scope for other species to survive and prosper on our land. I see no nuance in your reply. I have already stated that I have no interest in the ‘worth’ of the land, indeed for the dream to be realised others, after me, would need to agree that the land was valueless. This might come across a lot of resistance from folk that already think that land has value, your good self included.

        My arguement, such as it is, is simply that the use of land is the deciding factor.

        And finally, I have spent my entire Euro-millions on this dream. I am, currently a pauper. The land is valueless, except for squirrels, because that is who inherits my estate or those that can speak for them.

        How, exactly am I amongst the richest persons in the country?

        I have given it all away, in the scenario we speak of.

        OK, I would have held back a few million for essentials like the new Bentley 4 b 4 and medical care into my old age, but you are now getting into details.

        To the extent you can be serious about a fantasy, I would do what I propose. I assume not everyone in South Arran would be delighted at the prospect. They seem to grow pretty good potatoes.

        • If the land is valueless then there will be no tax liability so I think your conundrum has sorted itself. It is highly likely that land zoned for conservation would be either exempt from any charge or entered in the valuation roll as £0. So I don’t see any problem here. You would have to agree, however that you would never sell this land and realise any value it had in it. You could not do that and at the same time argue that it is valueless.

          • Surely all those ‘hunting and shooting estates’ are worth peanuts too?

            You would have to agree, however that you would never sell this land and realise any value it had in it. You could not do that and at the same time argue that it is valueless.

            I have already told you that it would only be valued by folk that like red squirrels. I have also told you that, in my dream, they would have a place to live. I do not see the hand of the State, even moderated by andywightman as being particularily useful to my dream.

            You suspect of me of being a Dickensian capitalist who requires ‘tripped up’ by the wily fans of Land Tax as a panacea!

            I am merely pointing out that some land ownership may indeed be for the purposes of re-wilding rather that sporting estates and that, absent the profit motive you hold so dear, what is wrong with that? And should it not be seen differently from highland killing zones? Indeed, if my dream were to come true it would be a sunk cost with absolutely no prospect of profit.

            I think you make great points elsewhere, but this is not one of them.

  22. Taking that thought a little further, is it not perhaps the case that land, above a certain size as opposed to value, should be subject to a 100% inheritance tax? In other words it should be taken back on the death of the current owner? Clearly corporations would require to also, legally, expire, say after 75 years or so.

    I would imagine that, if it the land so aquired were to subsequently come up for auction there would be ‘interesting’ economics in play. It would be lease rather than own. How do we deal with change of use gamblers, those that manage to get farmland converted into building plots? I used to live in Bishopbriggs and nowadays you can see Lenzie creeping towards us as the builders build. Whatever happened to ‘green belt’ policies?

    I do question the effect it may have on altruistic people. Will they be caught up in a ‘one size fits all’ policy?

  23. Everyone scared to mention the greatest threat to all of us morally/physically/financially is the good old USA has been for the last 100+ years,Nicola should if given the chance opt out of NATO is it is there only to serve the purpose of the aforementioned.Eck was right when he said that he admired Putin for standing up for his country,remember this folks Russia defeated 3 German armies by dint winning the war.

    • Russia beat the Germans, as far as I know.

      I cannot find the link right now, but Germany lost huge numbers to the Soviets, It was attrittion.

      We owe Russia a lot.

  24. Yes Emily, spot on. Russia is provoked by NATO endlessly and our embedded media promotes the lies and propaganda.

    NATO/US overthrew a democratic govt in Ukraine and put neo Nazis in its place. US NATO has set the MiddleEast on fire and fans the flames. USNATO says falsely that Iran has nukes yet there is silence on Israel’s 400 nukes.

    The EU spreads its cheeks to Washington and this is shaming. To say nothing of UK govts of all stripes.

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