Best News of 2013: a New Real World Example of Geonomics
|January 2, 2014||Posted by Staff under Rent recovery or avoidance|
These two 2013 excerpts are of (1) the Curaçao Chronicle, Dec 30, on shifting the property tax by Baker Tilly and (2) Massachusett’s Gloucester Times, Dec 14, on leasing public land by James Niedzinski.
From Property Tax To Land Value Tax Starting In 2014
Willemstad is the capital of Curaçao, an island nation in the Kingdom of the Netherlands (former Netherlands Antilles) in the southern Caribbean Sea.
Its property tax will disappear in 2014. It will be replaced, on January 1, by the Land Value Tax (LVT).
The rate of the LVT is higher and is also a progressive rating system.
‘For Sale’ Signs may Sprout at Long Beach as Residents React to Leases
Long Beach residents say they are experiencing a severe case of sticker shock after receiving new 10-year lease agreements for their summer homes from the town.
New land leases, based on the fiscal 2014 land assessment, may ultimately mean paying an additional $750 per year over each year of the 10-year agreement.
Selectmen have decided to gradually raise the land rent to 3.25 percent of the fiscal 2014 assessed land value over each year of the 10-year leases.
The 10-year leases that expire Dec. 31 charged $2,100 for annual land rent for a beach-front cottage and $1,300 for a back row cottage.
By the end of the new lease, cottage owners will be paying about $9,000 a year in rent for the land under his family’s cottage.
One question raised by officials throughout the process of drawing up the leases was whether tenants who have been renting for generations should receive considerations in the lease agreement.
“I believe that our board worked very hard to strike a balance between our fiduciary responsibility to the taxpayers of Rockport and maintaining the culture of the multi-generational community at Long Beach,” Selectman Eliza Lucas said.
“In my opinion, they have been given a pretty good deal for many years,” Selectman Paul Murphy said. “This is a fair deal.”
Ed. Notes: In some places, the land is public, and elsewhere the tax is on land, not buildings — which is how it should be. Nobody made land, everybody needs land, all of us together give locations their value, and so we owe everyone else for excluding them from our site, just as they owe us. So public recovery of land value rests on solid moral ground.
Nevertheless, people find paying taxes on land offensive. Partly because it means if you don’t pay, government can kick you off, just as banks can evict you if you default on a mortgage. Another reason the payments are disliked is that it’s all one direction; the money to compensate neighbors for excluding them goes in but no money to be compensated oneself ever comes back. That could easily be rectified by paying residents a share of the recovered rents.
A dividend from surplus public revenue would be better than governments bending over backwards for landowners. Politicians in Long Beach charged cottage owners on public land very low ground rents. Leaders in Curaçao charged landowners very low tax rates. Owners had been paying a rate of 0.345%, hardly a thing. The new rate is about 0.5%, still hardly a thing. But paltry charges don’t deter speculators and speculators inflate location values, which hurts buyers, especially young families, and brews up bubbles that always burst, causing a recession, hurting many more people.
While shifting the property tax off human-made structures, onto nature-made land, is a healthy step, at such a low rate it’s hard to imagine that owners will be motivated to put their locations to highest and best use. One immediate benefit for the government is that assessing just the site alone is easier than trying to calculate the value of both the site and the structure together. We’ll have to keep an eye on Curaçao and hope for the best. And eventho’ a baby step toward geonomic justice, it’s still the best news of 2013.