Mine owner wants a tax on land to revive ruined Zimbabwe
Connecticut's new law for a pilot tax on land value
A major resource owner promotes a tax on the main natural resource -- land. The State of Connecticut just passed a law to give the reform a try. We trim, blend, and append two 2009 articles from (1) the Irish Times, July 7, on Zimbabwe by Bill Corcoran (via reader Alanna Hartzok); and (2) Henry George Foundation USA/Center for the Study of Economics, July 3, on Connecticut by Joshua Vincent, Executive Director.
By Bill Corcoran and by Joshua Vincent
Zimbabwe showing signs of fledgling recovery
Zimbabwe ‘s economy may be reviving. Once-empty fuel stations along the highway are busy with people filling cars. Harare’s supermarkets reveal shelves stacked with a wide range of goods, most of which is imported from South Africa.
Less than six months ago hyperinflation had caused goods to lose their value by the hour. Moreover, the problem was made worse by the former government’s insistence that businesses refrain from increasing prices to counteract the zimdollar’s rapid devaluation.
Everyone, including the government -- which printed zimdollars at will for the cost of paper and ink and then traded them on the black market for the more stable foreign exchange and gold -- traded on the parallel market to survive.
Now, letting the US dollar, South African rand, and pula to be used instead has brought the once record-breaking inflation, recorded at well over 230 million per cent a year ago, under control.
Another consequence of the decision to “dollarise” the economy has been the demise of the no longer needed black market. Yet now there is a huge shortage of hard cash on the ground.
Since the formation of the transitional government last February between the Movement for Democratic Change (MDC) parties and President Robert Mugabe’s Zanu-PF party -- apart from bringing relative peace and stability to Zimbabwe -- employment and industrial capacity has doubled to 15% and 20%-30% respectively.
Lee John -- who owns most of the gold mining concessions around Kwekwe region in the midlands -- says, “I believe we should scrap the current income tax system and replace it with a progressive consumption tax. This starts at zero for food and basic necessities and increases up to several hundred per cent for luxury items.
“There also needs to be a new wave of land reform. Once this is rectified we should introduce a land tax. This would deal with many of the idle farms there are at the moment, as it should force landowners to be productive.”
JJS: Turning from a place talking about it to a place actually taking a legal step toward tax and tenure sanity.
Connecticut Passes Law to Try Taxing Land Value
On July 1, Connecticut Governor Jody Rell signed into law HB 379, which lets New London establish a pilot program for taxing the value of land instead of the value of any building upon it. Towns that have shifted their property tax off improvements, onto locations, have stimulated prosperity among residents.
Most cities sit on a fount of socially created rent that passes through to absentee landlords and corporate welfare overlords. While homes crumble, New London watches idly as this wealth flows to Pfizer and the like.
ReNew London, led by Art Costa, organized the campaign to pass Land Value Taxation (LVT). An educational event at the public library in 2007 January, featuring the Henry George Foundation, kicked off the effort. About 20 attendees, including the Mayor and several council people, were present. And press coverage was favorable.
Activists gave frequent input to legislators and statewide advocacy groups for the environment, workers’ rights, economic development, and urban revitalization, and to other nearby small towns. Many of these organizations and city delegations eventually endorsed LVT. Earlier in the decade, some of those groups plus the Connecticut Conference of Municipalities and the Connecticut Homebuilders Association had also endorsed LVT.
Advocates pushed for a broad bill that would include all major towns and cities in Connecticut. Similar bills had made it into the Senate in years past. However, due to opposition from a member of the Planning Committee, only the trial bill was passed.
New London’s Pilot Project may explore several options such as: rate changing, assessment exemptions on all buildings, a combination of the two, or even a more ambitious plan to replace income tax rebates from the city to residents with an annual disbursal of recovered land values. Some in New London’s city council want to apply whatever version only to the Central Business District.
The new laws focuses attention on VLT in Connecticut, and on the injustice of poor cities existing in nearly the richest state in the USA. Now some assessors want their cities to have power to shift the property tax. The victory helps cities realize they can change the rules of the game for the benefit of all.
Jeffery J. Smith runs the Forum on Geonomics.
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