We are pleased to share with you a special and very timely report from the United Kingdom.
Our normal publication schedule will resume with the October 1 issue.
Britain's Deputy Prime Minister, John Prescott, has commissioned an investigation into how public spending raises land values. The contract has been awarded to one of London's leading property consultancies and London University. They will review the literature that documents the link between investment in transport systems and increases in the rent of land.
Collecting the evidence is the first step towards working out new policy strategies. But I can report that other government ministers in Blair's administration - strapped for cash to pay for health and educational services - are beginning to force the issue. They are keen to know if the uplift in land-rents would pay for things like better rail networks.
This turn of events originated with the publication of a book by the Centre for Land Policy Studies (CLPS). Don Riley, who restores property on London's South Bank, discovered that the construction of the extension to the Jubilee Underground line had raised the value of land - including his sites. And he wanted to tell the world that it was wrong for a few privileged people to pocket the proceeds.
His analysis of how £3.5bn of taxpayers' money was translated into an uplift in land values of about £13bn - according to his estimate - appeared in "Taken for a Ride." We published the book in the summer of 2001 as the first in a series of Inside Stories. The reaction was astonishing. Reason: the book answered a question that was worrying governments all over the world - how to finance improved services.
Government transport agencies as far apart as Ireland and New Zealand bought the book - and some of them have now launched their own research projects into land-rents as a possible source of public revenue. South Australia's transport minister, Michael Wright, sought a briefing on the subject when he recently visited Dave Wetzel, Vice-chair of London Mayor Ken Livingstone's Transport for London.
"Taken for a Ride" received glowing testimonials from the Press when we launched it in cooperation with the Institute of Economic Affairs, one of Britain's leading free market research institutes. Setting the tone was the major piece in the Financial Times on August 30, 2001. Columnist Samuel Brittan opened with the statement that Britain's Treasury minister, Gordon Brown, and Mayor Livingstone, "could learn something from David Ricardo's 200-year-old analysis of land values. Here is one of the very few examples of a tax that, far from being a distortion, should aid efficiency".
Mayor Livingstone, in his draft London Plan - published in June - has responded positively. He declares that "large increases in land values, much of which is attributable to the planning system or to public investment, should be recouped to re-invest in the public interest. For example, increased land value created by public sector investment - especially public transport improvements - should be partly recouped for the public benefit".
Media endorsements came thick and fast, culminating last month with a major analytical report in The Economist (August 31). Under the headline "Getting there faster: Why not make those who benefit pay for transport improvements?" the prestigious journal offered an account of how the Blair government was focussing on land values.
Citing Don Riley's experience, The Economist reported that "the idea of taxing increases in land values makes eminent sense". As if that was not enough of a fine endorsement, The Economist went on to admit: "The idea of taxing increases in the price of land may sound dangerously radical but actually it is not. It has a history stretching back to the mists of fiscal time".
A benign public climate is in the making. If we can consolidate the gains, so far, we make it more difficult for the traditional opponents to deride the rent-as-public-revenue policy. The other London think-tanks are now gearing up to wade in with their research reports on what they perceive to be the hot issue in public policy. Last Friday (Sept. 6) the Blair-linked Social Market Foundation held a private roundtable for selected experts, property developers and civil servants. I was present. We were briefed by the man from the Treasury who has been charged with exploring policies related to land values. The meeting was held on the basis of Chatham House rules (participants agree to speak frankly, on the understanding that they are off-the-record), so I cannot disclose what was revealed.
I can now draw some conclusions from the events of the past year.
First, CLPS has found the recipe for arousing interest in land-rents. The confessional angle, documented with hard facts and illuminating stories that expose the damage caused by taxes, attracts readers who are challenged by problems that are now running away from political control.
Second, unless we control the agenda, the outcome could be a policy disaster. British Labour governments have botched their attempts to tax land values on three occasions since 1947.
Third, we have to shift the debate into other areas of concern to the public. We must demonstrate convincingly that the rent policy offers solutions that are otherwise beyond the reach of politicians.
CLPS has some aces that we will use to build a solid constituency in favour of fiscal reform. Our key document - the benchmark study of the benefits that flow from shifting away from taxes and onto public charges on natural resources - was published in the spring as the second Inside Story. "Double-cross" - by CLPS chairman Ron Banks - provides the hard numbers that are a profound embarrassment to politicians. CLPS has adopted a Name & Shame strategy to confront policy-makers who speak with forked tongues. Governments have to be held accountable for employing revenue-raising tools that crucify their economies.
We will now deepen the debate with follow-up studies that will shock readers. Our strategy is to force the Blair government into a realistic reappraisal of taxation. Politicians prefer the simple life. Our mission is to enable them realise that they can keep their promise to abolish taxes - if they go about it in the right way.
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