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It is suggested that three to five years would allow sufficient time for phasing-in and reduce transition problems to a minimum. Economic rent should be increased progressively until 100% of the market value is charged at the end of the phasing-in period. Taxes should be simultaneously reduced.
The most unjust and harmful taxes, such as payroll tax, should be abolished first. It is preferable to abolish some taxes than to reduce all taxes, because collection costs would remain about the same until abolition is achieved.
All land is held in trust by state governments. All revenue therefore should be collected by local governments, acting as agent for state governments and apportioned among the three tiers, local, state and federal.
The Federal Government should be allotted prescribed duties in return for its share of economic rent, in accord with agreed national formulae.
The phasing-in problems, as these affect people of different age groups; stages of development, and establishment, are stated. The alternative effects of allowing the present unjust conditions will be stated in conclusion.
(i) In every social change there are transitional problems, but provided the desired results are achieved, these will pale into insignificance.
The problems, nevertheless, must be assessed, reduced to the maximum extent, and assistance provided in cases of genuine hardship.
The objectives are: Freedom, Peace, and Prosperity.
The means of achievement are:-
The abolition of all taxation which bears as a fine to restrict the production, exchange and consumptionm of wealth.
The abolition of all monopolies.
(ii) The collection of the socially-generated Site Rental value of land for Public Revenue, thereby preventing what the people and their governments have created being diverted as unearned tribute to individuals.
(iii) Confining governments to functions which are necessary monopolies in which private enterprise cannot operate efficiently or effectively.
The nett results of such policies are full employment opportunities at full earning capacity.
The government does not have an obligation to provide people with an income; rather, to ensure that all ablebodies people shall have the opportunity to earn their own living and manage their own lives.
Government also has an obligation to care for the incapacitated and afflicted, by ensuring affordable insurance protection against misfortune, misadventure, and incapacity.
It is proposed that the Georgist system be phased in over a period long enough to reduce transitional problems to the desired extent.
Results, however, will be much faster, once it is realised that there will be no future unearned income arising from land monopoly and speculatiion--this was the experience in Denmark.
In order to evaluate transitional problems, it is necessary to examine the position of people in different age groups, stages of development, and establishment.
THE PROLETARIAT--LANDLESS, RENT-PAYING PEOPLE
The landless rent-paying people would be infinitely better off in the Just Society we propose. The site rent they pay at present would be diverted to government, but all taxation would be abolished.
Full employment opportunities at earning capacity would be restored. Prices would be reduced, so their standard of living would rise.
THE SMALL HOME OWNER
The small homeowners who own land for use and security would be in a much better position than they are at present. They would not have to pay, say, $30,000 to $100,000 in land price in advance, or mortgage interest which might eventually double the original cost of buying their home.
It has been estimated that the nett savings for single breadwinner families would amount to about $200,000 in a working lifetime of 40 years.
Families with several breadwinners living at home would save much more, in the order of up to $400,000.
Small business, the major organisers of employment in Australia, are subjected to a maze of regulations which make survival extremely difficult. Many firms have become insolvent, and many others have transferred their operations overseas.
In the past 20 years about 48,OOO new laws, rules, and regulations have been imposed, which is four times as many as Canada or the United Kingdom.
About 60 different taxes and charges must be paid directly or indirectly and accounted for. Total collection of these is impossible. The temptation to resist unjust impositions are everywhere. But total avoidance is difficult, so small business has become an honorary tax collection agency of Governments, taking in sales tax and superannuation payments to pay out, and paying payroll tax, fringe benefits tax, etc.
The costs include filling in forms and making reports, plus the engaging of specialist accountants and lawyers needed because of the complexities of the tax structure. If a profit is made, this is taxed, and must even be paid in advance under prescribed payment laws. There is also a fee to be paid for the privilege of lodging a tax return, and penalties paid for late lodgement.
In a Free Economy, all this would cease, and the benefits which apply to small homeowners would also be applicable to small business, which would also have the benefits of buoyant markets responding to cost reductions.
There are virtually no transition problems in restoring a free economy.
The farming industry would probably benefit most from a Georgist economy. Operational costs are increased about 40% by taxation etc. Unlike other industries, which pass on overheads to the home market, the farmer sells the greater part of his products on the world market, which is not interested in paying inflated prices caused by bad government in Australia.
Price support schemes and subsidies are not seen to be ghastly failures, which stimulate over-production and the competition of altenative products, such as synthetic fibres competing with wool, and beet sugar supplanting the market for cane sugar.
Under Georgism, rural industry would benefit enormously, paying site rent instead of taxes. Land would be held on a pay as you earn basis, costs would be reduced and profitable markets increased accordingly. Under present rules, those who operate on marginal and low-priced land are the worst affected victims of taxation .
Site rental payments would be relatively low, compared with taxes which apply to everyone, without regard to the value of the land being used.
Public companies suffer all the disabilities of private companies and personally controlled. enterprise, but have access to shareholder funds to help tide them over a depression.
In many cases attempts are made to create monopoly conditions by political pressure to retain or increase tariff protection, import quota restrictions etc.. Such methods, however, worsen the economy generally and reduce markets for Australian products.
The development of sheltered industries is a transitional problem, and it is proposed that trade barriers (with some exceptions) be retained until full employment opportunities are restored and alternative opportunities for capital investment are stimulated.
It must, also, be realised that tariffs, quotas, export subsidies, and even taxes which increase the cost of Australian products, stimulate reprisals, and are a cause of international conflict.
(i) Young People
Those who have bought a home site or a developed property at inflated land prices will recoup their losses in about two to four years depending on the locality of the land and whether they have had to borrow funds and pay interest.
(ii) Elderly People
Those who have bought land late in life, with, say, four working years ahead before retirement will lose on their land purchase, but will benefit from income tax abolition for a few years, and from the repeal of all indirect taxes afterwards.
There will be opportunities for light part-time work, and no enforced premature retirement or means test on part-time earnings. In some cases, however, government assistance would be needed.
ELDERLY PEOPLE CHANGING HOMES
A second or third home buyer will have avoided any possible losses by the sale of their former home or homes at inflated land prices, and might even make a substantial profit, buying a smaller home situated on less valuable land, for example.
Stamp duties which at present take an enormous part of the profit will be abolished. The abolition of income tax on will help those retired people with investments or rollover funds. Because all indirect taxes would be abolished, their cost of living would be reduced.
There will be some cases of genuine hardship which will need assistance, byut those who have made wise provision for retirement will be better off than they would be under present rules.
RETIRED PEOPLE LIVING IN INNER SUBURBS
Retired people living, say, in inner suburbs on pensions and investments, may find their income inadequate to pay for the increased charges on land.
Their two options are:
(i) To move to a cheaper locality which can be afforded, remembering also there will be no stamp duty to pay.
(ii) To apply for a deferment of the public chage until the sale of the property or death. Similar provisions already exist in Local Government. Arrears of rates owing by retired people are collected from the proceeds of the eventual sale.
Under the proposed reform, retired people will find everything else a lot cheaper.
(i) Present government procedure is to spend beyond the income, waste money on artificial attempts to create jobs although they always fail in the long run. So there is an obligation to pay for welfare services need because of the government's own unjust policies and incompetent administration.
This results in public debt, which recently totalled $150 billion for all tiers of governent, and is passed on together with interest to the next generation.
This devilish practice involves a debt of more than $7,500 for evey man, woman and child in Australia.
Inflation of the currency, another form of taxation, naturally adds to the burden. Such immoral practices would cease in a free society.
Australia employs four times as many public servants, per head of population, as Japan. In consequence, despite our wealth of natural resources, compared with Japan, which is poorly endowed, we are unable to compete profitably on world markets.
Many public servants would become redundant in an economy in which governments were restricted to their proper functions and there was a greatly reduced need for welfare services.
Eventually, many public servants would be obliged to transfer to more rewarding and interesting private employment, for which there would be adequate demand.
Only about 60% of Australians are presently engaged in productive employment. This imbalance would be resolved in a free economy.
There would be no hardship resulting from a transfer to productive employment.
THE BIG LAND SPECULATORS
These would suffer financially from their loss of unearned income, but for the first time, they will be enabled to experience the real joy of creative effort, in serving their fellow man, as well as their own interests only.
We would not ask for return of the wealth they have accumulated by legalised stealing, nor would we pay any compensation for the loss of their privileges to exploit.
There will doubtless be enormous pressure erected on governments to compensate the favoured 10% who at present own about 90% of the land .value of Australia.
The consideration of compensation would naturally involve compensation also of the living victims of land monopoly in the past.
But, such attempts would be impossible of evaluation and would involve enormous legal and accounting costs. It would be much more practical to say like Christ to the woman of Samaria, - 'Go and sin no more.'
One-sided compensation has been paid in India and has resulted in tribute being paid as interest instead of rent. The Indian people are no better off than they were before.
The business activities of land agents would remain unchanged. The present conditions of land title, in fee simple (subject to the prior right of the Crown) are ideally suited to a Georgist form of government. A land title confers the right of exclusive occupation subject to payment of the public "fee"' and the right of ownership of all improvements and construction thereon.
Land agents, in effect, would be acting on behalf of those who are acquiring or exchanging titles, including all buildings and improvements.
The rental value of the land will generally be enhanced, although land price eventually will disappear but property improvement will be greatly stimulated. The agentís fee will be based on the site rental value and the value of improvements. Land agents will not be worse off in a free economy and will continue to render valuable service to the public for which they will be adequately rewarded.
It must be understood and remembered that to own the land, from which and upon which, all people must live, is, under present conditions, a much more effective method of enslaving the people, than was chattel slavery, that was tolerated for 800 years.
The cost of helping the few cases of genuine hardship, during the transition period, would be infinitesimal compared with the continued toleration of poverty, suffering and misery that is everywhere evident under present conditions. The cost of helping those in difficult circumstances for a few years, would not really be a consideration in a just, free, and prosperous economy.
The alternative, to continue the present system, means indefinite acceptance of poverty and massive unemployment, which must number almost a million people in Australia today.
It is being freely recognised that violent and fraudulent crime, suicide, broken homes, homeless people, and every form of social disorder, arises from unemployment and poverty, but a blind eye is turned to the basic cause of such - to deny the right of access to land and the right to keep the rewards of honest labour.
(Acknowledgements: Bright yellow background colour on one or more of these pages by courtesy of the Banneker Center USA. The early pages of this Website were put on the WWW through finance from HGFA, the work of JCM, the advice of GANM, plus GP and GP of Multiline Internet Server mid-October 96, revised (incomplete) & to server 31 October 96, completed 1 November 96, last revised 11 October 97.)