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“Land Tax is Back on the Agenda”. So reads the heading of an article usefully reprinted in November’s Comment, from its earlier publication in the Press & Journal of 15 October. “Usefully”, because I suggest it is well for us, at this early stage in the matter, to grasp what an appalling misnomer the term “land tax” is!

In the first place, it is not land (implying acreage) that is taxed, but the land’s rental value – a value which can rocket in urban areas in even the miniest of sites, as we know. Now these rental values exist – in some cases astronomically – whether land is up for development or not, so why should the government wish (as now seems likely) to step in merely at the point of a new development gain? Surely, in justice, either these rental values – allowing something to past development – should be collected by society from every site, or none should be taken at all. For new development gains will achieve, simply, sudden new leaps in that same rental value – (since all capital values in land refer back to rent). Secondly, if we decide that these rental values should indeed be taken by society, then no complex programme of taxation is required to capture them. Simply – society opts to collect them, 100%, from every site.

Now, would this be fair? Here we are confronted with a basic aspect of revenue- raising, since any proposal must be seen to be just if it is to gain public support – (a test, we might remark, scarcely passed by taxation!). The answer is, it is as fair as that we can say: the community collects its rental values back. Its rental values? No community – no rental values! And this stands, whether there is development permission involved or not, since it is the need of us all for space on this Planet which gives rental value to land. Even land having for its occupier the highest intrinsic worth (ie use value) has no rental value unless there are others who would gladly occupy it in his place.

There is another feature of land rental value which commends it particularly for our revenue – it is something that not only arises with a community, but increases with that community’s growth. It was the American social philosopher, Henry George, who a hundred years ago drew our attention to the beauty of this natural law, called the Law of Rent: that, as a community arises and grows, there arises naturally with it its own fund – that is, a fund uniquely social in its origins – from which to meet all its social needs; and a fund which, as that community grows, grows naturally along with it.

Now if such a socially-sourced fund already exists for us, right to hand, from which to meet our social needs – then what is the whole taxation business about? Can we possibly have stumbled here on the source of that never-ending gap between the rich and poor? – not to mention the “widening black hole” in the Chancellor’s budget calculations, mentioned in that article?

To answer the last question first – the Chancellor’s black hole: very likely, since revenue-raising via taxation is mightily self-defeating. Which of us does not know of people who have given up on working harder or longer hours, because ‘most of it will be taken in tax anyway”? And what about those famous (or infamous) tax havens abroad made use of by the super-rich? Or who can calculate the amount of tax lost through private cash transactions, prompted by the natural indignation felt by those who labour, that their work is being robbed of its rightful return? If we can only see it, the failure of taxation to meet society’s needs is already written into the sloppy, self-defeating formula on which it is based – “from each according to his ability and to each according to his need”. A school teacher, doing a bit of education on the aside, once asked his class what would happen if, when exam results were read out, those having 90% were asked to forfeit a sizeable chunk of their marks, to meet the “needs” of those in the 30% range? What would be the effect upon both the 90s and the 30s?

The trouble is that, so attuned are we to the ethos of a society in which a huge number live in or below the poverty line, that we cannot imagine one in which such economic “needs” would not be all too real. We simply cannot imagine how things might be otherwise. But the question of land rent serves us with a powerful wake-up call, presenting, as it does, the possibility of a new and invigorating formula, as opposed to the old sloppy one. How about a formula making justice its bottom plank – ‘from each according to what he receives from the community, and to each according to what he contributes to it’? This new formula greets us at once in the recognition that it is not the owner of the title-deed who creates the land’s rental value but, in fact, everyone except the owner, since its entire rental value flows from the surrounding community. (We should note here that all of us contribute equally to these rental values, since we all equally have need of land for our very survival here).

We can now see that we live in a society which is truly topsy-turvy – one in which the rental wealth it creates flows to those who have not made it; while, by the same token, the members of the community who – all of them together – have created that rental wealth, not only do not receive back their rightful share in that wealth, (a proportion of which could well be paid over as a social dividend to every citizen), but in addition are clobbered with taxes, so suffering a doubling of the unnatural burden they bear. Perhaps we can now see why we live in a society full of “socially excluded” and “deprived” – one where all efforts to close the gap between the rich and the poor are forever in vain. If we have the smallest social conscience, we must see that the time has now come for us to take a decisive step, and to change course.

To turn to the earlier question: what is the whole taxation business really about? In brief, a centuries-long cover-up! And a cover-up it is high time that we awoke to. This cover-up I, of course, easily maintained by the false term “land tax”, which gives no hint of the real community-created values attaching to land, and hence of the robbery of the community that continues, day-in day-out, under present land tenure. We can now see how cover up, aided by falsification and mis-education, can hold a society down for a very long time!

There are two final points that we have to consider. Firstly, what happens to the capital value of land, when those rentals are returned to the communityt each year? Land, having no cost of production, has no real capital value, so its pretended capital value vanishes naturally into thin air – or rather, back into those formerly uncollected rentals from which it was first concocted…which, of course, allowed speculation in uncollected rentals ongoing, to the title-holders of land…

We can now see how the false teaching that land is capital – (something not refuted by the false term “land tax”) – by stealth draws a society into the fateful realm of land monopoly, whose terrible reverse face is the dispossession, disempowerment, and gradual degeneration of a growing proportion of its people – (70,000 Scots now in prison, one in seventy of us and the highest figure ever) – under that monopoly’s ever-tightening grip. Need we wonder at the proliferation of social problems with which we are wrestling? Though none dare say it, our society is now on a runaway course, careering down to the abyss.

The second point for our consideration is somewhat startling. “Baal – god of the landlords”! Yes, such is the title of an article by a Bible historian which appeared in Land & Liberty in September 1979. It seems there is no getting away from it. Our land tenure system, which treats land as a capital commodity, can be traced back to those earlier times, linked to the worshipping of idols – both coming under the severe censure of the great Bible prophets. So we discover that the real saga of the Old Testament (Jezebel and all) turns upon the question of justice – as involved in the land tenure law! Not only this, but the same burning theme flows on into the New Testament, where we discover that Jesus’ words about “the meek shall inherit the earth” have been somewhat watered down in translation, and actually refer to the dispossessed – with the accompanying assurance that the land shall be restored to them.

“Biblical Economics” by the Rev. J. Archer Torrey,* a small volume incorporating the earlier article in Land & Liberty, is riveting reading indeed, giving the Bible a wholly unexpected modern dimension – relating it vividly to our own crumbling state. So, Jesus walks the land with us today in ways we never realized. Surely the stuff of an electrifying message from the pulpit – one that might even bring people flocking back to the churches again!

* 5th edition, published 2005. ISBN 0-9.11312-99-4. A copy is in Pitlochry public library.

The above article casts no aspersions upon any individual, no matter what may be their position within the present system. It is the structure of our society that is at fault, and no individual is to blame for that. It is a joint responsibility in which we all share, and the united efforts of us all are needed to re-structure it aright.

by Shirley-Anne Hardy