I just saw a BBC interviewer ask Equatorial Guinea dictator Teodoro Obiang Nguema Mbasogo what he’s been doing with all the money from the country’s oil – because it certainly wasn’t finding its way to his impoverished people.  Mbasogo prevaricated.

That would be a pretty good question to put to the head of BP, too, I thought. Do the English do anywhere near as well as the Norwegians do from their oil rent?

For that matter, Australia has oil, natural gas, iron and coal in abundance, yet we don’t capture anywhere near enough rent from our natural resources either.

When Prime Minister Kevin Rudd tried to make the miners pay a little nearer to the fair rent for their licenses they revolted, got rid of Rudd for even contemplating Ken Henry’s 40% super profits tax, then negotiated the ludicrously small minerals resource rent tax in a back room deal with Rudd’s replacement, Julia Gillard.

They did a job on her.

But her economic ignorance was lost on Australians.

Are we really that thick?

The Norwegians aren’t: let’s take another look at the excellent video to which I put a link on Sunday.

… IF LAND TAX REPLACED PAYROLL AND PROPERTY TAXES?

THREE ACRES AND A COW

“I hear thee speak of a bit o’ land,

And a cow for every laboring hand;

Tell me, dear mother, where is that shore

Where I shall find it and work no more?

Is it at home this promised ground

Where the acres three and a cow are found?

Is it where pheasants and partridges breed?

Or in fields where the farmer is sowing his seed?

Is it on the moors so wild and grand

I shall find this bit of arable land?”

“Not there! Not there, my Giles!”

“Eye hath not seen that fair land, my child,

Ear hath but heard an echo wild –

The nightmare of an excited brain,

That dreamers have, like Chamberlain.

Far away, beyond the ken

Of sober, practical businessmen;

Far away beyond the sight

Of men whose heads are screwed on right;

Where castles in the air do stand,

Behold the cow and the bit of land!

‘Tis there! ‘Tis there, my Giles!”

–      Anon

They seem to have got it from the Land Values Research Group’s Dr Gavin Putland.

Why site value tax is best option

Sunday December 2 2012

Madam – We the undersigned support the introduction of a property tax based on the unimproved value of all residential sites, and all zoned land, ie the value that has not been created by the landowner. A tax on the unimproved portion of property value is a Site Value Tax (SVT).

SVT is the most equitable, efficient and effective property tax option for the Government. Unlike a conventional property tax that taxes the ‘improved’ portion of the property, ie the buildings and thus penalises construction, SVT is non-distortionary, creates no economic drag and has minimal adverse effects.

By capturing unearned value at an early stage of the property development process, SVT discourages empty buildings, land speculation, hoarding and over-zoning and diverts capital and available credit into productive investment and sustainable jobs.

In the long term, an SVT will moderate violent fluctuations in the property market and general economy.

SVT provides a stable base to fund vital infrastructure and services and offers a transparent link between the private benefits of public investment and the source of the investment.

SVT will reduce the property tax burden on homeowners by one-third by spreading the burden on to development land-owning individuals, firms and banks which were largely responsible for the current crisis.

Peter Antonioni, UCL;

Bill Black, Associate Professor of Economics and Law, University of Kansas;

Dr Micheal Collins, NERI (Nevin Economic Research Institute);

Karl Deeter QFA, (LIAM) dip;

Dr Constantin Gurdgiev, Adjunct Prof at Trinity College Dublin;

Dr Stephen Kinsella, University of Limerick;

Professor Brian Lucey, Trinity College;

Ronan Lyons, Balliol College, Oxford;

Dr Terrence McDonough, Economics, NUI Galway

See also Maireid Sullivan’s piece at

http://www.globalartscollective.org/what-has-happened-to-Irelands-sovereignty.htm

and don’t forget to click on the Ireland v. Norway video there!

SIR ROBERT’S LEGACY

Sir Robert scanned Australia vast

So sparsely populated

“O something must be done”, said he

To get folk immigrated.

I’ll tax the toilers more and more

To get my plan in motion

And I will trot across the globe

To coax men o’er the ocean

Sir Robert raised the income tax

The school books got their levy

He burdened most consumer goods

With duties huge and heavy

The big landholders grinned with mirth

And said the scheme was clever

They knew land values would increase

Without their own endeavour.

As migrants by the million came

They needed land for tillage

The owners asked them such a price

‘Twas nothing else but pillage

Among the men who owned the land

Great fortunes cumulated

The landless peoples’ lot grew worse

Their needs were aggravated

“I’ll help the newly weds,” said Bob

To show I’m philanthropic

I’ll grant them all three hundred pounds

This proved him most myopic.

The fellows who owned all the land

Half split their sides with laughter

They could demand three hundred more

For blocks of land hereafter

Sir Robert said I’ll build new roads

And smear the land with phosphorus

Improve the railways and the ports

And make Australia prosp’rous

The workers had to foot the bills

He took their cash in slices

The speculators were enriched

As land advanced in prices.

The land went into fewer hands

The estate business flourished

The workers’ bankbooks and their kids

Went sadly undernourished.

As agricultural land grew scarce

The farmers’ sons went townwards

This caused a labour surplus there

Which forced all wages downwards.

The workers in a drastic plight

For higher wages pleaded

Sir Robert and his government

Relented and conceded

Then wages soared up very high

But prices spiraled higher

Wage earners were not better off

They stayed stuck in the mire.

Sir Robert by his very act

The big landholders pampered

By placing fortunes in their hands

While industry was hampered.

For when the market price of land

Exceeds its valuation

It locks out capital and works

Thus fostering stagnation.

With all the aids of implements

Discoveries in science

All labourers should be opulent

Content in self reliance

Instead we have the phenomena

Of booms that end in busting

When toilers cannot get a job

Machines lie idly rusting

So much for Robert Menzies’ role,

And Calwell’s is no better

Their views keep capital hamstrung

And labour in a fetter

We must shake off the parasites

Shake off taxation’s burden

Collect land rent for revenue

So toil can reap its guerdon.

– JS Rankin

The Bard of the Baw Baws

~~~~~~~

Sir Robert Gordon Menzies is held by some to have been Australia’s greatest Prime Minister.

John Simon Rankin, “The Bard of the Baw Baws” (2 Dec 1912 – 1 Jul 1994), clearly had a good grip on matters economic, and obviously did not agree. Nor did he hold Menzies’ Labor Party opponent, Arthur Calwell, in particularly high regard.

It was actually Sir Robert Menzies who abolished the Australian federal land tax in 1952. It had been legislated in 1910 and served Australians extremely well since 1911.  Menzies provided the wealthy’s usual justifications for getting rid of it.

Related matter of interest:

It was left to another Liberal Party Prime Minister, John Grey Gorton, to finally dismantle Canberra’s system of land rent – although it does nominally remain a leasehold system .  (Canberra, Australia’s capital, celebrates its centenary next year.  See “Canberra: those other Americans” by David Headon.)

The people at Business Spectator usually provide interesting economic analyses, but they’ve shown they’re not up to thinking outside the square that has come to constrain productivity and the financial sector.

So, I couldn’t resist commenting on Robert Gottliebson’s (correct) opinion today that “Fortune won’t cut it for the lucky country”.

The incredible blind spot about the manner in which the world’s tax regimes have fostered investment in real estate at the expense of productivity carries through into every quarter of economic analysis, not even rating a mention in the McKell Institute’s recent “Understanding Productivity: Australia’s Choice”.

Chiding several other analysts, the McKell Institute’s report endeavoured in vain to distinguish itself from “neoclassical economists” by recommending productivity be raised in the following less than inspiring fashion. It seems Australia must:-

1. Innovate or perish
2. Create better managers
3. Make better use of skills

Yep. That was it.

Go, McKell Institute!

Don’t worry that the world is on its knees because we’ve taxed doers for doing, and rewarded parasitical plutocrats for stealing our land and natural resource rents!

Why can’t we focus on that idiocy – and try to rectify it along the lines Ken Henry suggested?

[Sigh!]

Billionaires warn higher taxes could prevent them from buying politicians.