Today I have been making a list of those who are registered on our site. They are awesome people.
We have people over a wide age range from 75 down to late teenagers. Three people said they trawled the internet trying to find a political party which seemed to address the issues they were worried about and had solutions they thought would work. Others hit upon it by accident.
We have many professions here from financial advisers to teachers, engineers, architects, lifestylers who practise permaculture, permaculture teachers, IT people who are fully aware of the challenges of peak oil and a wide range of other challenges. We have those who read Spontaneous Evolution by Bruce Lipton and Steve Bhaerman (remember Swami Beyondananda? He said “I have good news. There will, indeed be peace on Earth.. I sure hope we humans are around to enjoy it”. We have psychologists, a theology graduate, someone who built an electric car, someone who sells raw milk and someone who has been a leader in many sustainability organisations. We have members of Transition Towns from various places and a farmer who hates land tax policy. We have many who have read widely on the topic of money systems and a lot of people who have read my book Healthy Money Healthy Planet. Some have been to Christoph Hensch’s course on money in Christchurch. We have followers of Max Keiser, Bernard Lietaer, environmentalists, a pharmacist, an activist in the Occupy movement and an anthropology scholar.
Some have been involved in Green dollars in the past and many have been founding members of intentional communities and were once keen Social Credit Party, Values Party or Green Party voters. There is a keen land value tax man and someone connected with a church based Liberty Trust. We have Steiner School enthusiasts and daughters and sons of ministers in a church. Some are involved in coast care and river care. Some are interested in small business and entrepreneurship. It goes on. Amazing people, leaders in thinking and that’s how it will be.
Collectively many of us believe, as Bruce Lipton and Steve Bhaerman write; “A miraculous healing await this planet once we accept our new responsibility to collectively tend the Garden rather than fight over the turf. When a critical mass of people truly own this belief in their hearts and minds and actually begin living from this truth, our world will emerge from the darkness in what will amount to a spontaneous evolution.”
So I have had my first interview with a radio station and it was a student radio station who picked up the piece on how Auckland needs an Auckland currency. It was fine, I enjoyed it. Every time you speak to the media it stimulates you to learn more so you can answer better the next time.
And I have been working still on thinking about how we can get a politically acceptable policy on land tax. Is to be a Location Value Covenant or a Land Value Tax? We need a policy which isn’t going to take ten years to implement. Every time I raise land tax someone says “Well that is political suicide”. But if I start talking about getting a policy based on existing contract law which means that instead of paying the banks for your house you pay the Council or Central Government, the reaction is different. If you pay Central Government, then will have enough revenue to drop GST and soon income tax.
Imagine a time when all landowners have to pay and nobody can gain advantage by taking their assets overseas or paying for an army of accountants who minimise their tax. Imagine a time when you can work all you want and don’t get penalised for it, but prices are low because there is no interest built into the price of goods, no GST and no income tax. More spending power. Imagine a time when we have thriving local economies because local authorities have issued a different sort of money, one that depreciates like the goods they represent. Imagine a time when people spend their local money in sustainable business investments rather than in speculating in land or simply banking the money and keeping it out of circulation. As Silvio Gesell says in his book The Natural Economic Order “Money is an instrument of exchange and nothing else”.
Last week both Laurence and I were interviewed by Rose Diamond in her A Whole New World Series
Laurence Boomert: http://InstantTeleseminar.com/?eventid=26556861
To ecineribus and Kev the Farmer, it took me a few years before I accepted that a tax on natural resources, namely land, was the most socially just way of collecting government revenue.
My first breakthrough was remembering how my parents in law in England had bought a retirement two room country cottage that had internal asbestos walls. The rates were £12 a year in 1967. A year later after a full renovation the rates were £80. This was because England uses a rating system that penalises improvements.
You can imagine how happy I was when I returned to Wellington to buy our first home to find that the rates were on land value. I enlarged the basement, built a car deck and many more improvements without our rates rising a cent. Our land value compared with our neighbours values, and I felt that I had economic freedom.
Of course this was not to last as the Douglas – Basset local body ‘reforms’ changed Dunedin, Wellington and Christchurch to capital value rating.
Masterton is now on capital value, and the empty section next door to me has just sold for $120,000. The rates would have been one third of mine, and I am aware that my rates have effectively subsidised the speculative capital gain made by the seller.
Land receives its value by location and all the services provided by the community.
Thus a resource rent on a parcel of land is only returning to the community what the community has provided.
Hong Kong is good example of land tax in action, and it happened by accident.
the British had obtained Hong Kong on a peppercorn 99 year lease, so they could not allow private title. The solution was that as the city grew, they released parcels of land by auctioning the leases. The thinking at that time was that the land tax could be about four per cent, but they set it at 3.5% of value as an inducement for people to take up the leases. Meaning that the title holders would be putting some of the ground rent into their own private pockets. Despite this, Hong Kong’s only tax was a 15% flat income tax.
Nowadays we would expect to raise up to 5% on land values, and have the land valued every year. For example if there was an airport runway extension, we would expect values to drop over the flight path.
When Hong Kong began to build its underground railway in the seventies, the administration took back the land where the stations were to be built, compensated the owners for loss of capital only, and put up the leases around the stations as the land values had risen because of location. Thus the land value capture paid for the railway.
Compare this with London’s Jubilee line. Taxpayers in the UK contributed £3.5 Billion to pay for the line and ten stations. Land values around the stations rose to an estimate of £15 Billion and properties changed hands in the expectation of capital gain even before the stations were finished. “Taken for a Ride” by Don Riley.
When one mentions land tax, people tend to think of farms, but as I said once at a rural fire brigade session, “Would you rather have a commercial property on Lambton Quay and have a meeting once a year to divvy up the ground rent, or get up at five o’ clock in the morning to check out your lambs?”
I presume I am the “farmer who hates land tax policy” you mention. Firstly, let me make it quite clear I am not a landowner but a renter, so no gripes please about me not wanting to pay tax on my fortune, I don’t have one.
In NZ, our GDP is broken down thus; service sector 70%, manufacturing 23%, primary production (ag, hort, forestry etc) 7%. assuming government requires 40% of GDP for it’s purposes, the sector that requires principally land as it’s capital is expected to pay tax to the extent of 40/7=470% of its income. Please explain how.
You state in your article commending Land Value Taxes “income is a poor predictor of someone’s ability to pay. Their wealth is a much better predictor, and much of their wealth is often tied up in property”. This is self-evideny falsehood, exactly the reverse is true! “Income” is a cash good and thus has perfect liquidity, making it easy to pay taxes from. Land has zero liquidity, so there is absolutely no basis for assuming the landowner can pay even if he wants to. You yourself use the term “tied up” when referring to a landed persons wealth. Indicating you acknowledge this fact.
Maybe three or four hundred years ago you might have been onto something. Back in those days land was the principal form of wealth generating capital (thats why it’s called “real” estate) whereas today we have all manner of credit money, intellectual property, manufacturing capacity etc. the value of which exceeds land values many times over. The only tangible argument you can come up with for Land Value Tax is expedience, that land cannot be exported like other forms or capital -if expedience is our watchword, let’s hang and flog convicts instead of the expense and inconvenience of prisons!
It’s a damned pity you have chained yourselves to this particular millstone as a core policy. I know you are good people but be prepared to remain at a few dozen “landowner haters” for support until you dump this folly and concentrate on “money created as interest bearing debt” which is the real evil.
Good on ya Kev! I don’t see the land tax working either, BUT, I don’t think it is fair to say that we are “chained to it.” The land tax is one idea, we are new and policies are being formulated and discussed. Despite my possibly being branded as a heretic by some, I DO still feel that if a local sales tax is legal/lawful, it is worth considering, along with the land tax idea and anything else. I have seen local sales taxes operate in America, and they do work. They are also voted on by the PEOPLE and only if a majority supports it, is it implemented.
I totally agree with your remark ” concentrate on “money created as interest bearing debt” which is the real evil.” THIS should be, and I think is, a top priority of the party, it certainly is MINE and will be the front and centre subject at our meeting in Kaikohe tonight. You have my contact details Kev, if you want to get in touch, feel free. I am, as you will gather, in the far north.
Dead right Kevin you are the farmer mentioned. But there are others on the site who are not also convinced of the critical nature of land tax. It’s not just you, because most of us here come from the monetary reform movement. It’s relatively easy to hate banks and much harder to look at ourselves as homeowners on the escalator of rising land prices, ready to reap our unearned capital gains one fine day.
If you solve the money problem but leave the land problem alone because it is too hard, then inflation rises and “investment” money is just put into buying land which up to now has appreciated in value over time. If you solve the land problem but leave money alone then the wealth will pool with banks. the moneyed interests “row the economy”. They cause booms and busts. By lending to business, adjusting interest rates. They securitise patents, copyrights, radio spectrum, trademarks. They bribe government, extort the economy. So both must be solved together.
If we are to be a political party we need to get a credible policy for revenue gathering. If we want to drop GST, drop income tax and company tax and pay a Citizens Income then we must tax the monopolised use of the commons properly. Land is the biggest part of the commons and must face up to getting a credible and feasible policy to tax land and then go about selling it to the public.
I am the first to realise that Land Value Taxes have a range of anomalies, exemptions and a big question about how it is diviied up between local and national government. I am also aware that despite more than a century since Henry George wrote on the topic we are not much further in having it implemented. We must put on our thinking caps and work. The ALTER branch of the Libdems in UK is grappling with the problem, the Scottish Greens have adopted it at local level and the odd Welsh MP makes a good speech. But it has to be adopted nationally to get the reversal of tax policies that we want.
New Zealand have a crazy situation where farmers earn a pittance (except dairy farmers) all their lives, earn nearly half the country’s export dollars and live for their capital gains at the end of it all. All the time they are enriching the banks, while farmland prices skyrocket. As Andrew Gawith says in his Herald article Why Finances on the Farm don’t add up; “The idea that businesses should generate a return sufficient to cover the cost of capital doesn’t seem to apply to farming.”
That is why I have been investigating the possibility of Location Value Covenants, an opt-in scheme which I will explain more fully in the next newsletter. It takes money away from the banks and gives it to government instead. Moreover it doesn’t have the political obstacles or economic disruption associated with land value tax. But the principles written on the website still apply. We need to pay society so that we can receive government, local government, business, Nature and society’s services, provided to the site, according to the value of the site we have legal rights to occupy.
Propertymarketnz.com arguing for investing in real estate says 90% of millionaires get there by investing in real-estate. They say “It’s historically proven that average growth rates for real estate located in the metropolitan areas is 10 % per year, ie to double in value every 10 years. This is a compound rate of increase.”
Land taxes keep the prices of property stable and low. While our actual policy on land tax is not set in concrete, we simply can’t turn a blind eye to it and hope it will go away. A capital gains tax only goes half way to the solution. Gareth Morgan and Susan Guthrie in The Big Kahuna have another interesting option and this book is worth reading.
Deirdre, I feel like you are “emotionally wedded” to the concept of a land tax. Nothing wrong with that, on a personal level -I have agrarian ideas that I am thus attached to but I know I cannot “sell” them to a public that are themselves attached to the conceits (as I see them) of urban life. I feel you (or someone) have more chance of selling the land tax as a political gambit because for the majority it would be a tax that they wouldn’t have to pay much of. The very idea of getting rid of taxes such as income tax, GST etc is bound to be popular because tax in general is seen as a greater harm than the perceived benefits of social spending derived from it. This is a proven psychological foible.
I firmly believe that if a concept seems, to a rational and impartial person, implausible without a great deal of exemptions and fine-tuning, then it probably isn’t a great concept. I am reminded if the attempts of the Catholic Church to reconcile the concept of the Trinity with that of the One God. It took them eight hundred years to codify it!
I am given to believe that under a system where money is created by the crown with right of seignorage rather than as interest bearing debt then the need for a high tax-take is greatly reduced, perhaps to the point where income tax is no longer required. Income tax is a modern invention anyway, in the UK it was introduced in the Napoloenic wars, in NZ not until the First World War! The correct way to raise revenue is through customs tarrifs and excise duty (GST being simply a base level of excise duty). Customs taffifs have a great positive effect for national sovereignty and self-reliance, that is why the WTO and so-on do their best to eliminate them, because they wish Capital to be the sovereign force throughout the world and to destroy national self-reliance. Excise duty can have great positive influence for environmental and health outcomes and as an economic leveller because it is easily tuned to charge for environmental detriment inherent in the goods, for health detriment eg. tobacco, and on luxuries mostly consumed by the wealthy.
No need to re-invent the wheel here -we simply need to go “back to the future” in an intelligent manner.
As an agrarian I firmly believe that access to land is an inalienable right as much as drinking water and air to breathe and as such should not be taxed any more than drinking water and air for breathing should be. I do have issue with private ownership of vast tracts of land but private homesteading, whether as owner or tenant, is in my view nothing but a fantastic good. In the past, the Crown has compulsory purchased large amounts of private land that has gone derelict during recessions, spent large sums on it’s restoration and then sold it at a loss. I believe this will happen again but the land should be vested in Community Land Trusts for the public good rather than sold into private hands.
Geoff, I’m not sure how I have your details -you can contact me via comments at http://kevthefarmer.blogspot.com comment moderation is on so you will not be publicly visible.
I tried your blogspot thingy, don’t see how to contact you. My details are Geoff. on 09-402-7506 or 09-402-8031
Hi Kevin, land value taxation is the exact tool needed to allow access to land. Prospective farmers now face the same financial hurdle as prospective house owners — the up front cost of land. Because of the long-time capitalization of rent into the purchase price, farmland is now out of reach of most, and getting worse. Farmers would, under LVT, only need to negotiate a mortgage to purchase improvements, not land. Yes, LVT would mean higher monthly payments — but to government, not to banks in the form of interest. The higher monthly land tax would be more then offset by vastly reduced mortgage carrying costs. Plus, with governments financed through land rent revenue could untax incomes, sales, land transfer taxes…
The capitalisation of rent into the purchase price is not the reason land is out of the reach of most. Indeed if that were the case, then the purchase price of land would be at the “perfect” level (assuming, as is self-evident, that a renter will only pay a rent that allows a sufficient return on working capital and effort to make the venture worthwhile).
No. The reason that land is overpriced is because it has scarcity value, similiar to precious metals and gemstones. Simply, the demand cannot be supplied by making more of it. Moreover and unlike gold etc. it is essential to life itself. This makes it a desirable object of speculation (past paradigm) and as a “reserve of value” (present paradigm).
The position is exascerbated by the present trend for the monetisation of debt, otherwise known as “quantitative easing” or, simply, baleouts. The financial institutions are awash with cash resulting from this source that they will not invest into business startups and so-on because they know what we all (I hope by now) know, that the era of growth is over, due to resource constraints. They instead buy assets like land (or lend money with land as collateral, which amounts to the same thing in the event of default) that create oportunities for future “rent seeking”.
Quite simply, the banks should be allowed to fail and the government should guarantee the depositors funds to a set or sliding-scale limit rather than guarantee the institution per-se.
If we end the creation of money as interest bearing debt and give the State the power for the creation (and destruction, in this case) of money we have the mechanism for the orderly deflation of the money supply to the point were all money is backed by some kind of tangible value.
No-one has seen fit to tackle any of my original points, these being:
Land ownership being an insufficiently broad base from which to derive sufficient revenue.
Lack of liquidity in wealth tied up in land making it an ineffective and perverse source of revenue.
The fact that, in the modern world, there are many forms of capital other than land. It is possible to be immensely wealthy with a huge income gained in the most rapacious fashion and yet own no land whatsoever. How can you see Land Tax as remotely “just” in those circumstances?
Much store seems to be set in certain circles of the LVT fanclub on the high values of land in city centres and it’s commensurate high taxable value. Although these values seem to be holding up at the moment due to the prevalence of the “extend and pretend” mindset, the very existence of the high value “city centre” as we know it will disappear as the global economy deflates to a much more fundamental level of activity. Typical CBD business is predicated on a massive flow of wealth from the outliers into the centre, as has been the case during the “cheap energy” era. In the future world this wealth will circulate more locally. How much tax do you thing this land will support when it is either derelict or occupied by clothiers and bootmakers again rather than banks and insurance companies?
On the topic of the tax mix it is interesting to look at the Te Papa site which gives a historical journey down the various mixes. http://www.teara.govt.nz/en/taxes.
We havent yet got on to putting a section on excise taxes. Of course they should feature large in the mix. The general principle is to uptax resources and downtax productive activities. Despite having worked in tobacco control for years, I don’t think you could ever fairly ask excise taxes to dominate the tax mix. As for tarriffs we haven’t yet had a discussion on them. It does seem in line with permaculture principles to manage our boundaries and tariffs are part of this. You will notice a carbon tariff proposal on the site for climate change reasons, a policy championed by the peak oil writer Jeff Rubin.
Of course access to land is an inalienable right of all humans. And we have been fairly well indoctrinated over the years about the virtue of owning our own home. It is hard to get your head around the idea that ‘ownership’ does not imply that you won’t continue to pay for the privilege of your monopoly use of the site. But when you get the idea that by occupying part of the earth and keeping others off it, you benefit every time there is a new railway, a sports club, an upgraded road, an attractive new store or a school built near you. This capital gain belongs to the public. I am speaking as someone who has been a homeowner for 45 years.
By failing to tax land, you penalise workers and those who are not on the property escalator. You will find an amazing chart demonstrating that in Australia 85% of the net incomes of labour and capital was retained, but by 2015 it had dropped to 40%. The rest was taken in taxes and the privately captured windfall from the unearned capital gain on land. This url gives a link to Bryan Kavanagh’s paper, the Riches of Oz. http://thedepression.org.au/?p=9812
Great stuff Deirdre. Hopefully we will haven MORE “Amazing people join this website” after the inaugural meeting of the New Economics Party Northland Constituency/Branch tomorrow (Wed. 22 Feb. 2012) at the Greenworld Health Food Store in Kaikohe, thanks to the generosity of Mike & Shirley. Anyone who reads this and wants to come but needs directions can call me, Geoff. on 09-402-7506 or 09-402-8031. I know Liberty Trust, have had some dealings with them. I must confess to being curious as to where the “theology graduate” and “and daughters and sons of ministers in a church” stand. My experience in “the church” is that it is part of the problem, not the solution. “So heavenly minded, they are no earthly good” is one term that I have heard a lot. Don’t get me wrong, I used to be an avid church goer, warmed many a good pew I have,now I am one of the group referred to as “The churchless faithful.” I prefer to throw in my lot with those who are doing something practical to try to change things in the “here and now” and not just wait for the “there and then.”
I don’t see the Land Tax working but I am not going to get into thet here with you Deirdre, we need to concentrate on what we DO agree on, like getting rid of the scam banking/fraudulent debt money system and replacing it with an honest system run by honest people instead of the banksters (abnker gangsters) and their parasite puppet pollies, as it is now.
Well, I have had my little rant.
I just came across an old Social Credit booklet called “Salvation Island.” It was written originally back in 1938. I have had my copies since around 1984.It is now, like most things, on the internet and here is the link to it. It is a good read “http://www.michaeljournal.org/myth.htm”