“How do 52 million South Africans share equitably in their 122 million hectares, especially when those hectares vary so enormously in value? … No prizes for guessing it cannot possibly be done without taking a long hard look at the phenomenon of land or economic rent – and then collecting the community created value that it represents. Moreover if, as is possible and advisable, we do that instead of taxing the application of labour and capital, guess what, we’ll get the application of a lot more capital as well as the jobs that go with it.”
Stephen Meintjes, The Star, Johannesburg
South Africa is strategically important for the West. Like many countries in Africa, it is resource rich but the benefits are not shared by the whole population. High levels of unemployment are leading to increasing conflict and violence, undermining the brighter future hoped for when apartheid was abolished.
The authors set out a proposal to unleash their country’s potential for growth in a way that benefits investors and the poorest by reforming taxation – a blueprint for other developing countries. The rapid development of Taiwan and South Korea in the 1950s and 1960s owed much to a similar, business-friendly tax reform.
Governments today tax social ills like tobacco and alcohol to discourage use, but why tax work and investment? The result, the authors reveal, is to make half the country economically unviable, yet economists have long known that a tax on ground rent does not have this adverse effect. As Adam Smith put it: “Though a part of this revenue should be taken … in order to defray the expenses of the state, no discouragement will thereby be given to any sort of industry.”
All governments need do is collect the value they create and stop taxing the value created by labour and capital. To achieve this, the authors propose replacing most taxes with land value rentals and, in the case of mining, rolling out the tried and tested gold mine tax formula to the rest of the industry, thus stimulating development and creating more jobs.
Such a regime would encourage the owner of land to put it to its best use or sell it for someone else to do so. It would also make viable public investment in new infrastructure projects. These would become self financing, because the uplift in land values, due to the improved amenities, would automatically be captured in higher rentals payable to the government, a kind of virtuous circle.
Stephen Meintjes studied law at Stellenbosch and Oxford where he was a Rhodes Scholar. He has spent most of his career in investment research and management and is frequently quoted in the media, including radio and television. He is currently Head of Research for Imara S. P. Reid.
The late Michael Jacques, a chartered accountant and then lecturer at the Faculty of Commerce of the University of the Witwatersrand, worked with Stephen Meintjes on the submission to the Treasury of various proposals on windfall taxes, royalties and general tax reform.
“Lateral ideas on tax raising to generate social justice for all South Africans whilst maintaining
international investor confidence.”
“This book is, in a sense, immediate and topical and in another, universal and timeless.”
Nobantu Mbeki, University of the Witwatersrand, Johannesburg
“… abounds with new ideas … they must be debated, for only in this manner can a solution to the [land] crisis be found.”
Dr Thami Mazwai, University of Johannesburg
“[The authors] challenge us to totally rethink the nature of taxation.”
Kennedy Maxwell, past President, Chamber of Mines of South Africa
“This is an innovative proposal on taxation that simultaneously addresses the issues of equity, growth, job creation and tax efficiency. It goes beyond the theory and outlines practical steps that can be taken to a different taxation regime …”
JP Landman, Economic Advisor, Accelerated and Shared Growth Initiative for South Africa
“The concept of community-created natural resource rentals as described … does much to stimulate the basis for an expectation for finding and unleashing forces that could give rise to economic regeneration.”
Alex Anderson, Chairman of MIS Holdings
“A valuable contribution filled with sensible commentary that is well supported and well evidenced.”
Dr Adrian Saville, Chief Investment Officer, Cannon Asset Managers
“An excellent demonstration of how to apply principles of economics to precise circumstances of place and time — in this case of South Africa today. The main principles concerned are the law of rent, the incidence of taxation and the role of credit, all of which are included in the authors’ understanding of natural law. What characterizes the book, and distinguishes it from others that have dealt with these same principles, is the use of the concept of resource rentals as a broader alternative to land value taxation. In support of their argument the authors quote from the preamble to the South African Constitution: ‘South Africa belongs to all who live in it.’ With great care and perception they draw out the implications of this statement…The authors deserve great applause for their devoted application of principle and empirical research to their native economy.”
Brian Hodgkinson, African Development Review
“For a country in search of inspiration, here’s an idea that deserves a decent airing.”
Ciaran Ryan, Moneyweb – Read full review here.
“This is a thorough study with enough detail to provide the basis for adoption by the SA government if it were persuaded of its merits. The principle argument put forward by the authors in favour of LVT is that it would be a fairer tax than the current arrangement and help bring rural and deprived areas out of poverty. Anyone interested in social justice needs to look at economic justice as part of that, and anyone interested in economic justice needs to look at tax justice. This book is therefore a welcome addition to the literature.”
From a customer review on Amazon – Read full review here.
Our Land, Our Rent, Our Jobs is the subject of the closing thought in Land and Liberty Magazine, a piece by the economist Fred Harrison – Read the article here.
Read Stephen Meintjes’s article on ‘Land Rent as a Solution to Equitable Land Distribution.’