FAO proposes land value tax

03 Oct 2018 16:40pm
WINDHOEK, 03 OCT (NAMPA) - Land tenure officer at the Food and Agriculture Organisation of United Nations (FAO), Mackay Rigava has proposed land value taxation as a progressive form of improving and enhancing productivity.
Delivering a presentation at the second National Land Conference here on Tuesday, Rigava said this would improve equity to improve the chances of raising income for everyone and build a more stable society.
Land value tax is a levy on the unimproved value of the land. It disregards the value of buildings, personal property and other improvements to real estate.
He said a progressive form of taxation would be an advantage as it does not create distortions and makes for a transparent system.
Rigava added that this method is used in the United States of America, China, Australia and Chile, and in other advanced and less advanced economies.
“It is relatively easy to manage, limits the risk for tax evasion and limits incentives for speculation because the purpose is to tax those who own more land,” he said.
The FAO representative noted that one challenge in making land value tax work is how land would be valued, especially in rural areas, which economies like America have also faced.
Setting a tax rate for land values is another challenge.
“If the tax rates are too high, only very few people – probably the wrong people - would be able to pay for the values. If they are too low, you will not be able to get the tax revenues you need.”
In addition to the taxation of land values, it is important to have a very robust set of accompanying measures, he said.
He noted that among the measures needed to make taxation of land values efficient is access to finance and ensuring that those who have access to land have managerial expertise, training and skills to make the most out of the land.
“In the end, you want the owners to be more productive and to connect their land to global value chains as we are living in a world where it is impossible to walk and succeed alone. You need to organise yourselves in groups and connect to the global economy.”