Land Value Taxation Campaign

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Land rent for public revenue

Saudi catches VAT meme

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Saudi Arabia is the latest country to catch the VAT meme. The country introduced it at a rate of 5% on 1st January. They ought to know better. Land value tax is a traditional form of Islamic tax. It is known as Kharaj, and though originally intended for agricultural land there is no reason why it should not be applied to urban land, worth many times more than agricultural land. The Saudis should go for it.

As has been pointed out previously, VAT interposes a tariff barrier at the precise point where supply and demand meet. If the addition of value is taxed, then less value will be added. Wealth is created by adding value. That makes VAT the worst conceivable of all taxes. Whoever has given the Saudi government this advice should be punished. If it happens in the traditional way that absolute monarchs punished those who gave them bad advice, it should help to discourage the others. One wonders if sales are even permitted under Sharia law.


LVT, the virtual world and a missed opportunity?

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We regularly get told that land is no longer important in the world of the virtual economy, and that companies such as Apple and Google would get away with paying next to nothing.

Yet people are still living in real houses, consuming real food and real energy, wearing real clothes, driving real cars, travelling in real trains and aircraft, purchasing real electronic goods made in real factories using raw materials grown on the real surface of the planet or dug out of real holes in the ground. How does virtualisation change any of that?

There is another angle to this, too. I have been involved with land value tax campaign organisations for over forty years and am in contact with others, in particular in the USA. Apple has been around for most of that time; Google has been big for at least fifteen years.

The land value tax movement is not mainstream as it was in the years up to 1939, but it is not unknown, yet no organisation within the movement has ever been approached by these or any other technology companies. If it was to the advantage of Apple, Google, etc, they would have a vested interest in promoting what we are doing. Why, then, have they never come forward with offers of assistance?

It is also the case that there are some pretty smart people within the land value tax movement who would themselves have realised that, if LVT was so good for companies which operate in cyberspace, they would want to support our work; they would surely have tapped them for funds, which would certainly have been forthcoming. Have we all missed a trick?


A Georgist EU?

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What would a Georgist European Union look like?

  • Member countries raise the bulk of their public revenue from an ad valorem tax on the rental value of land.
  • Contributions to the EU central fund in proportion to each country's aggregate land rental value.
  • No tariffs charged on imports to or within the Single Market area.
  • No restrictions on imports to the Single Market area, subject only to the country of origin, and contents being clearly marked, unless there is a major issue of public safety.
  • No sales taxes within the Single Market area (with the possible exceptions of alcohol and tobacco).
  • CAP scrapped.

I would settle for a ten year transition period.


The dead loss of VAT

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Brexit is a golden opportunity to get rid of all the trade tariffs we have been saddled with by the EU - that is, to reduce taxes on sales of goods and services, by dropping not only existing ‘free trade agreements’, with their enforced tariffs, but while we are at it, VAT as well. As a tax, it would be difficult to conceive of anything more damaging, because it applies precisely at the point where supply meets demand. As the UK drifts to what seems likely to be a "Hard Brexit", persisting with VAT merely retains our own home-grown version of a toxic trade tariff.


Irish border troubles

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I came across this information in a discussion about what should be done about the border between Northern Ireland and the Republic.

Ireland's top exports (Source: International Monetary Fund, World Economic Outlook Database (GDP based on Purchasing Power Parity). Accessed on February 18, 2017)

  1. Pharmaceuticals: US$31.8 billion (24.9% of total exports)
  2. Organic chemicals: $27.6 billion (21.5%)
  3. Optical, technical, medical apparatus: $13.1 billion (10.3%)
  4. Electrical machinery, equipment: $9.8 billion (7.6%)
  5. Perfumes, cosmetics: $8.6 billion (6.7%)
  6. Machinery including computers: $7.2 billion (5.6%)
  7. Aircraft, spacecraft: $3.8 billion (2.9%)
  8. Other chemical goods: $3.4 billion (2.6%)
  9. Meat: $3.2 billion (2.5%)
  10. Cereal/milk preparations: $2.5 billion (2%)

Most of these are specialised products having a high value in relation to their weight. Thus they can sent as air-freight. The UK is the only country with reasonably good surface transport links to the Republic. The Republic has no container port comparable with Felixtowe or Southampton, let alone Rotterdam or Hamburg. It cannot have. The population is too small to generate the necessary traffic.

This table below, from the same source, is also instructive: 15 of Ireland’s top export sales destinations, by dollar value during 2016. Also shown is each import country’s percentage of total Irish exports.

  1. United States: US$33.2 billion (25.9% of total Irish exports)
  2. United Kingdom: $16.3 billion (12.7%)
  3. Belgium: $16.3 billion (12.7%)
  4. Germany: $8.4 billion (6.6%)
  5. Switzerland: $6.9 billion (5.4%)
  6. Netherlands: $6.5 billion (5.1%)
  7. France: $5.4 billion (4.2%)
  8. China: $3.3 billion (2.6%)
  9. Spain: $3.2 billion (2.5%)
  10. Japan: $3.1 billion (2.4%)
  11. Italy: $2.6 billion (2.1%)
  12. Australia: $1.6 billion (1.3%)
  13. Israel: $1.6 billion (1.3%)
  14. Poland: $1.5 billion (1.2%)
  15. Mexico: $1.5 billion (1.2%)

After Brexit, most of the Republic's exports will not be to EU countries.

All the trouble will be due to the EU's rules for the Single Market coming into effect as the UK moves outside it. The same rules already cause similar damage to the economies of the regions on both sides of the EU's eastern border, from Finland in the north to Ukraine in the south, taking in parts of the Baltic states, Belarus, Poland, Slovakia, Romania, Bulgaria, Serbia and the enclave of Kaliningrad, before 1945 Königsberg, an important commercial and industrial centre.

Perhaps the Republic should leave the EU too?


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