Angela Merkel describes dysfunctional things like Greek bonds as s***-storms. The seemingly incurable and inexplicable property dogmas of the Free Market Foundation (FMF) qualify for the same label. At the very least they also refute the rule of law.
The article “Land reform can be achieved cheaply and legally” in Business Report, July 17, refers.
The FMF has an obsession with freehold tenures, the code for land transactions that are settled by a one-off capital payment. The result is high taxes and high land prices. In Claremont we have experienced land price increases of an average 15 times to R2.5 million over the past 24 years, which is quadruple the cumulative consumer price inflation rate.
These are unearned profits, a state subsidy of landowners! The cause is the undertaxation of land (including all natural assets below and above the earth’s surface) and the overtaxation of labour (wages and salaries), capital (profits and interest) and consumption (VAT). The latter are also known as dead-weight taxes as they slow economic growth by raising the cost of living to satisfy demands of the SA Revenue Service.
As a car can be powered by petrol which pollutes the air or by sun-charged batteries which do not, so the national budget can be funded entirely from beneficial land revenues, excluding improvements.
These are “jumbo” rates and taxes charges. An average monthly R5 000 extra rates bill levied on the 11 million formal house and flat owners will equal the R650 billion budgeted by the National Treasury in 2012 for personal income tax and VAT.
There is a different ratio for the corporate taxes of R190bn. These figures need auditing but illustrate the point that whatever income taxes and VAT might be, a land rates system can match them.
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The Guardian 