Taiwan: A Georgist Success Story?
Edward J. Dodson
Equal Rights, Vol.35, No.3, Spring 2006]
Today, the very real concern of the people of Taiwan is whether the
rest of the world will stand by should the Republic of China demand
reunification. For several decades following the arrival of mainland
Chinese to the Island of Formosa, one of the great challenges was the
feeding of a greatly expanded population.
As we know, the Kuomantang party, influenced by the writings of Sun
Yat-sen, introduced a program of land reform. The most important
accomplishment was to eliminate the "rack rents" of the
island's landowning class, encouraging farmers to become increasingly
productive and - in the process -- profitable.
By the late 1980s, Taiwan was being referred to as one of Asia's new "little
tigers." The Taiwanese remained governed by a one-party political
system, but a continuously improving economy also brought political
stability. Taiwan's President, Lee Teng-hui, held a doctorate in
Agricultural Economics. Taiwan's story was documented in 1989 by the
former Minister of Finance and Economics, Kwoh-ting Li, in The
Economic Transformation of Taiwan. In this book, the role of land
policies is described as one of many measures adopted as part of a
commitment to economic development.
This is not meant to suggest that Henry George's perspectives played
no part in the thinking of Taiwanese planners. One of Taiwan's leading
experts on land markets, Tseng Hsiao (Director of the China Research
Institute of Land Economics) wrote:
"The principle of equitable distribution of land
rights requires no taxation on labour and capital. Furthermore, site
rent has to be taxed for public revenue because land has monopoly
power. There is a difference between ordinary products and land. The
latter is a gift of nature, which is limited and cannot be increased
by human beings; its revenue has to be shared among all citizens in
Another writer, Alven H.S. Lam provided the following assessment of
Taiwan's experience with land taxation in a December 2000 article for
the American journal of Economics and Sociology:
"In 1977, the Land Tax Law was passed to provide
stronger regulatory and enforcement power for land-related taxes.
Two major land-related taxes were defined in the laws: land-value
tax and land-value increment tax. The land-value tax was developed
to expand the local government revenue base. The land-value
increment tax was designed to ensure the public enjoyment of future
land value increment. In other words, land-value increment tax's
objectives are to assure the equal distribution of future benefits
from land and to control land speculation. For the effectiveness of
implementing the laws, both land-value tax and land-value increment
tax are carried out within local jurisdictions.
The land- and building-related taxes in Taiwan include land-value
tax, agricultural land tax, land-value increment tax, deed tax,
house tax, and estate and gift tax. Agricultural land tax was
suspended in 1986. Estate and gift tax is a central government tax.
Deed tax accounted for 8.5 percent of prefectural and municipal
revenues in 1995 is levied on realized gains from land transactions.
It is sometimes imprecisely characterized as a "capital gains"
tax. The gains from land sales in Taiwan, however, have special land
policy implications. In Dr. Sun's ideology, it is important that "the
incremental of land price should belong to the society rather than
the landlord." He believed that the increase of land-value is
attributable to social development rather than work form the
landlord or investors. The profits from land should be returned to
the society through the land-value increment tax. The land-value
increment tax became a powerful policy tool to regulate the equity
of income distribution and to control land speculation. The seller
must pay the land-value increment tax before the land transaction is