It sounds as if the Republic of South Africa is embracing the wrong sort of tax reform. Crossing Continents on BBC Radio 4 on Thursday may be worth listening to. It is billed as "South Africa's Promised Land: Rosie Goldsmith investigates the South African government's controversial attempts to speed up the process of land reform."

The programme can be heard on Thursday 10 July at 11.00 and is repeated in the evening at 20.30. From the trailer, it sounds as if the country is heading for the trouble that Zimbabwe has got itself into.

There was a news piece this morning (8 July) about the problem the Swedish tax authorities are having with getting the right amount of tax out of taxi drives. Yesterday there was a report of the crack-down by Skattverket on restaurants who fiddle their takings; a popular method has been by manipulating their cash registers. So far, over 100 restaurateurs have been convicted and 45 sent to prison.

Sweden enjoys high standards of public services, so much so that they can be taken as a benchmark for how such things ought to be. And though Sweden, unlike some other countries, no longer harbours the delusion of being a world power with the associated need to spend a fortune on military activities, the government still needs a lot of money. Around 55% of the Swedish economy is in the public sector, which suggests that in the UK, with its much greater concentration of population, the figure would have to be much higher than the present 45% or so to bring the public realm up to the standard that people aspire to. Though it must be remembered that a sizeable chunk of that 45% is spent on welfare - state charity, much of which would not be needed if there was the economic justice for which Land Value Taxation is a key prerequisite.

However, there are good and bad ways of collecting tax. Levying charges on products, goods and services is inevitably troublesome and the authorities are obliged to run these enforcement campaigns which in themselves add nothing to national wealth and tie down skilled personnel who could be doing something more useful. Apart from its deterrent effect, no useful service is performed by locking up restaurant owners.

Tax legislation round the world needs to take account of the simple fact that a tax on the annual value of land cannot be avoided or evaded, as land cannot be hidden or moved to a tax haven and its value is readily ascertainable without examining anyone's accounts. It is necessary only to keep a record of land transactions, which in many countries is already standard practice. The savings in administration by a shift to this form of taxation would be immense and nobody would have to concern themselves with what restaurant owners did to their cash machines.

The news on the UK economy gives no indication of any silver lining to the cloud. All is talk of recession, a house price crash, a falling exchange rate and inflation.

The falling exchange rate is more serious than usually acknowledged. A year ago, a Euro cost 71p, whereas now it is nearly 80p. But the Euro itself has also been losing purchasing power, and all these changes will feed through into higher prices for all imported goods. The only people to benefit are exporting companies who provide services with small inputs of imported products.

Precisely what will happen is impossible to predict as much depends on how the government and the Bank of England deals with the situation. Unfortunately, there is little evidence that the response will be coherent; when the Governor of the Bank of England blames external causes, one can have no confidence that there is any intention even of bringing the situation under control. In any case, most of the inflation for the next two years is probably already in the pipeline, A reasonable guess is that the UK will get 11% inflation in the period of 24 months to June 2010.

The likely future consequences for house prices have been discussed elsewhere on this site, but the general conclusion that the UK economy is in trouble seems inescapable. In truth, it has been mismanaged for years, certainly since 1945, and nobody in charge knows how to get out of the problems. Ed Balls, Brown's economic advisor from 1997, was the best qualified of his generation. If he could not do better than letting the UK economy rise up the wave on the rising phase of the cycle, primed for collapse on the down side phase, there must be something wrong with the theories that UK academics are propagating.

The analysis underlying the theories of the economist Henry George seem to give a reasonably convincing explanation and at least at the level of economics are almost certainly somewhere near to being a true description of what is going on. But the student who wants to dig deeper is left with the question of why a seemingly serviceable explanatory theory with good predictive record is so consistently ignored both by those in authority giving and by the established economists who decide what the succeeding generation of politicians and ecomists will be taught. It is as if the knowledge had been buried.

The news is still of falling house prices and expectations of more to come. Nationwide report a drop for every month of the last nine. An estimated 145,000 mortgage holders already owe more in mortgage payments than their houses are worth, according to research undertaken for the Daily Telegraph. Since the peak in October last year, the average house price has fallen from £186,044 to £172,415, with house prices now falling for eight consecutive months, according to Nationwide. But this is not good news for first time buyers because there are tight constraints on lending. Which is presumably a major cause of the drop in prices.

The volume of sales is said to be at an all-time low, with Halifax predicting a 45% drop in mortage approvals for 2008. This has caused problems for house builders: Taylor Wimpey suffered a 50% drop in share prices on 2 July. These difficulties are already having repercussions for the wider economy, as major expenditure on furniture, consumer durables and refurbishment tends to take place when houses change hands.

Higher energy prices are a further factor which is likely to lead to economic downturn. Again, this too is something which it would be easier to weather if LVT was in place. As things are, land values are "sticky downwards" - they do not respond to the reduced rental yields caused by the higher input prices, and instead, sites are liable to just go out of use, which is the usual observation during recession.

Almost nobody apart from LVT advocates is acknowledging that the house price slump is is really a drop in land prices, which makes it impossible to appreciate what is really going on, and, one might hope, to introduce policies - including LVT - which will get the UK out of its problems as quickly as it might, and to prevent a recurrence in the future. Only LVT will break the unhealthy and damaging link between the land market, the banking system and the general economy. But there is no need to be an LVT supporter to realise that the underlying theories provide a better model of the economy than those more generally accepted. Advocates such as Harrison, who predicted the 1991 crash long before it happened, have an excellent record of predicting how the economy will perform.
Read about Harrison's prection of the crash of 2010

There is a range of predictions being give about the eventual size of the fall. It depends on how the Bank of England decides to set interest rates in its attempt to control inflation. Lax control means that inflation will lead to a catch-up; a tight control will result in a larger drop. The key figure to look at is rentals. The primary value of property is its annual rental, since property purchase is in principle the purchase of an income stream. Multiply them by a figure between 4 and 6 gives the realistic range within which selling prices lie.

The spare capacity in the economy means that it would be a good time for the government to spend on infrastructure, if only there was a system of land value taxation in place, as the Campaign advocates. Without such a system, the infrastructure improvements are absorbed into land values and capitalised into land prices. The government gets little back for the money spent, which means that it has is little incentive to improve the UK infrastructure, which is a frequent comment of criticism by people from mainland Europe who have been to Britain.

The sharp drop in selling prices is a useful warning to LVT advocates who believe that it does not matter if assessments are based on annual rental values or selling prices. It is the latter that have been so dramatically affected. Domestic rental values have remained quite stable, in fact they have increased a little in some areas, though that would change if the general economy goes into recession, which is possible.