Struggles for Rent in Congo and Maldives
Prominent Blogger, Candidate, & Economist Pro-LV Tax
Feuding over land rent tore a Congolese family apart and shortchanged the Maldives government. Elsewhere, leaders push for a fair reform. Once understood, this principle could spread and solve such disputes everywhere. We trim, blend, and append five 2010 articles from: (1) ACR Issue 271, Oct 1, on Congo by Institute for War and Peace Reporting; (2) Center for American Progress, Oct 2, on LVT by Matt Yglesias, political blogger who twitted at the Huffington Post, “I'm always down for Land Value Tax advocacy” (via reader Wyn Achenbaum); (3) Sudbury Star, Sept 30, on reformer Richard L. Paquette, Candidate for Ward 4, Sudbury Ontario Canada; (4) Economic Voice, a UK news site, Oct 4, on Mark Wadsworth by Richard Henley Davis; and (5) Haveeru Daily, Oct 4, on unpaid land rents.
by IWPR trainee, by M. Yglesias, by Sudbury Star, by R.H. Davis, and by Haveeru Daily
DR Congo: My Struggle for Land
Land is the most important asset that anyone in the Congo can own. Without land, survival in this country becomes very hard.
With land, we have a way of living, a permanent way of earning money. We can build houses on land or extend old ones. By charging people rent to live on the land, we can survive. With land, we can also grow food for our own sustenance, or to sell in the market.
As peace has come to Goma, land prices have started to rise. A plot of land in a good location can easily sell for 4,000 US dollars per square metre.
This is why land is able to wield such destructive power. It can tear whole families apart. It can lead family members to kill one another.
My father is polygamous. He has several wives living with him on the same plot of land, and this has given him a large family, with each member of the family feeling that they have some entitlement to the land.
In 1996, when I was just 15, I was kidnapped and forced to fight as a child soldier in the Rwandan armed forces. My half-brothers accused me of deserting from the army and claimed that I had weapons in my house. As a result, I was regularly detained by the military police, which would come to my house at night, often at one or two in the morning. Sometimes they spent the entire night outside my front door.
My half-brothers went to a district court, where judges ruled they were entitled to the land. The judge who heard the case was subsequently dismissed as part of President Joseph Kabila's anti-corruption purge of the judiciary. The land probably went for well over 100,000 dollars.
JJS: Since it is the free and easy money that tempts and corrupts people, one practical response would be to make clear and enforce the fact that the rental value of land is not up for grabs but rather is part of the commons, a commonwealth for each member of society to share in equally. Government could actualize this understanding. It could recover the socially-generated value of land (note how society returning to peace pushed up its value) by taxing land, or charging a land-use fee, or annual deed fee, or collecting land dues. The more familiar tax is extolled by thinkers all over the world.
Land Value Tax
Is there any reason at all to think it makes sense to tax property values rather than land? The case for it seems (a) extremely compelling and (b) to be made primarily by cranks. So what gives here? How come the economists of America aren’t uniting in insistence that we make the switch?
To lay the case out simply, the problem with taxes from the standpoint of economic efficiency is that they reduce the incentives to do stuff. If you tax wages, that reduces your incentive to do useful work. If you tax property values, that reduces your incentive to invest in valuable structures. But land area is more or less fixed. So there’s no productive activity [making land] to disincentivize. Sounds awesome. But instead of being in place throughout the country, we use this system in just a few parts of Pennsylvania.
JJS: Some candidates are trying to rectify the situation.
Paquette for Ward 4
The current system taxes buildings and improvements at the same rate as land value. That discourages high quality building and improvement, as these will end up costing you more in municipal taxes. It actually encourages low quality buildings or as an incentive for property owners to leave land vacant.
We need to eliminate taxes on buildings and improvements and shift to a single tax on land value. This system works better; it can lower taxes for most and encourage construction.
JJS: Some economists are trying to rectify the situation.
Questions tackled by economist
The concept of a UK Land Value Tax is now hitting the mainstream media.
While some homeowners are concerned, first time buyers could find themselves getting themselves on the housing ladder through a sharp fall in house prices should LVT become a reality.
After all, high house prices only serve a small number of the population for a small period of time.
MW: Instead of handing over all the rent or purchase price to the current owner, the location value would go to the government.
Any LVT supporter I’ve ever met subscribes to Tom Paine’s idea of two centuries ago that the government ought to collect the tax, spend a bare minimum on running the state, and dish out the rest as a Citizen’s Dividend.
JJS: Without the dividend, it's hard to see anybody happily forking over all the rents to government.
Rf1.5 billion unpaid to government: MIRA
Different parties owe Rf1.5 billion to the government by August as fine and rent, Maldives Inland Revenue Authority (MIRA) said.
The statistics show that about Rf1 billion was from an island leased for tourism development.
The remaining debts include Rf500 million from tourism tax and resort rent, Rf5.6 million from foreign investment royalty, Rf17.8 million from fish export royalty, Rf34.5 million from agricultural island rent, Rf1 million from flat rent, Rf8.2 million from commercial land rent, Rf829,000 from Alimas Ufaa Carnival land rents, Rf13.9 million from industrial land rents, Rf25 million from vehicle and vessel fees, and Rf2.4 million from foreign trade fees.
Commission General of Taxation Yazeed Mohamed earlier said the authority is working on recovering the money owed by different parties to the government.
JJS: While some of Maldives’ charges would fall on valid earnings, most of them are an attempt to recover rents, or the economic values due not to solo efforts but due to the activity of society or to the advantages of nature. Government would have an easier time raising revenue if it adhered to moral principle; that is, if it charged people for the values they take, not for the values they make.
That’s the revenue-raising side of geonomics. On the spending side, the basic principle is to not favor special interests but to advance everyone’s welfare (as the US Constitution indicated). In many cases, that would mean politicians and bureaucrats would not get to spend the public revenue; rather, they would pay citizens a dividend and the people would spend their own socially-generated values themselves.
Editor Jeffery J. Smith runs the Forum on Geonomics.
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