Land Tax Benefits Build
The chorus continues to grow for the inclusion of Land Taxes in the national tax debate. Economics editor for The Age Ross Gittins advocates his support for Land Tax in How to fix everything:
Why? Partly because GST is a regressive tax, whereas land tax is progressive, hitting higher-income households proportionately harder than lower-income households.
Do that and the need to “compensate” low income-earners disappears – though it would be necessary to institute reverse-mortgage arrangements for asset-rich/income-poor oldies.
It would also remove the government’s temptation to short-change the punters by double-counting the return of bracket-creep as compensation.
Increasing land tax would mean the reform package made the tax system fairer rather than less fair – surely an important goal of honest tax reform.
As well, universally applied land tax is more efficient than GST in that, as every economist is supposed to remember, it would do less to distort people’s decisions about whether to “work, save and invest”.
The argument that income from capital and, for high earners, income from labour, need to be taxed more lightly because globalisation has made financial capital and executive labour more mobile between countries, is widely used – especially by Treasury – to justify taxing consumption more heavily.
But how can these guys be fair dinkum in this argument when they’re overlooking the ultimate immobile tax base, land?
The benefits from simply swapping stamp duty for land tax are immense, dwarfing the treasury’s estimate of the benefits from swapping income tax for goods and services tax.
The next stage in the reform process is for government to implement a well-rounded public education campaign to build understanding of the benefits Jason Murphy and I discuss in the interview. What other policy can simultaneously address the need for growth, equality of opportunity, provide self-financing infrastructure, encourage small business, increase wages, reduce debts, curb tax evasion and help the most disadvantaged? And that’s not all of it. Read more on Land Taxes.
With the commodification of real estate accelerating, the time for Land Taxation is now. Hopefully the upcoming Federal Treasury modelling of Land Taxes will show just how significant the economic dividends could be.
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