A Land Value Tax for Wales?

1. A Land Value Tax for Wales? Molly Scott Cato Reader in Green Economics, Cardiff School of Management Taxing our Most Important Resource

2. Where we are going • What is land? • Why does it matter to a green economist? • Who should gain the value/benefit from land? • How would a Land Value Tax work? • What has been happening elsewhere? • What are likely yields from a land tax?

3. Land according to the classical economists • ‘the distinguishing feature of land is that it is essentially in fixed supply to the whole economy even in the long run’ • It includes all the resources contained in the land • Not considered inherently different from capital and can be discussed as an equivalent ‘factor of production’ • Private ownership leads to efficient use of land • Can be sold in a market which determines its prices in terms of supply and demand • Can provide a living from rents

4. Land as Common Wealth • ‘That we may work in righteousness, and lay the Foundation of Making the Earth a Common Treasury for All, both Rich and Poor’ • Gerard Winstanley, St. George’s Hill, London, April Fool’s Day 1649 • ‘A fundamental difference between the indigenous concept of land and the western idea is that indigenous peoples belong to the land rather than the land belonging to them’ • Daniel Zapata of the XikanoXiximeka tribe of Arizona

5. Green economics as political economy • The three crises—ecological, energy and financial—are different aspects of a systemic crisis • Addressing them simultaneously allows us to transcend the old fight between labour and capital by bringing land (environment) back into political economy

6. [We] have ‘forgotten’ that the economy and all its works is a subset and dependent upon the wider ecosystem. . . Modern citizens have not only lost contact with the land, and their sense of embeddedness in the land, but at the same time they have lost those elemental social forms of more or less intimate and relatively transparent social relations. Thus a basic aim of bioregionalism is to get people back in touch with the land, and constitutive of that process is the recreation of community in a strong sense.

7. Why the globalised economy is unsustainable • Extended supply chains • Weakening of community bonds • Climate change imposes limits on consumption and transport

8. A Bioregional Economy • A bioregional economy would be embedded within its bioregion and would acknowledge ecological limits. • Bioregions as natural social units determined by ecology rather than economics • Can be largely self-sufficient in terms of basic resources such as water, food, products and services. • Enshrine the principle of trade subsidiarity

9. A Balanced Economy

10. Who gains the benefit from land? • Henry George, Progress and Poverty, 1880 • The ‘single tax’ • Site-value tax or Land Value Tax • At present we are effectively renting land and labour overseas to provide for our needs

11. Structure of Land Value Tax • Land Value Tax is levied on the  annual rental value of each parcel of land • Based on unimproved value, so not a tax on capital • Need a baseline survey of the values of certain types of land and survey of land holding

12. Canons of good taxation practice • Cheap to collect • Difficult to evade • Should fall lightly on production—sales and employment taxes discourage economic activity • Discourages speculative land holding, e.g. Olympic site in Greenwich • Encourages active use of land

13. Reasons for taxing land • It is fixed • The proceeds of the most valuable resource should be shared • It leads to efficient use of land and means it is not left ‘idle’ • Reduce the concentration of land ownership • Can work with planning system to influence land use

14. Who Owns Monmouthshire?

15. Decline in the amount of land available for agriculture, presumably the result of housing pressure, which is indicated by the rise in the number of dwellings • Vast reduction in the number of smallholdings and the smaller, but still highly significant, decline in the proportion of land owned by small landowners • While many more people now own some land, this is likely to be only the plot their house stands on, and around half the population of the county still owns no land at all, while 20% of the county is owned by large landowners • The population of the county has more than halved

16. LVT combines practical advantage  with moral justice. Landowners did  not create the land, so, however  legitimately they may have acquired it,  land it is owned ultimately only by  "right" of conquest. And just as  landowners didn't create the land,  neither do they create its value. Land  values are conferred by the existence  of the human community and its  collective economic effort. It is  therefore morally just to redistribute  the advantages of holding (as opposed  to using) land which otherwise accrue  to private profit.

17. Land taxes in different countries

18. How might this work as policy? • Property, as owned by most people, already heavily taxed • Could be used to introduce resource-based taxes of absent landowners and water resources • Could be used as a planning windfall tax • In conjunction with planning policy to build a sustainable, self-reliant economy

19. One Planet Development • TAN 6: Welsh planning policy for the countryside • ‘Development that through its low impact either enhances or does not significantly diminish environmental quality’ • OPDs should, ‘over a reasonable length of time (no more than five years) provide for the minimum needs of the inhabitants’ in terms of income, food, energy and waste assmiliation’

20. LammasEcovillage • Pembrokeshire County Council Policy 52 • Local resilience: security of supply • Local communities to make decisions about land use • More self-reliance and less need for welfare?

21. Land reform and food production • ‘A large majority of studies show that smallholders in developing areas produce more per hectare than big farmers. • The land reforms of the 1950s in Japan, Taiwan and South Korea were followed by rapid growth in farm output. So were land reforms in West Bengal, India, in 1969-84 • Professor Michael Lipton, ‘Smallholders can spearhead growth’, FT, 20 April 2010

22. Land Reform in Scotland • ‘A comprehensive economic evaluation of the possible impact of moving to a land value taxation basis’ • Recommendation of the Land Reform Policy Group, 1999 • Glasgow is considering replacing Council Tax with a Land Value Tax

23. Estimates of yields for Scotland

24. Contribution of different land uses

25. Knowledge is power • PCS proposes ‘compulsory register for all land in the UK to help future housing decisions’ • Land is a resource whose importance will grow because of climate change and food insecurity • It should fairly shared and politically controlled

26. Find out more www.greeneconomist.org gaianeconomics.blogspot.com Green Economics: An Introduction to Theory, Policy and Practice (Earthscan, 2009) Environment and Economy (Routledge, 2011)