Mehdi Hasan: Time to talk about land taxes

An important contribution from the FT's Samuel Brittan.

Samuel Brittan, often described as the "doyen of British economic journalists", has an important column in today's Financial Times, provocatively entitled:

Tax England's green and pleasant land

Brittan - despite his background as a Thatcherite and monetarist - has been one of the most vocal, consistent and well-informed opponents of austerity economics in recent years. Today, he says:

Whatever one thinks of fiscal austerity, governments will need a new source of income in future if only because of demographic trends.

So what does he propose? A land tax. Indeed, as the Lib Dem Business Secretary Vince Cable argued at his party's annual conference in September 2010:

It will be said that in a world of internationally mobile capital and people it is counterproductive to tax personal income and corporate profit to uncompetitive levels. That is right. But a progressive alternative is to shift the tax base to property, and land, which cannot run away, [and] represents in Britain an extreme concentration of wealth.

I'm not sure it's an either/or question, of income taxes versus land taxes, but Cable is correct to point out that the latter are harder to dodge, avoid and evade. And while a land tax is progressive and fair, and a potential means of redistributing wealth, it's also a mainstream and sensible proposal.

"[F]ar from being an outrageous Bolshevik idea," explains Brittan in today's FT

the case for a land tax is one of the oldest and least disputed propositions in economic thought. The underlying theory was developed at the beginning of the 19th century by the highly respectable David Ricardo. Many chancellors have said that they would jump at a tax that had no disincentive effects on work or enterprise but had a strong redistributive element. The problem was that the amount of preliminary work required would take more than one parliament and any credit for the measure would redound to their successors.

He continues:

A land tax is one of those subjects - basic income is another - which divides commentators into a great majority who never mention it, and a minority who talk of nothing else. The result is to give supporters a cranky appearance, while the eyes of chancellors of either main party glaze over if you as much as mention the subject.

The basic point is that the supply of land, with rare exceptions such as reclamation in the Netherlands, is fixed. But because of its scarcity owners can command an income over and above the normal return to the enterprises placed upon it. Gross UK trading profits of non-financial and non-oil corporations are running at over £200bn per year or about 20 per cent of gross domestic output. Some part of this - we do not know how much - is not true profit but the return on land. There is one way in which the supply of usable land can increase. That is when land, previously off limits, is newly released by local authorities for development. The consequent increase in value, say some land tax campaigners, is created by "the community", which is entitled to a share of the increment. But to argue in this way is to sell the case short. The case for a land tax is valid even for land which always was available for development or which remains in agricultural use.

My editor Jason Cowley made the case for a land tax in a New Statesman cover story in October 2010:

An annual land value tax would not only provide a new and fairer source of income, Wetzel said, but would encourage owners of empty buildings and empty land to put their properties to good use. Towns and cities would become more efficient and the need for urban sprawl would be reduced.

Meanwhile my NS colleague Rafael Behr addresses the issue of land taxation, and the wider rows and divisions over taxation and the forthcoming Budget, in his politics column this week. Clegg, he writes

clings to the idea of a "mansion tax" on houses worth more than £2m.

That policy is toxic for Tories, whose safe seats are dotted with fancy real estate. The prospect of sizing up the nation's housing stock for a new tax threatens also to make ordinary households look wealthier than they feel. Labour, by contrast, is open to the idea. The mansion tax is being actively debated in Ed Miliband's office, partly because the leader's freshly advertised enthusiasm for fiscal discipline needs reinforcing with revenue-raising measures and partly because, with parliament on course to stay hung at the next election, there are strategic reasons to flirt with Lib Dem policy.

Privately, senior figures around Miliband admit to being impressed at how effectively Nick Clegg has set the terms of pre-Budget debate and put the Tories on the defensive. Although Labour harbours no affection for the Lib Dems, there is recognition of a shared interest in branding the Conservatives as defenders of inherited privilege and hoarded wealth.

A senior Labour figure told me recently that the the party leadership plans to focus on "taxes at the top" in the coming days and weeks. Good. It's a case I made in the Guardian just a fortnight ago - and I do hope that land taxes, mansion taxes and the rest feature as part of the impending discussion. Perhaps the shadow health secretary can chip in again. And David Miliband too. Oh, and from the right, ConservativeHome's Tim Montgomerie.

I leave you with Brittan's concluding line from his excellent FT column:

If politicians really want to think about the unthinkable, as they sometimes claim, here is a place to start.

Mehdi Hasan is a contributing writer for the New Statesman and the co-author of Ed: The Milibands and the Making of a Labour Leader. He was the New Statesman's senior editor (politics) from 2009-12.

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GM should not be the monopoly of a few multinational corporations

People may be opposed to GM crops and ultimately consumers will decide what they want to eat. But people facing malnutrition or starvation do not enjoy that choice.

My parents researched malnutrition and under-nutrition in India, especially among children, and found that many diets recommended by Western nutritionists were in fact completely inapplicable to the poor. So they formulated cheap, healthy diets based on indigenous food with which people were familiar. Yet despite their many other efforts, a quarter of people in India and nearly one in nine people around the world do not have enough food to live a healthy active life.

The World Bank estimates that we will need to produce about 50 per cent more food by 2050 to feed a population of nine billion people. And the past 50 years have seen agricultural productivity soar – corn yields in the US have doubled, for example. But this has come with sharp increases in the use of fertilisers, pesticides and water which has brought its own problems. There is also no guarantee that this rate of increase in yields can be maintained.

Just as new agricultural techniques and equipment spurred on food production in the Middle Ages, and scientific crop breeding, fertilisers and pesticides did so for the Green Revolution of the 20th century, so we must rely on the latest technology to boost food production further. Genetic modification, or GM, used appropriately with proper regulation, may be part of the solution. Yet GM remains a highly contentious topic of debate where, unfortunately, the underlying facts are often obscured.

Views on GM differ across the world. Almost half of all crops grown in the US are GM, whereas widespread opposition in Europe means virtually no GM crops are grown there. In Canada, regulation is focused on the characteristics of the crop produced, while in the EU the focus is on how it has been modified. GM crops do not damage the environment by nature of their modification; GM is merely a technology, and it is the resulting product that we should be concerned about and regulate, just as we would any new product.

There are outstanding plant scientists who work on GM in the UK, but the Scottish, Welsh and Northern Irish governments have declared their opposition to GM plants. Why is there such strong opposition in a country with great trust in scientists?

About 15 years ago when GM was just emerging, its main proponents and many of the initial products were from large multinational corporations – even though it was publicly funded scientists who produced much of the initial research. Understandably, many felt GM was a means for these corporations to impose a monopoly on crops and maximise their profits. This perception was not helped by some of the practices of these big companies, such as introducing herbicide resistant crops that led to the heavy use of herbicides – often made by the same companies.

The debate became polarised, and any sense that the evidence could be rationally assessed evaporated. There have been claims made about the negative health effects and economic costs of GM crops – claims later shown to be unsubstantiated. Today, half of those in the UK do not feel well informed about GM crops.

Everyday genetic modification

GM involves the introduction of very specific genes into plants. In many ways this is much more controlled than the random mutations that are selected for in traditional plant breeding. Most of the commonly grown crops that we consider natural actually bear little resemblance to their wild ancestors, having been selectively modified through cross-breeding over the thousands of years that humans have been farming crops – in a sense, this is a form of genetic modification itself.

In any case, we accept genetic modification in many other contexts: insulin used to treat diabetes is now made by GM microbes and has almost completely replaced animal insulin, for example. Many of the top selling drugs are proteins such as antibodies made entirely by GM, and now account for a third of all new medicines (and over half of the biggest selling ones). These are used to treat a host of diseases, from breast cancer to arthritis and leukaemia.

Millions of acres growing GM crops worldwide. Fafner/ISSSA, CC BY-SA

GM has been used to create insect-resistance in plants that greatly reduces or even eliminates the need for chemical insecticides, reducing the cost to the farmer and the environment. It also has the potential to make crops more nutritious, for example by adding healthier fats or more nutritious proteins. It’s been used to introduce nutrients such as beta carotene from which the body can make vitamin A – the so-called golden rice – which prevents night blindness in children. And GM can potentially create crops that are drought resistant – something that as water becomes scarce will become increasingly important.

More than 10% of the world’s arable land is now used to grow GM plants. An extensive study conducted by the US National Academies of Sciences recently reported that there has been no evidence of ill effects linked to the consumption of any approved GM crop since the widespread commercialisation of GM products 18 years ago. It also reported that there was no conclusive evidence of environmental problems resulting from GM crops.

GM is a tool, and how we use it is up to us. It certainly does not have to be the monopoly of a few multinational corporations. We can and should have adequate regulations to ensure the safety of any new crop strain (GM or otherwise) to both ourselves and the environment, and it is up to us to decide what traits in any new plant are acceptable. People may be opposed to GM crops for a variety of reasons and ultimately consumers will decide what they want to eat. But the one in nine people in poor countries facing malnutrition or starvation do not enjoy that choice. The availability of cheap, healthy and nutritious food for them is a matter of life and death.

Alongside other improvements in farming practices, genetic modification is an important part of a sustainable solution to global food shortages. However, the motto of the Royal Society is nullius in verba; roughly, “take nobody’s word for it”. We need a well-informed debate based on an assessment of the evidence. The Royal Society has published GM Plants: questions and answers which can play its part in this. People should look at the evidence – not just loudly voiced opinions – for themselves and make up their own minds.

The ConversationVenki Ramakrishnan is President of the Royal Society, and Professor and Deputy Director at the MRC Laboratory of Molecular Biology, University of Cambridge

This article was originally published on The Conversation. Read the original article