Australia ought to: Re-introduce Federal tax upon unimproved land values of non-rural properties in excess of $100,000 unimproved land value; Impose a special tax upon vacant office space; Introduce a capital gains tax; Re-introduce mport licensing ; Adjust tax schedules in favour of lower and middle income groups; Seriously examine the pricing arrangements of foreign-owned multinational corporations; Examine the double-taxation agreement; Eliminate sales tax on all essential items, and reduce it on less essential items. --Clyde Cameron, Australian Federal Minister, writing to the Treasurer in 1974

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Progress, November-December 1996, pages 3 and 4

By The Hon Clyde Cameron, A.O.
    This letter was written by Clyde Cameron, Minister for Labour and Immigration in 1974, a member of the Whitlam Cabinet prior to the "Double Dissolution" in 1975. These events occurred 22 years ago [published 1996].
    It is addressed to The Hon. Frank Crean M.P., who was the Treasurer.
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Closest Geoist encounter with Canberra.."From Clyde with love"

27 June 1974

Dear Frank,

I promised that I would write to you concerning the fiscal policies that I believe we should be following to deal with the present inflationary situation. You will recall that I sought to open up this question during the talks with the Prime Minister arranged with the Australian Congress of Trade Unions'. (ACTU) representatives in Canberra on 20th June.

I am thoroughly convinced that if we are to make an effective attack upon inflation we will need weapons that we have not so far seen fit to use. These must include the following:

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1. The re-introduction of a Federal tax upon unimproved land values of all non-rural properties in excess of 100 thousand dollars unimproved land value, and a special tax upon any taxpayer owning more than his place of residence and one vacant block. As well as yielding several hundreds of millions of dollars in revenue, this tax would have the even greater advantage of easing pressure on resources caused by the rapacity of land speculators. It would reduce land values by taxing vacant building allotments and would be much more equitable than seeking to reduce demand inflation by such measures as say indirect taxation upon consumer goods and household appliances. Rising land prices have made a greater inroad into the incomes of the ordinary wage and salary earner than any other single factor. It not only directly affects the wage and salary earner who is seeking to build a new home but it indirectly affects the price of homes already built.

It is useless talking about allowing the States to control land prices. They will never do it and we should accept that as a fact. You might recall that when the Menzies Government abolished the Federal Land Tax the Labor Opposition then stated quite categorically that a Labor Government would re-introduce the tax.

Republished from Progress, official organ of Tax Reform Australia, 31 Hardware St., Melbourne, Victoria, 3000, Australia.
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As a matter of historical record it should not be forgotten that in 1910 the Fisher Government was actually elected to office on the sole issue of the taxation of unimproved revenue than the imposition of indirect tax upon the necessities of life; it is the one kind of tax that has to be paid by those best able to pay it. In terms of politics, it affects an insignificant number of voters because no ordinary wage or salary earner would ever be liable for taxation upon an unimproved assessment of 100 thousand dollars. An unimproved land value tax upon vacant blocks in excess of one additional block would not affect wage and salary earners. Those who would be most affected would be land speculation companies.

Our aim should be to impose an unimproved land value tax upon vacant land that is greater than the unearned increment that accrues to the land due to the operation of a law of supply and demand or of inflationary pressures. In other words, land speculators should be given the choice of either releasing the land to those who require it for home building or going broke to pay the tax which we would levy upon it while it was held out of use.

You will recall that I raised this matter during the pre-Budget discussions last year and that there was tacit agreement among the majority of Ministers that the re-introduction of a Federal tax upon unimproved land values of non-rural properties in excess of 100 thousand dollars should be adopted. I raised this matter, you will remember, with Sir Frederick Wheeler when he and his team of advisers appeared before a Cabinet meeting some months ago. Sir Frederick's excuse for not having included this proposal in last year's Budget was that Treasury did not have enough time to study the proposition. Actually, Treasury did not need much time because the land tax apparatus is already established by virtue of the fact that all of the States use it for revenue raising purposes. Treasury has now had almost a year to think about the matter and I would hope that lack of time would not again be used as a reason for further delay.

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2. We should impose a special tax upon vacant office space and office space or city buildings which are not leased. This would have the effect of immediately releasing enormous quantities of building materials and a huge reservoir of manpower for the construction of houses. Because of inflationary factors, it is now quite profitable to spend millions of dollars in the construction of city buildings even though the buildings are kept vacant. You will of course know about the profits made by the well-known UK entrepreneur who has been able to keep a multi-storey building in London empty for several years and at the same time reap an enormous profit over and above the interest on capital. This sort of thing is happening in our own country and it is criminal that we are doing nothing to direct manpower and materials to more essential building projects.

3. We should introduce a capital gains tax on all incomes derived from share transactions, the sale of land and the like, so that we can strip away all advantage that now comes from undistributed profit. In this way we would be able to make more money available to home builders and to other worthwhile projects at reasonable rates of interest. Investors are not going to bother about lending money to home builders and to the expansion of small businesses when they can reap such tax-free fortunes from investment in public companies which build up an enormous cash and capital reserves as an alternative to the distribution of dividends.

4. Import licensing should be re-introduced so as to ensure a reduction in the wholesale and retail costs of imported goods. We ought not to allow importers to benefit from reduced tariffs without being required to pass on that benefit to the consumer. By licensing all imports it would be possible to require an importer to control retail prices, by refusing to supply to wholesalers and/or retailers who charge or permit to be charged prices in excess of specified mark ups.

"Near the window by which I write, a great bull is tethered by a ring in his nose.   Grazing round and round he has wound his rope about the stake until now he stands a close prisoner, tantalised by the rich grass he cannot reach, unable even to toss his head to rid him of the flies that cluster on his shoulders.   This bull, a very type of massive strength, who, because he has not wit enough to see how he might be free, suffers want in sight of plenty, and is helplessly preyed upon by weaker creatures, seems to me to be no unfit emblem of the working masses.   But until they trace effect to cause, until they see how they are fettered and how they may be freed, their struggles and outcries are as vain as those of the bull.   Nay they are vainer.   I shall go out and drive the bull in the way that will untwist the rope.   But who shall drive men to freedom?"

Introduction to Protection or Free Trade, 1888, by Henry George.

5. Tax schedules should be adjusted in favour of lower and middle income groups. This would result in an improvement in real incomes and thus contribute to more moderate expectations in any minor incomes. Indeed I can see no reason why tax schedules below a certain level should not be indexed in such a way as to automatically raise the floor of the schedule as the consumer-price index raised the floor of the Minimum Wage.

I seem to remember reading about a system of tax indexation which has been adopted in Canada. If I am correct, could a similar proposal be adopted for Australia?

[ Top of Document ] [ Foot ]
6. We ought to seriously examine the pricing arrangements of foreign-owned multinational corporations and we should not hesitate to take stem action to penalise these as well as Australian monopolies who are found guilty of price manipulation or of any form of restrictive trade practice.

7. I would like to see a re-examination of the double taxation agreements that now operate between Australia and certain other countries. I opposed the first double taxation agreement and I am still opposed to the concept.

8. We ought to seriously consider a surtax upon dividends remission to foreign countries or even to prohibit the remission of dividends payable by Australian subsidiaries to parent companies abroad. The Chifley Government did this and we ought to be doing it in cases where the remission of dividends to overseas companies causes undue strains upon our economy.

Closest Geoist encounter with Canberra .."From Clyde with love"

9. We should eliminate the sales tax on all essential items and reduce the sales tax on less essential items and at the same time take steps to ensure that such reductions in sales tax are passed on to the consumer. I am sure it would not be beyond the wit of our brilliant economists in the Treasury Department to evolve a means by which this could be done. In fact, given the latter safeguard, there may even be a case for some reduction in company taxation.

The steps that I have outlined above would be a much more equitable and effective way of dealing with inflation than propositions for incomes and prices policy involving voluntary or compulsory wage restraint. The latter propositions have never succeeded in any of the countries in which they have been tried and I know of no reason why we should think they should succeed here.

You will recall that at the beginning of the year, I said that unemployment would rise before the end of 1974 but on that occasion Treasury officials saw fit to ridicule my forecast. I am convinced that I was right. I want the Government to change course before it finishes up in the same sorry mess as its predecessors found themselves in 1972.

I am forwarding a copy of this letter to our Cabinet colleagues because I want them to be in a position to consider what I have proposed when Cabinet holds its pre-Budget discussions in a few weeks time.

Editorial Comment: This letter was aimed at influencing people very loyal to Labor politics and may not read as pure Georgist economics.   To introduce our practical philosophies to people who are already loyally committed to any corner of the political spectrum, requires respect for their position, tact and diplomacy


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