Johannesburg Site Value Rating

Overview

Johannesburg adopted site value rating — taxing land value only, exempting the value of buildings — around 1918-1919, becoming the first Transvaal municipality to abandon the conventional property tax as it sought to reinvent itself from a declining mining town into a diversified financial center.[1][2] By 1979, site-value or two-rate taxation had spread to essentially all major towns in the Transvaal province; a comparison summarized by economist John M. Polimeni found that the cities taxing site value alone had doubled their capital investment and site value relative to the last two Transvaal holdouts still using the conventional land-plus-buildings tax as of the mid-1980s.[2]

Fred Harrison's The Power in the Land (1983) uses Johannesburg alongside Denmark and Pittsburgh as case studies rebutting economist Richard Lipsey's claim that "isolating economic rent is impossible" — citing the city's cheap office rents (£3.85 per square foot, among the lowest of any major world city at the time Harrison wrote) and the ongoing valuation-updating work of City Valuer John McCulloch as evidence that a jurisdiction can run site-value assessment as routine municipal administration for decades.[1]

Gaffney's Growth-Comparison Argument

Mason Gaffney's workpaper "Enterprising Johannesburg and Sleepy Cape Town: A Contrast" (undated, internally datable to c. 1991–92) makes a stronger, more contestable claim than the administrative history above: that the site-value tax caused Johannesburg's rise. He frames the city as an urban-economics puzzle — no harbor, no water transportation, exhausted mines, poor surrounding farmland — that "should now be a ghost town" but instead became South Africa's economic capital, and credits a 4% site-value-only property tax (a first-hand, unverified figure — "they tell me it is 4%" — distinct from the administrative record in this page's Sources 1–5 above), contrasted with Cape Town's superior natural site and lack of the same tax, which Gaffney associates with urban sprawl, a fractured CBD, and underused rail yards.[6] This comparative-growth argument, and its confounders (apartheid-era Group Areas Act spatial planning, Johannesburg's distinct role as mining-finance capital vs. Cape Town's as legislative capital, neither of which Gaffney addresses), are detailed on this wiki's Gaffney's Georgist City-Growth Case Studies page — carried there as attributed historical argument, not as independently corroborated evidence.

What Happened to It

Site-value rating did not survive as South Africa's default system. The Municipal Property Rates Act of 2004 (effective 1 July 2005) replaced the old provincial patchwork of site-value, flat, and composite rating with a single national system taxing the market value of land plus buildings, ending Johannesburg's pure land-value base as a matter of national law.[3] The city's rates administration today still shows the imprint of that history: its General Valuation Roll is reissued roughly every four years and is publicly inspectable and open to objection, a modern descendant of the same administrative machinery that once ran a land-only tax.[4] The site-value-rating tradition itself is independently attested by Riël Franzsen's 2003 Lincoln Institute survey, which records that as of the early 2000s site value was still the rating base in roughly a third of South African municipalities, Johannesburg among them, until the framework legislation behind the Municipal Property Rates Act moved the country to a land-plus-improvements base.[5]

See Also

• Land Cannot Be Assessed (objection) — the "assessment is impossible" objection this history is cited against
• Site Value — the assessment concept Johannesburg's rating system was built on
• Pittsburgh, Pennsylvania — the other city Harrison pairs with Johannesburg against Lipsey
• The Power in the Land (book) — the discovery source
• Gaffney's Georgist City-Growth Case Studies — Gaffney's separate, more contestable growth-causation argument for Johannesburg vs. Cape Town

Sources

1. Fred Harrison, The Power in the Land: An Inquiry into Unemployment, the Profits Crisis and Land Speculation (1983), Ch. 16, pp. 214-215 — used for the adoption date, the office-rent figure, City Valuer John McCulloch's role, and the book's use of Johannesburg (with Denmark and Pittsburgh) to rebut Richard Lipsey's claim that isolating economic rent is impossible. Book page
2. G.R.A. Dunkley, "Republic of South Africa," in Robert V. Andelson (ed.), Land-Value Taxation Around the World (Blackwell, 2000), pp. 299-311, as summarized in John M. Polimeni, "Historical Background and Contemporary Usage of Taxing Land" (draft book chapter, Albany College of Pharmacy) — used for the 1918 adoption date, the 1979 spread across Transvaal municipalities, and the capital-investment comparison against the last two conventional-tax holdout cities. PDF (draft chapter, self-archived) — the specific 1918 adoption date, the 1979 Transvaal spread, and the capital-investment comparison rest on Polimeni's secondary summary of Dunkley's chapter, not a direct read of Dunkley (2000); the underlying South African site-value-rating tradition, including Johannesburg's use of it, is independently corroborated by Franzsen (2003) in source 5.
3. PDG and Isandla Institute (for South African Cities Network and Urban LandMark), Municipal Rates Policies and the Urban Poor (October 2009) — used for the Transvaal Local Authority Rates Ordinance's site-value basis and the 2004 Municipal Property Rates Act's shift to a market-value (land + buildings) base effective 1 July 2005. Free PDF
4. City of Johannesburg, "Valuation Roll" — used to confirm the modern General Valuation Roll practice (roughly four-year cycle, public inspection and objection). joburg.org.za
5. Riël C.D. Franzsen (2003), Property Taxation within the Southern African Development Community (SADC): Current Status and Future Prospects of Land Value Taxation — Botswana, Lesotho, Namibia, South Africa and Swaziland, Lincoln Institute of Land Policy Working Paper WP03RF1 — Lincoln Institute PDF — read this session; used as independent academic corroboration that site-value rating remained in use in roughly a third of South African municipalities (Johannesburg among them) into the early 2000s, before the shift to a land-plus-improvements base under the Municipal Property Rates Act.
6. Mason Gaffney, "Enterprising Johannesburg and Sleepy Cape Town: A Contrast" (workpaper WP077, undated, c. 1991-92) — read in full; used for the growth-comparison argument, the reported 4% site-value tax rate, and the Cape Town contrast. Full detail and confounders on this wiki's Gaffney's Georgist City-Growth Case Studies page.