Australian Press, like UK’s, Covers a Fundamental Reform a Lot
|December 13, 2013||Posted by Staff under Good Press|
Perhaps the most basic reform possible is public recovery of the socially-generated values of land, locations, and natural resources. Collecting those values of assets not made by anyone’s labor or capital not only makes it possible to eliminate the counterproductive taxes on income, sales, and buildings (property). It also gives everyone, even the poorest among us, the opportunity to prosper and live lives of dignity. Plus, by streamlining the economy, our new efficient ways of producing and consuming would remove the pressure on the environment.
So it’s great news when other writers and publications cover this crucial topic. Previously the British press touted the idea. This time the roundup is from the Australian press.
These seven 2013 excerpts of Aussie coverage of a tax on land value are from:
(1) Australian Property, Dec 10, by Leith van Onselen;
(2) Herald Sun, Oct 8, by Jessica Irvine;
(3) Australian Financial Review, Nov 19, by Robert Carling;
(4) The Australian, Nov 22, by James Pawluk;
(5) Property Observer, Nov 25, reprinted in Macrobusiness, by Catherine Cashmore, a market analyst with extensive experience in all aspects relating to property acquisition; then our own cohorts, Prosper Australia:
(6) Media Release, Nov 19, by David Collyer; and
(7) Research Report, Dec 3, by Karl Fitzgerald who also recently had an op-ed in America’s Truthout, Dec 10 (more on that later).
Speculators Run Wild in Housing Finance
If you’re wondering what’s primarily driving up house price at the moment, look no further. Investor [speculator] finance commitments [to buy a house] were up by 8% in October, 29% over the year, and hit the highest level on record.
Growing Divide Between Rich and Poor in the Australian Housing Market
The property dream is getting tougher to realise for many young Australians.
Something is rotten in the state of the Australian housing market.
The proportion of Aussies who own their own homes is falling, creating a chasm of wealth between the housing “haves” and the housing “have nots”.
It’s not fair. But is there anything we can do about it? Of course there is.
One answer is to scrap stamp duty – which adds substantially to the cost of home purchase – and replace it with a broadbased land tax.
The ACT government is doing just that, progressively introducing a land tax on all properties and abolishing stamp duty over 20 years from 2012.
Stamp Duty Needs Reform
Various government-initiated tax reviews, including the Henry review, have recommended replacing stamp duty with broader and less distorting taxes, including land tax. However, land tax attracts much more political protest than stamp duty.”
Land Tax could help Cool Housing and allow RBA to Cut Rates
Is LVT the Solution to Housing Affordability?
The tax on land value (LVT) is best advocated by American political economist and author, Henry George, who wrote Progress and Poverty - an enlightened and impassioned read. George noted that land is in fixed supply, therefore we can’t all benefit from the ‘best’ sites without effective taxation of the resource.
New York’s Central Park is the highest generator of real estate wealth. The most expensive homes in the world surround the park with apartments selling in excess of $20 million, and newer developments marketed in excess of $100+ million.
Economist Michael Hudson has recently assessed land values in New York City alone to exceed that of all of the plant and equipment in the entire country, combined.
Currently more than 30 countries around the world have implemented land value taxation – including Australia – to varying degrees. In Pennsylvania 19 cities use land value tax with Altoona being the first municipality in the country to rely on land value tax alone.
Bringing about reform is never easy. The increased tax burden falls on those who have significant influence across the political spectrum. Strong leadership is essential. I do see a time when all the chatter around affordability, will finally evolve into real action – and a broad based LVT should form an important part of that debate.
State governments wring their hands over funding infrastructure, yet ignore the direct link between civic facilities and land prices. Houses close to transport, schools, libraries, and parks are simply worth more.
Dr Gavin Wood et al of the Australian Housing and Urban Research Institute: “Land prices have broken from their fundamental connections. We are in speculative frenzy, bidding up the price of land and shouldering a staggering debt burden to do so. This departure from common sense and good economics will destroy the finances of all who borrow heavily to buy property.”
Total Resource Rents of Australia
- The influence of monopoly is 10 times greater than mainstream economists acknowledge.
- Economic rents are a significant component of the Australian economy, comprising 23.6% of GDP.
- Almost half of all government revenues could be delivered by channelling the property boom to more productive purposes.
- Income, company and sales taxes, along with 122 present taxes could be scrapped.
- 90% of taxes are distortionary, adding 23% to prices of goods and services.
The Total Resource Rents of Australia report finds monopoly rents are capable of replacing taxation at all levels of government. In 2011-12, local, state and federal governments required $390.067 billion in operating revenue. The most efficient form of government revenue-raising, the taxation of economic rents, can raise 87% ($340.719 billion) of revenue needed. By including ‘sin taxes’ and non taxation revenue, a fairer, more equitable tax base is possible.