Solution to land and property crisis in Ireland

national | rights, freedoms and repression | opinion/analysis Sunday January 25, 2004 17:41 by Michael Lemass bigears at indigo dot ie

Time to start talking about a land value tax

For the last few weeks I have been trying to save some farm land, which was left in a will for the community, from being sold off to property developers. I think its just a symptom of the current land and property crisis in Ireland.

(Note: What I am writing below is NOT part of the Airfield campaign. It’s a personal interest in understanding the madness that is the current property situation in Ireland.)

While many seem to be able to ignore it I accept that there is a property crisis in this country due to a number of reasons

- a cartel of land owners who control the supply of land and therefore control the price,

- banks overlending, sometimes 5 times the salary rather than 2.5 times

- tax relief on rental income and other tax incentives for property speculation

- more double income couples,

- the way planning permission and rezoning effectively multiplies the value of land. The land (and the planning permission or zoning) can then be sold in one package, benefiting only the owner of the land,

- there are no real rent controls or tenant rights in this country and no long term lease tradition that the continent has. Landlords have total control here which has lead to most people striving to own their own home. Its no surprise to me why there is such a high rate of home ownership in this country.

- Huge profiteering is taking place, property auctions have become like art auctions,

- the mainstream media seem muzzled or unwilling to write in-depth exposés of the situation, some say due to the advertising revenue from estate agents. Please add links if you know of any articles???

- some profits from land development and speculation are given to political parties who have understandably done nothing to change the situation. Why bite the hand that feeds you? Why is it legal? What we are seeing in the tribunals is the tip of an iceberg.

- a lot more people are speculating in property now, due to the massive profits that can be made, pushing prices up further. Property or shelter is no longer just a human right it is now a privilege as the many thousands of homeless people in Ireland will testify to. Its ironic to think that Irish men died in 1916 to free the Irish from a colonial power represented by cruel, absentee landlords. And that now we are all up to our neck in debt or not able to afford a mortgage or sometimes event the rent!

- Most house owners are under the illusion that they are doing really well but the only time a house owner "wins" is if they sell up and emigrate and can buy a property for a fraction of what it would cost in Ireland. By selling their house in Ireland they can sign a cheque for a new property and have no mortgage. In reality a lot of people are up to their neck in debt for the next 30 years, stuck in jobs they aren’t interested in and then there are those who cant even get onto the property ladder. In case you didn’t know the literal translation of the word "Mortgage" is "grip of death". (Michael Rowbotham wrote a book called "The grip of death".)

I think this should be an election issue but so far it never has.

I also believe it is a profound human rights issue.

------------------------------

Some things I would call for would be:

Tenant rights, rent controls and the availability of long term leases would be a start.

Nationalising the banks and letting the government spend money into the economy rather than allowing banks invent money in the form of a debt when their clients borrow money.
(See "The grip of death" by Michael Rowbotham)

Interest free banking. The Koran and the bible outlaw usury but only Arab banks remain interest-free. Did christians forget?

I don’t hold out much hope on the above but one can always dream!

;-)

---------------------------

In terms of solutions that could interest Barry Saul, other councillors, TDs, MEPs and people who are posting about more social housing:

* * * WARNING: This is dynamite! * * *

( which is why you have probably never heard of it!!! )


If the council are looking to generate new funds through rates etc I would suggest another option open to them which is to consider a Land Value Tax. Its not a new idea, its been around for a long time. Henry George was the author of the world's first best-selling book on economics, "Progress and Poverty" (1879). In it he detailed how a land value tax would work.

http://www.henrygeorgefoundation.org

George was influenced by earlier sages such as David Ricardo, Tom Paine and John Stuart Mill, who wrote: "The increase in the value of land, arising as it does from the efforts of an entire community, should belong to the community and not to the individual who might hold title."

Land value increases as more people want to live and carry out business in the same area and when tax money is spent on improving an area.

Very simply, a land value tax can effectively recoup some of the tax money spent on the provision of public services and allow the whole community benefit from the increased land values which the community has been responsible for.

In terms of cartels of landowners controlling land supply and prices, the tax encourages land owners to develop their land or sell it which prevents hoarding of land and control of supply and therefore artificially inflated prices.

Property values along the Dart line increased dramatically as tax money was spent on the rail services. This well known phenomenon is now happening along the Luas line and the M50. The rezoning of land along the M50 near Carrickmines could result in a windfall of up to 3 billion euros for people who were smart enough to buy land along the motorway. But over-development along this stretch could lead to gridlock on the motorway(that’s another story).

One property owner in London, Don Riley, wrote a book called "Taken for a ride". He couldn’t believe how much his property along the Jubilee Line had increased in value due to tax money being spent on the line. He estimated that the Jubilee line in London, which cost £3.5bn, led to an increase in the value of land nearby of £13bn. His property increased so much in value, even though he had done nothing to improve his land, that he started to advocate a land value tax and wrote his book!

A quick google search for - "Taken for a ride" land value tax - gave these links(among many others)

http://www.guardian.co.uk/economicdispatch/story/0,12498,984921,00.html

http://www.samuelbrittan.co.uk/text89_p.html

http://ellisctaylor.homestead.com/henrygeorge.html

A land value tax has operated and is operating in some parts of the world.

Japan had a land value tax for many years but The Marshall Plan required the Japanese to end their land value tax after the 2nd World War. Without the tax they had to deal with a massive property value bubble a few decades later. In some towns in the USA they have a land value tax. Denmark has also successfully operated a Land Value Tax. Its not theory, it works.

It has been proposed that if governments or councils implemented a land value tax that they would be able to pay for all public services from the revenues that a land value tax would generate. This in turn would mean that the government could tax citizens less. Henry George believed it would be the only tax necessary to impose by governments!

Last November, an Irish sustainable economics organisation, www.feasta.org, in conjunction with www.henrygeorgefoundation.org, ran a 2 day conference on Land and in particular looked at a land value tax as a very fair solution for many different groups concerned with the land/property situation in Ireland. It was attended by some councillors and TDs.

For more information about this conference look at

http://www.feasta.org/housing.htm

http://www.feasta.org/events/landconf/landconfbrief.html

For a transcript of the talk given at the conference by Fred Harrison, director of the Centre for Land Policy Studies in the UK

http://www.feasta.org/documents/landhousing/ppleaflet.ppt

http://www.feasta.org/documents/landhousing/ppleaflet.pdf

More on Feasta:
http://www.feasta.org/

I challenge all TDs, MEPs, Councillors and journalists in the mainstream media to start talking about a Land Value Tax and examine the potential benefits and downsides.

I dare you!

Michael Lemass

bigears@indigo.ie