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New Zealand

Jeff Smith and Kris Nelson: Giving Life to the Property Tax Shift (PTS)
John Muir is right. "Tug on any one thing and find it connected to everything else in the universe." Tug on the property tax and find it connected to urban slums, farmland loss, political favoritism, and unearned equity with disrupted neighborhood tenure. Echoing Thoreau, the more familiar reforms have failed to address this many-headed hydra at its root. To think that the root could be chopped by a mere shift in the property tax base -- from buildings to land -- must seem like the epitome of unfounded faith. Yet the evidence shows that state and local tax activists do have a powerful, if subtle, tool at their disposal. The "stick" spurring efficient use of land is a higher tax rate upon land, up to even the site's full annual value. The "carrot" rewarding efficient use of land is a lower or zero tax rate upon improvements. ...

Kiwiland has used the land tax for over 100 years, political pressures along with economic swings have whittled it down to 0.4 percent of the federal budget in 1989. That year it became a political football. Since 1896, the federal government had independently recorded the market values of the land, the improvements, and the composite or capital value. In 1989, federal authorities reassessed land during a sharp rise in commercial values, primarily in Auckland (which doesn't collect land rent); but they actually collected the revenues a year later when land values suddenly fell. Genuine inability to pay ensued. The previous ruling party, the National Party, raised the rate on commercial land as it exempted all rural land. That gave a nice tax cut to 1,300 of the richest people in New Zealand. Where sites were underdeveloped, perhaps due to the ineffective level of the land tax, too few site users could manage to pay the tax. The resulting hardship reinforced the ruling Labour Party's right-wing proposals for abolishing the land tax and replacing it with taxes on goods, services, and users. More recently, since 1991 the land tax as such is considered a dinosaur on a national scale, although some 90 percent of the municipalities employ land-value rating (rates are levied on the rental value a property as assessed by the city council annually). Since Wellington has adopted capital value rating (the regular property tax), its renewal has faltered. Most recently the concept of "resource rental" is floated in national debates as a substitute for taxes on land and capital assets.

A big problem needs a big solution which in turn needs a matching shift of our prevailing paradigm. Geonomics -- advocating that we share the social value of sites and natural resources and untax earnings -- does just that. Read the whole article

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Wealth and Want
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