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Financial Times economics writer Martin Wolf is one of the “clever economists and academics” Bronwyn Williams refers to “who are starting to realise that [Henry] George’s old ideas … could quite practically be put into practice” (“Old ideas offer a new take on land ownership”, February 14).

Wolf often points to the merits of a land tax, and in a recent (February 6) article said: “The idea of taxing the rental value of land is most closely associated with the 19th-century American Henry George. But Adam Smith, David Ricardo, James Mill and his son, John Stuart Mill, all shared the same view.

“Thereafter, foolishly, economists began to incorporate land (which includes all non-produced natural assets) into produced capital. This then led to the neoclassical ‘two factor’ models of the economy, which are grossly misleading.

“As a result, taxes on land were increasingly considered in the context of taxes on wealth, even though natural resources are quite different from the capital stock created out of effort and foregone consumption.”

The monopolistic characteristics of our system of land tenure to which Williams referred were highlighted by Winston Churchill, who was an ardent protagonist of the land tax, which Lloyd George sought to introduce in England in the 1909 budget: “Land monopoly is not the only monopoly, but it is by far the greatest of monopolies — it is a perpetual monopoly, and it is the mother of all other forms of monopoly. Unearned increments in land are not the ... only form of unearned or undeserved profit but they are the principal form of unearned increment.”

Churchill also said “roads are made, services are improved, electric light turns night into day, water is brought from reservoirs a hundred miles off in the mountains — and all the while the landlord sits still. Every one of these improvements is effected by the labour and cost of other people and the taxpayers.

“To not one of these improvements does the landlord, as a land monopolist, contribute, and yet by every one of them the value of his land is enhanced. He renders no service to the community, he contributes nothing to the general welfare, he contributes nothing to the process from which his own enrichment is derived.”

Williams mentioned the Norwegian government’s oil trust fund, which captures windfall profits from oil investors and places them in a national trust for the benefit of the population at large. The Alaskan government has long had something similar from which it has paid dividends to the citizenry, while Singapore and Hong Kong owe, in large measure, their prosperity to the low taxes due in turn to the fact that they both, albeit by widely differing routes, derive a substantial part of their state revenue from land.

Closer to home, and in this newspaper, the writer pointed out that the debilitating proliferation of blackjack farms in Johannesburg was due to the wilful abolition by the ANC in 2004 of site value rating, which had been responsible for the dynamism of Johannesburg for over 80 years.

Finally, to paraphrase Williams, yes — there is only one exception to the rule that if you tax anything, like labour or capital, you get less of it. Tax land and you get more of it!

Stephen Meintjes

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