Reforming Public Revenue Systems
[This paper represents an attempt to summarize a new
system of public revenue based upon the philosophy of Henry George.
LAND IS LIFE - THE SOURCE OF SUSTENANCE
At the present time in Australia, we have a tax system which
penalises enterprise, work, production, savings, self-reliance and
sustainability - all the things which a sane society would encourage.
Our present tax system is also expensive to maintain, grows
increasingly complex, and is easy for the well-off to minimise and/or
This has resulted in the growth of greed, corruption, hoarding,
alienation, and fear. The gap between rich and poor is rapidly
growing, and communities have almost disappeared as burgeoning urban
sprawl destroys greater areas of land. Foreign companies are taking
over more of our resources and assets and we are becoming increasingly
dependent upon conditions and decisions made outside Australia over
which we have no control.
So, why is this happening, where is our money going and what are the
1. Have you ever wondered why we tax the things we want
to encourage (work, production, skill, enterprise, self-reliance,
savings, goods, services, sustainability, etc.)?
2. Have you ever wondered why so much 'development' is taking
place, while the numbers of empty buildings, homeless people and
areas of urban sprawl increase?
3. Have you ever wondered why 'real' estate, i.e. land prices, get
higher and higher?
4. Have you ever wondered why real estate has 'boom and bust'
cycles? 5. Have you ever wondered why communities are getting poorer
6. Have you ever wondered why many property developers seem to get
wealthy so quickly and seemingly effortlessly - sometimes overnight?
7. Have you ever wondered why tax & ratepayers (i.e. the local
community) unknowingly fund the windfall profits of property
8. Have you ever wondered why a piece of low-value land can
suddenly become very valuable overnight because of a simple change
of zoning by the local authority? The lucky owner gains much
unearned income but has done no work nor produced anything.
9. Have you ever wondered about the "right" to make
private profits out of land and natural resources which belong to
10. Have you ever wondered why almost everyone accepts without
question the above bizarre occurrences and why the reasons for these
events have been virtually banished from economic studies,
discussions and analysis?
11. Has it ever occurred to you that there may be one main reason
which often causes people to behave in ways which are fear-based,
greedy, insecure, corrupt, alienated, self-interested and lacking in
THE SOLUTION is to gradually shift away from our present tax system
towards charges upon the use of land and natural resource - Community
Ground Rent. That is, you pay a rent to the community for the piece of
land that you choose to occupy. You pay according the benefit/s you
receive from the community. At the same time, present forms of
taxation are reduced. Eventually, most of the present taxes we pay -
directly or indirectly - can be abolished.
Let me explain more.
In 1890, a famous American called Henry George visited Australia. As
a result of his visit, we have what is regarded as one of the best
land-rating/valuation systems in the world. At that time, most people
knew about Henry and the ideas from his book "Progress and
Poverty" - an international best seller - were widely discussed.
Henry disagreed that land should be seen as a commodity to be bought
and sold. He saw land as the source of all sustenance and believed
that all land should belong to the community which lived on it. Any
products of the land, and any goods produced from the land through the
use of labour, were free to be bought and sold. However, if you chose
to privately occupy and use a piece of land, then a rent for the use
of that site (called community ground rental, community charge, site
rental, or land value tax) should be paid to your Local Council.
Thanks to Henry's visit to Australia we already have a (watered down)
system of Community Ground Rent charges in place. A landowner pays a
relatively small amount to her/his Local Council based upon their
valuation of the 'improved' or 'unimproved' property. These annual
charges are called "rates", and they partly pay for all the
infrastructure and services we need - e.g., roads, drainage, power,
water, police, gas, telephone, libraries, rubbish collection, parks,
and so on. Inner city properties which have more local amenities
usually have a higher rated value than those properties which are
rural, and have less surrounding infrastructure and services
available. (At present, all Local Government rates collected in
Australia amount to less than 5% of total tax revenue.)
Henry claimed that no other taxes would be necessary and the income
from fairly valued site rental charges (based upon the value of the
land site only, or 'unimproved' value) would be more than enough to
pay for all of the services and infrastructure a community/nation
needed. The price of land would fall to zero with windfall profits
going back to communities rather than to property speculators. The
price of 'improvements' upon that land would remain. Rents would be
reduced as landlords would need to attract tenants. They would have to
pay the community charge for any land they owned, whether it were
occupied or empty.
Australia's most comprehensive review of how to raise public revenue
took place here in Brisbane in 1989. Using the Brisbane City Council
as the focus of their study, The Lord Mayor's Committee of Inquiry
into Valuation and Rating came to the unanimous conclusion that
charging an annual rental on the unimproved value of a piece of land
(a site), was the most efficient and equitable general revenue base
for all levels of government.
Their recommendation has never been acted upon.
However, if each piece of land were valued by Local Councils, and the
owner paid the annual 'rent', the income would be more than sufficient
to provide all Australian communities with quality public services and
amenities. Excess revenue could be directed to state and national
levels of government. The only other taxes necessary would be levied
on unsustainable, wasteful or polluting activities. Land and the use
of natural resources would carry an annual rent to be returned to the
community. You pay according to what land you choose to use, and
according to the benefit you receive from the community. (The Benefit
Enormous savings would take place; people would become far more
enterprising and creative when punishing taxes were removed from
enterprise, investment, savings, production and sustainability.
Employment would flourish (no more payroll tax), and money would be
available for useful investment instead of being wasted in more (often
unnecessary) property developments Urban sprawl would be reduced; less
environmental damage would occur; home purchase and rental would be
far lower in cost than it is now; mortgages for home owners would be
either unnecessary or very small. Remember, the cost of land would be
reduced to zero and most of our present taxes could, in time, be
Can you begin to imagine the growth of enterprise, creativity,
employment and production when such desirable activities were no
longer punished by high taxation!