STATES COULD BE BIG WINNER IN TAX PLAN

Australian municipalities cried poormouth to the federal government the early 1970s, so Prime Minister Gough Whitlam chose to ‘assist’ them by meeting half the cost of local government out of federal taxation revenues.

Today, state governments, having mainly reneged on their promises to get rid of certain taxes if the national government instituted a goods and services tax and rebated it back to the states, are now also crying poormouth for all their inadequacies.

Each level of government should be accountable for funding itself.

Every government inquiry into taxation the last twenty years has shown land tax to be the most efficient of all taxes, but because of the squawks the property lobby raises, state land taxes, cursed by exemptions, thresholds, multiple rates and aggregation provisions, have never been reformed nor extended.

The trend over the last forty years in Australia as elsewhere has been to reduce reliance on property-based taxation, whether it be municipal rates or state land taxes.

That’s why the world has experienced incredible bubbles in land prices and extreme financial collapse.  Land taxes not capturing sufficient publicly-generated land rent, have left too much rent in private hands to be capitalised into these land price bubbles every 18 years.

It’s very simple: if you don’t choose the right fiscal path, you pay the penalty and experience the pain.

So, the Australian states should get off their bums and reform and broaden the land tax base, because it’s the most efficient revenue source, and they already have the land-taxing power.

Extending rapacious hands to the federal government for money is a cop-out: it’s not the states’ answer.  The best instrument lies in their own hands.

Thus, I find it extremely difficult to disagree with this article in THE AGE today.  Yea!!

[And, Victorian Treasurer Kim Wells, wake up to yourself – because it would be your own fault if federal funding were to be withheld for non-compliance!]






ALL THIS HELL – FOR WANT OF APPLYING A SIMPLE FISCAL ADJUSTMENT

[IT’S CRAZY!]

The French Revolution replaced the monarchy with a bloodthirsty pack unaware of the capture of land rent that physiocrats, Quesnay, Turgot and others had promoted. [No, physiocracy was not just about agricultural rent as simplistically portrayed in the New World Encyclopedia.]

Similarly, recent Middle East revolutions have no workable economics to sustain them.

Nor does the well-intentioned Occupy movement.

Nor do Tea Party rednecks.

In rapid succession, the US, Ireland, Greece, Spain, Portugal and Italy are brought to their knees.  Who’ll be next?  Is Australia, with its massive household debt, really any different?

World share markets oscillate in time with the latest national bailout, and the financial pages divert us.

‘Experts’ clot together at the G8 or G20 to talk arrant nonsense as they try in vain to retain confidence in a world of high finance that has become terminal.

Well, then, let the historians write of wars, political struggles, and distress in social life. Let them write freely of the things that happened, and the suffering endured. But let them never mention land and the ownership of land as being the ultimate causes of these happenings.FWG Foat

Also, never let them mention that surface land rent alone is 30% of the economy, before consideration of community-generated mineral, fishing, forestry and spectrum rents.

Lie to them that land rent is only 1% and not worth capturing.

Let the Grattan Institute propose an increase in the GST as the answer.

Don’t let them know The Henry Tax Review, with its call for a reformed land tax and resource super profit tax, offers a tenuous seed of hope.

Don’t let them know of the simple fiscal adjustment–publicly-generated land rents instead of taxes–because the public’s land rents have been reserved by the 0.1%.






Australia’s great GDP growth?

OK, great, Wayne Swan and Co., the March quarter GDP increase of 1.3% gives us a surprisingly good 4.3% annualised growth rate.

But much of the 0.8% increase in private investment was predictably in mining, and you’d have to admit the 0.9% growth in household consumption, largely on food and transport, isn’t all that jolly?

I’m still hearing that one-third of over 50s can’t afford to repair their homes.

I’m still hearing building construction continues its decline.

I’m still hearing jobs are also being lost in other trades, manufacturing and service areas.

I’m still hearing retailers are doing it hard.

I’m still hearing people are struggling to pay the mortgage, because the banks gouged them by refusing to drop their lending margins during the residential property bubble.

I’m still hearing we tax labour and capital for daring to earn an income.

I’m still hearing we continue to reward people with negative gearing for speculating in real estate (even as property prices begin to decline!)

I’m still hearing–with the exception of a watered-down mining tax–you’re still refusing to implement the recommendations of The Henry Tax Review to reinvigorate economy.

And I know we still have to face and deal with the $805 billion in our real estate bubble.

Me, unfortunately I remain one of your “doomsayers”, Mr Swan!






LET’S DECLARE WAR ON CORPORATE RENT-SEEKING

TV regularly exposes the crooked scams worked on Centrelink welfare payments. Being taxpayers, most people are happy to see the perpetrators brought to justice.

I was happy then to have been asked to speak at Sharon Firebrace’s novelly named “War On Corporate Welfare” at the Darebin Intercultural Centre yesterday.

Why hasn’t the theft of $500 billion in publicly-generated land and resource rents—some 40% of Australia’s GDP (certainly not the 1% claimed in economics’ textbooks!)—ever rated a mention on TV, I wondered? After all, it’s the issue that’s currently brought the financial world to its knees.

I suggested to the audience that if economists understood The Theory of Valuation—amongst other things, that the value of land is the capitalisation of its privatised rent—they’d know a vacant parcel with a net annual value of $16,000, when yields are showing 4% net, will sell on the market for $400,000 (i.e. $16,000 pa x 100/4).

On the other hand, if the government were to abolish the 125 damaging taxes recommended by the Henry Tax Review and capture back half the $16,000 rental value community and local infrastructure and services contribute, the same piece of land would sell for only $200,000 – all other things being equal. (i.e. $8,000 pa x 100/4).

Yes, supply and demand and zoning are relevant, but very secondary, considerations to the extent of privatised rent a site yields.  Why do we allow this public rent to be privatised?

We’ve obviously ignored, at a great cost to society, that the rental value of land and resources is owed back, equally, to all of us, I suggested. There’s a vast fraud involved here.

In the early days, we used to capture our rents. Not now. There’s only part of municipal revenue and some state land taxes left. The rent-seekers have done well for themselves gradually removing land-based revenues by making the exception the rule: “What about the poor widow?”  [Her payments can be deferred til she dies; alternatively, she can pay her land rent out of her universal basic income!]

Society has gone backwards by choosing to ignore the truism that the rent of land and natural resources is sufficient to replace all taxation in Australia and still deliver a universal basic income to every citizen.

So now, we are taxed on our earnings and our productivity, and, as economies grind to a halt, the big corporate fraudsters, property speculators, mining magnates and banks continue to steal and grow fat upon our publicly-generated land rents: I repeat, $500 billion annually. Most of the big corporates get a big slice of this rent.  Once we used to own our natural rent-bearing monopolies, our power, gas, telephony, highways, airports, etc.  Not now.  We’ve sold them off, handing this largesse to private companies.

Incredibly, 3AW’s Neil Mitchell, the IPA, the Liberal Party and The Daily Reckoning can’t see anything at all wrong with Gina Rinehart and Clive Palmer keeping these ‘super profits’ that are our rents.

Belatedly, the Labor Party is now beginning to.

And so can I – it’s called theft, guys, and it amounts to a crime against humanity!


IT’S RIDICULOUS: PEOPLE WOULDN’T COP IT

You must be mad!  Don’t you realise most people own their own homes these days?  That means they’d all have to pay the site rent on their land, too – along with all the big boys who have many valuable properties, and the mining billionaires, spectrum licensees, etc.

Nobody’s going to want to do that, even if not doing it did create financial collapse in the US and Europe – even if it is about to do the same in Australia.

It’s far better to have economic depression here than expect landowners to pay an all-in land tax as advocated by The Henry Tax Review – on top of their municipal rates, BTW!  …. even if the 100+ taxes Ken Henry wanted abolished were abolished.

What are you coming at?

Even if it could self-fund new infrastructure …. even if it was able to fund hospitals and education much better than damaging taxes do …. even if it could pay for a universal basic income for every Australian ….

It’s just not on.

Even if taxation does add to prices by cascading its deadweight right throughout the economy …. even if it did mean wage earners and businesses could keep all they earned …. even if it did mean we’d never experience another recession …. even if it is cheap and easy to collect because land can’t flee the country …. and even if a current site value has been put on every block of land in Australia…. even ….

Um …. Where do I sign up?

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