As a research associate of the Land Values Research Group, land values speak to me about many things. They reflect relative advantage. You know, Ricardo’s Law of Rent, otherwise known as location, location, location and all that?
A great part of land values are situated within our capital cities, and it is in our capital cities where real estate yields are the lowest, because land is deemed less risky in the capitals than in rural and regional areas. That’s why land-based revenues are good for rural and regional people: their lower liability for land tax reflects lower land values, and acknowledges their greater transport needs and costs. As income taxes make no such concessional allowance, farmers and people in the regions get the double whammy, thereby doing it much harder than their city cousins.
As a decided land value bug, it eludes me why policymakers fail to see the enormously positive implications the Henry Tax Review’s recommendation for an all-in land tax have for decentralisation and reducing the size of our overgrown cities.
Another thing that leaps out at me is the Australian government’s currently misplaced solicitude for businesses, with its proposal to provide them with almost $50 billion in tax cuts over the next ten years.
Is that the best way to improve business outcomes? I think not.
Here, again, the relative quantum of land values may offer a hint. Commercial and industrial land values currently amount to a total of $380.2 billion; that’s only 8% of Australia’s total land values of $4,722.2 billion. (ABS 5204 Table 61) So, what’s the alternative to cosseting business in this fashion?
Wouldn’t putting an extra $50 billion over the next ten years into the hands of those occupying the other 82% of land values be a far better option to improve the prospects for Australian businesses? If people have the extra money, aren’t they likely to spend it?
You tell me.
Think in terms of land values if you want to see where the great privileges lie.