New Zealand - land and property taxation

American Journal of Economics and Sociology, The,  Dec, 2000  by Robert D. Keall

• E-mail
• Print
• Link

These policies were pursued (often in contradiction to election manifestos) by a coalition government stitched together on the basis of unrelated political issues and through the mechanism of an ill-contrived form of preferential party representation. The Asia-Pacific Economic Cooperation Group (APEC) conference held in New Zealand in the Fall of 1999, expressly designed to extend "trade liberalization," brought that approach under close scrutiny and adverse comment from, among others, a former governor general and a former prime minister. The underlying cause of concern is the failure to distinguish between free trade in produced goods and services, and treating the nation's patrimony of natural resources as a mere commodity to be bartered away to foreign interests instead of serving as a continuing source of opportunity for its citizens and revenue for its public services.

This diminished level of economic rent appropriation for community purposes has had the results that should have been expected. While glowing reports go 'round the world extolling the recent growth of the economy (which is fine for those who own "the economy"), wages fail to keep pace with even relatively low overall inflation and are inadequate to meet the new demands of individual responsibility. The benefits of deregulation have not trickled down. The rich have got richer, and the poor, poorer. State assets have been sold cheaply, ostensibly to repay debt. But the national debt and current account deficits have risen alarmingly. All basic government services are run down--health, education, police, etc., to meet tax cuts directed at the top end. Poverty and violence have attracted unprecedented comment by the judiciary. All these factors and more were issues in the 1999 election that resulted in the present government. The question now is whether New Zealand's repudiation of the failed program of the New Right presages a return to the failed program of the Old Left. There's got to be a better way than either. That way is sketched in the final paragraphs of this chapter.

New Zealand's experience of having practiced land-value taxation in several ways over 150 years; the demonstrated bankruptcy of other approaches at both ends of the political spectrum; the paucity of viable fresh alternatives on offer at the recent election; the liberal attitude of the media and the hunger for change of freelance journalists; in short, the crossroads the country is now at, make it a crucible for the resolution of these historic issues.

The current confluence here of the related critical issues (alluded to under Recent Developments and more immediately above) presents an unexpected opportunity to promote new ways to collect economic rent, and to secure the community's interest in natural monopolies, akin to the rating legislation of a century ago. Addressing this opportunity requires an approach (including appropriate terminology) that: (1) commends itself to the electorate; (2) is mutually exclusive of other taxes; [23] and (3) institutionalizes the principle so it is less vulnerable to political interference and to every tax collector, at every level, every year. To this end, a market "resource rental" is now more appropriate than a land tax in relation to the significant infrastructural industries currently the cause of concern. The term is already used by government and political aspirants. It inferentially distinguishes the operation from the ownership of the asset--one need not own it to use it. Private enterprise must not include pri vate ownership of the natural elements of life. When the objective is recognized, a wide variety of well known techniques may be used as transitional or enduring means of achieving it. In some cases, a capital investment by the state may be necessary to manage the resource and to recover the rent.