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Is a better tax system possible?

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NoDebtHighGrowthLowTax

No Debt, High Growth, Low Tax
by Andrew Purves


Our Land, Our Rent, Our Jobs

Our Land, Our Rent, Our Jobs
by Fred Harrison


cat_econ_public_taxation_revenue

Public Revenue Without Taxation
by Ronald Burgess

This question was posed in a review of Our Land, Our Rent, Our Jobs in Moneyweb, on a Johannesburg-based website. The reviewer, Ciaran Ryan, acknowledges the difficulty: ‘There is so much invested in the current tax system that it is hard to imagine an alternative. The cost of administering SA revenue systems is about R10 billion a year, and there are an estimated 2 000 registered tax professionals lumping another R1 billion on top of that as fees. A far greater cost is the combined hours and expense incurred by companies, executives, lawyers and the courts dealing with tax matters. That’s a stubborn oak to cut down.’

In their book, the authors point out that some 50% of South Africa is rendered economically unviable by the tax system, creating large scale unemployment and migration of the rural population to the crowded shanty towns surrounding the major cities. Apart from all the social problems created by this, the government is unable to raise enough revenue to pursue the promise made on the abolition of apartheid of buying up land to redistribute to the black population. There is growing frustration, particularly among the young, at the failure of government to deliver on a brighter future for all, leading to the formation of a new Marxist party, Economic Freedom Fighters (EFF).

A taste of what could follow, were the EFF to replace the ANC as the government at the next election, was given in an open letter, published in the Mail and Guardian by the EFF’s self-styled ‘commissar for land and agrarian revolution’, Andile Mngxitama. He warned Sir Richard Branson, who had just bought a vineyard in the Cape, ‘that the EFF policy of land expropriation without compensation may, in the near future, affect your investment adversely’.

The authors of Our Land, Our Rent, Our Jobs put forward a way of reforming the tax system that would stimulate economic growth and create new employment, while at the same time making the redistribution of land easier to achieve, thus reducing the two major tensions within the country that could become explosive if not addressed. Read the full review here.

Two weeks later a review of No Debt, High Growth, Low Tax  in Moneyweb, contrasted the dire situation in South Africa with the two ‘tiny specks of land’, Hong Kong and Singapore, which ‘consistently rate as among the freest and most prosperous nations in the world … provide levels of public service that are the envy of developed nations … Unemployment in both states is negligible’ and ‘Hong Kong has nearly double the financial reserves of the UK and Singapore’s per capita GDP now exceeds that of the US.’

In his book, Andrew Purves reveals how an important ingredient in the success of Hong Kong and Singapore is the large amount of revenue the governments draw from the economic rent of land, thus making them less dependent on the plethora of conventional taxes which impede economic development elsewhere. Were South Africa to follow this path, as advocated in Our Land, Our Rent, Our Jobs, it too might enjoy high growth and low unemployment.

No Debt, High Growth, Low Tax  ‘provides a few interesting examples of how Hong Kong managed to finance public facilities by charging rent on appreciating land values. One such example is the Mass Transit Railway, [showing] how these governments tackle public finances with a keen sense of business dynamics. The government leased the land for the railways to the Mass Transit Railway Corporation (MTRC) at “pre-development” prices, along with development rights on land above the stations. The MTRC built shopping centres, offices and apartments above the train stations – on which it collected rent used to fund the building of the railway network. As the development rolled out, the value of the land increased proportionately, as did the rental income.’ Read the full review here.

Andy Burnham calls for radical tax reform

UPDATE 3/9/10 Following Burnham's article, further comment on LVT has been published on the Guardian website. Benjamin Fox writes 'With land value tax, Labour is getting it right', 2nd September 2010 UPDATE 2/9/10 Comment on Andy Burnham’s article in the Guardian has...

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The People’s Book Prize

Shepheard-Walwyn is pleased to announce that The Predator Culture by Fred Harrison has been entered into the non-fiction section of The People's Book Prize this Autumn. Readers are invited to participate in the selection of a winner by casting their vote at...

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John Clare: Voice of Freedom – now published!

Our latest book, John Clare: Voice of Freedom, by R S Attack, is now available. The book is a unique look at the life and poetry of John Clare, who lived at a time of great upheaval during the Enclosure movement. The book is a must read for anyone interested in great...

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“You can become wealthy by creating wealth or by appropriating the wealth created by other people. When the appropriation of the wealth is illegal it is called theft or fraud. When it is legal economists call it rent-seeking”

John Kay, Financial Times 27th Dec 2009

“If a free society cannot help the many who are poor, they cannot save the few who are rich.”

John F Kennedy, Inaugural Speech, Jan 1961

“If science is defined by its ability to forecast the future, the failure of much of the economics profession to see the crisis coming should be a cause for great concern”

Joseph Stiglitz

“Today we live in a world that is divided. A world in which we have made great progress and advances in science and technology. But it is also a world where millions of children die because they have no access to medicines… It is a world of great promise and hope. It is also a world of despair, disease and hunger”

Nelson Mandela

LATEST BOOK

Rent Unmasked

Rent UnmaskedRent Unmasked explores the new economic paradigm that policy-makers need to solve global problems in the post-2008 era. With conventional economic theories discredited, the new model must equip governments with tools to re-stabilise societies in a dangerous world. Rent Unmasked explains why one paradigm only qualifies to serve this purpose: the dynamic model that reinstates time and space in economic theorising.

ISBN 9780856835117 | Price: £19.95