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Robert Keall

In “The Condition of Labour” Henry George, with the utmost deference rebuked the Pope. In his ‘infallible wisdom’ the Pope had ‘pontificated’ that if you had paid for land you were entitled to keep it.

With disarming politeness George explained there is no valid title to stolen goods; there is no natural right to own slaves, paid for or not. Hence the abolition of slavery just 15 years before – without compensation!

Our task does not appear so simplistic, but in fact should be easier to achieve – the point of this paper.

Whilst we have to recognize that implementing our reform too radically would cause injustice we also need to be aware of the mechanisms already in place we can exploit (infra) to avoid injustice without compromising principle.

We have inherited a sacrosanct assumption that private property in land is as certain as tomorrow’s sunrise. But only 400 years ago Galileo confirmed Copernicus’ perception that the sun didn’t rise, and faced excommunication for his heresy.

It’s only 150 years since Lincoln, and 130 since George.

Whilst we have all the problems of popular mindset, ignorance, apathy and greed we have several advantages to exploit.

In Australia / New Zealand we have had 200 years’ experience of L.V.T. in various forms – Crown Leases, Land Tax, Land Value Rates, Public Body Leases; an established valuation practice that separately identifies the value of the land from the improvements; professional valuers in contrast with those elected by popular vote. The Northern hemisphere still argues about whether you can or can’t do it.

With that mechanism in place we have the following opportunities to implement the paradigm from the bottom up, now, rather than top down on the never, never.

  1. Rates Rebates – since 1973.

Those on low incomes (e.g. pensioners on State Superannuation) can apply to the local Council for a Rebate (App. 1). The current factors of Rates/Income can easily be changed.

  1. Rates Postponement.

The asset rich but income poor can apply for Rates to be postponed and brought to account when the property is sold. The principle could be extended beyond the current 5 year write-off dispensation, and be made optional.

  1. Negative Gearing. (App.2)

It has long been possible to set off the loss on property investment against other income. Recently this led to increased borrowing to 100%, 110%, 120% of the valuation (negative gearing ) in order to ensure a loss to set off against other income. Higher interest rates designed to curb it actually made it more attractive to the Banks and the borrowers. Blue Chip regarded it as Positive Gearing – a legitimate means of beating the tax man.

Ring-fencing the loss against the property was dismissed as contrary to the income tax rationale. It has been refined but persists.

In 2003-4 this cost the Australian Federal Government $2.6 billion, expected to $4 billion in 2004-5. (“Progress” p9 Nov / Dec 2005. App.3)

  1. The Homeowner’s Rates should be tax-deductible like all other commercial operations. An introductory sliding scale of Rates / Income would accommodate people without compromising the principle. (App.4)

  1. Donations to designated charities qualify for a Tax Refund – without application. The designated charity reports contributors to the Tax Department who remits a refund to the Taxpayer.

The mechanics are in place to implement the change, now, at the grass roots, which is the ultimate objective. A few would lose. Some would break even. The majority would gain!

Robert Keall

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