OK, “THE AGE” MAY NOT HAVE PUBLISHED MY LETTER THIS WEEK, BUT I CAN
Dear Editor,
It’s sickening to see the two major parties compete to sell Australians out as they kow-tow to foreign interests in connection with our natural resources. As Julia Gillard accedes to the requirements of the big miners, Tony Abbott says she’s still not providing them enough super profits at our expense. We’re clearly being diddled and sold down the creek, and Bob Brown and the Greens are the only people left representing us on this extremely important principle.
To see former unionist and purported future Australian Prime Minister Bill Shorten argue that Julia Gillard needs to accommodate international miners with the leeway she has granted in comparison with the recommendations of Ken Henry’s panel misses a critical point: Bill, you should have learnt by now it’s workers who create mining companies’ wealth, not vice versa. If the big boys want to walk away if we demand a fair return for using our natural resources, let them. We’ll find local companies to resume their leases at a market rent of at least 40% on their net profit before depreciation, amortisation and tax.
– Bryan Kavanagh
Understood Brian. There is a concept within that which sets a ‘complete’ or ‘full’ land value tax; that being one which drives the price of land (not the capital improvements thereon or the rental associated with it) to zero.
What I’m interested in is if there is a similar concept for a) non-renewable and b) renewable natural resources.
Your suggestion of a tax of 40% net profit seems somewhat arbitrary (or possibly less well developed) in comparison to the logical position that a full land tax should drop land price to zero.
That’s true, land price may disappear, Chris, but the rental value remains. It may even grow with the ensuing prosperity. A market of land rental values will emerge, and those who are prepared to pay the known rental value of the site in a particular location (which will now be higher than previously-existing rates or property taxes) will make an offer to the title-holder for the depreciated value of the buildings.
This process would allow taxation to be abolished concomitantly, and has positive implications for people and companies retaining their earnings and for lower (non-tax-inflated) prices for goods and services. It also encourages production and employment, and would bring back many industries driven offshore, because land price (not land rent) and taxation will disappear.
My understanding is that a full land value tax reduces the price of land to zero – such that only the improvements are valued for property sale purposes.
I see no need to apply a rental value to the improvements when the land value is zero, Chris. The idea is to ignore the improvements and assess a land rental. Can you elaborate on the situation where the land value is nil, please?
Bryan; has anyone developed a natural resource equivalent ‘rent’ measure equivalent to that provided in the land case by the land having no value, only the built structure?