A Rural Land Tax
for the Republic of South Africa

Godfrey Dunkley

[Reprinted from the Association for Incentive Revenue Research Newsletter, June 1995]


Serious thought is being given to the advisability of a Rural Land Tax in the R.S.A. This is being investigated by the Department of Land Affairs and a Parliamentary Select Committee on Land Affairs. The subject is also just starting to enter into public dialogue and the press.

The Minister of Land Affairs Mr. Derek Hanekom has a major problem in addressing the expectations of the masses which were heightened during the run up to the elections in April 1994. There are a large number of people, particularly blacks, who were dispossessed of their land during the apartheid era. Some of this land is still owned by the state, but a fair amount was sold into private ownership. Legislation is being prepared for land to be restored to its previous owners where ever possible. However that land which is now in private ownership presents a major problem, as land values have soared in recent years.

A further problem is that the concept of tenant farmers was largely destroyed during the apartheid era. In many areas, only those families actively working for the farmers were permitted to remain on privately owned farm land. Therefore there are large numbers of landless people who even in the event of land being made available to them have lost the ability to farm in their own rights. The farm labourers also have a very limited knowledge of the economics of farming.

Some legislation has already been tabled in parliament allowing for second generation tenant farmers to take over the land which they have worked in this capacity. In some cases workers are being evicted from land that they have worked for a long time as the farmers anticipate losing some of their land. Many traditional white farmers are very upset at the possibility of losing some of their land which may have been in the family for more than a century.

In summary, Minister Hanekom is faced with a very delicate situation. Fortunately he is proving to be the right man to meet this challenge.


During the early days of white settlement in South Africa a system of quit rent was used whereby those using land paid an annual amount to the government for the use of that land and the protection that they enjoyed, under the state In time this was replaced by freehold tenure to land which still demanded a service to the country in the event of disturbances and war. In time this form of service also fell by the way and early this century income tax was introduced as a temporary measure mainly to cover the demands of war. This income tax, far from being temporary, has continued to increase and a number of indirect taxes have also been introduced.

Fortunately at local government level, the majority of municipalities collect their rates on land value only and more than 70 % of rates in the country are collected from site value rating. Over the last 30 years those cities on site value rating have shown far greater growth than those remaining on total value rating. Today only Cape Town and Port Elizabeth continue to use total value rating and Cape Town intended changing to a much higher rate on land than on improvements prior to the general election: no decisions have been made since.

There is a general acceptance at municipal level that it is better to collect rates on land value only. This concept needs to be extended to cover central government revenue as it would hold many benefits for the community as a whole. However, a tax on land values, to be equitable, should apply equally to all land throughout the country which has a market value.


On the 20th March 1992 a one day conference was held at the University of Pretoria to investigate the feasibility of a (rural) land tax in South Africa under a new constitution. This was sponsored by the Centre For Human Rights Studies and organized by Prof. Riel Franzsen. This conference was addressed by several experts on land tax from overseas including Profs. Mason Gaffney, John Strasma and Rexford Ahene.

On the 23rd March 1992 a one day workshop was held at the University of the Western Cape on the same subject. Both the above were attended by Minister Derek Hanekom, who at that stage represented the African National Congress.

A second conference was organized by Prof. Riel Franzsen at the University of Pretoria, in November 1993. Prof. John Strasma and Rexford Ahene were present.

Professor Strasma tended to favour a rural land tax whereas Godfrey Dunkley spoke strongly in favour of a land value or rental tax on all land and natural resources.

Over the last few months there have been numerous reports in the media regarding the intention of the Minister to introduce a rural land tax, but the details have not been set out. Godfrey Dunkley had a long meeting with Minister Derek Hanekom on March 7th 1995 during which strong emphasis was placed on the need for such a tax to apply to all land and not only farming land. It was also pointed out that this should not be seen as an additional tax but that an equivalent amount should be off set against taxes that impinge at the margin of production.