When the value of good land rises …
Charities get bumped as speculators get rich
What if a charity can’t afford the land it has been on? What if public spending ups the land value of a rich landowner? What’s a fair way to settle such situations? We trim, blend, and append three 2011 articles from: (1) The Observer, May 29, on charity sites by D. Boffey; (2) The Infrastructurist: America Under Construction, Jun 1, on value capture by A. Flint; and (3) Vanguard Media, May 30, on a property tax.
by Daniel Boffey, by Anthony Flint, and by Vanguard Media Nigeria
Council sell-off of clothing banks 'threatens survival' of charity shops
High-street charity shops could be forced to close down after a decision by councils to charge ground rent for recycling banks and offer the space to profit-making companies.
Donations to clothing banks on town land are a crucial source of stock for many charities. But private, for-profit clothing recyclers are willing to pay a fee to collect on prime land. Counties Northumberland will receive about £300,000 a year in fees and Hertfordshire about £160,000.
The move puts in peril a key revenue stream for the shops, a fixture on high streets for more than 70 years.
Scope, the charity for those with cerebral palsy, had 17 textile banks in Northumberland and 29 in Hertfordshire. The clothing banks had provided 250 tons of donated clothes each year, representing at least £150,000 worth of shop sales.
Clothing banks encouraged recycling, and ensured clothes did not end up in landfill. Recycling companies plan to sell the clothes they collect abroad.
To see the whole article, click here .
JJS: If local government gets more money from land, then it can cut taxes on labor and capital. And when local government gets site rent continually, then the “land dues” it imposes motivate owners to put their locations to best use; using central sites intensely spares suburban land from much use at all -- quite good for the environment.
If local government uses the rent to pay residents a dividend and cuts taxes on people’s labor and capital, then residents can afford to be more generous. Yet there should be less need for charity, since there’d be less poverty when wages are higher, natural rents are shared, and people are healthier in a healthier environment.
So, who should get the immense spending for land? Everyone? Government? Do-gooders? Or an individual landowner?
Paying for Infrastructure: Value Capture and the Use of Private Land
What do Frank McCourt and Henry George have in common? The embattled L.A. Dodgers owner and the 19th century political economist both recognized the potential windfall that can occur when public improvements come through a private landowner’s property.
Before he left for the West Coast, McCourt owned prime land on the South Boston Waterfront. In the 1990s, to build two big tunnels, local government offered him $30 million for part of the land, but he sued and won over $87 million.
McCourt put the financing together for the Dodgers, based largely on the value of his Seaport remaining parcels -- which had skyrocketed because of the new infrastructure. Having acquired the land for under $10 million, McCourt sold it at over $200 million.
What would Henry George say? He might have suggested that instead of the government paying so much to McCourt to enable construction, it should have been the other way around. Under the concept known as “value capture,” when public investment in infrastructure results in an increase in property values for proximate landowners, the private owners contribute to the financing of such projects.
Value capture financed transport systems in Bogota, Tokyo, Hong Kong, and elsewhere. Other policy instruments in the US come close to the definition -- tax increment financing (TIF), Business Improvement Districts (BIDs), or even the basic concept of a property tax. So real estate moguls with an eye on future baseball team ownership -- you might take note.
To see the whole article, click here .
JJS: While most localities use a property tax to recover land rent, that levy also falls on buildings, which discourages owners from building high quality structures. So a pure land tax or land dues would be both more efficient and equitable. Hopefully, in some places, the conventional property tax is only a step toward a charge for exclusive use of land.
Lagos generates N3bn from property tax in 2010
The Lagos State Government generated N3.02 billion through property taxation in 2010 under the Land Use Charge. The amount was an improvement on N2 billion and N500 million generated in 2009 and 2008 respectively.
Commissioner for Finance, Mr. Rotimi Oyekan, said the Land Use Charge combined “four different previously existing land charges into one charge. The old charges included tenement rate, developmental charges, ground rent, and neighborhood improvement charges.”
The commissioner said that the ministry had almost completed its assessment of all properties in the state. “The implication is that all properties in Lagos State will get their Land Use Charge notices by the end of the year and by the end of each year.”
He also disclosed that the state had been paying the monthly salaries of its employees promptly, adding that with the implementation of the new minimum wage, the wage bill of the state currently stands at N5.4 billion, while N251 million goes for pension bills.
Oyekan added that the state had also paid N1.3 billion to retirement savings account of 322 retirees of the state in order to ensure that the retirees accessed their terminal benefits in record time.
To see the whole article, click here .
JJS: While the Nigerian newspaper called it a “property tax”, it seemed the minister’s definition actually made the levy out as a land tax. Thus it would recover the socially-generated values of land and leave alone the individually-generated value of buildings. Nigeria, being so oil-rich, could easily afford to avoid taxing labor and capital and merely recover the rental value of land of all kinds, including mineral land.
Also, if government did not tax labor and capital but lived off the value of land, then politicians and bureaucrats would want that value to be as high as possible. And the value of land is highest when the health of land is soundest. Hence, a land levy would turn government into environmentalists. Rather than tolerate landfills or build infrastructure that caters to the car, they might build to cater to humans.
And humans -- the residents -- might prefer alternatives to cars, too, since land would be used more efficiently and compact cities are not places for cars but are ideal for vans, bikes, and pedestrians.
Even better for the environment, having buildings side-by-side and destinations closer to starting points both save energy and cut air pollution (smog is not healthy for people or planet). Here is a Georgist and Pittsburgh Libertarian with more on that:
Dan Sullivan: I was called to Ireland in the summer of 2009 to present my paper, "Why Pittsburgh Real Estate Never Crashes." It was incorporated into a book on global warming, and a reviewer called it the best chapter in the book. They are soliciting comments. The organization is a bit too alarmist for my taste, but otherwise very good, in that they see through cap-and-trade, preferring what they call "cap and share." They are also very good on money and debt. To see the paper, click here .
Editor Jeffery J. Smith runs the Forum on Geonomics.
While some governments recover rents …
If the state won’t collect the commonwealth …
During this bottom, who catches a break?
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