It seems unlikely that a leftish blog would find support for one of its favourite policy lines in the shape of former Tory Prime Minister Sir Winston Churchill, but in May 1909 he made a great speech on land called ‘The Mother of all Monopolies’ (admittedly whilst he was still a Liberal).
He argued for a tax on land by distinguishing it from other sources of unearned wealth. ‘Land’, he said ‘which is a necessity of human existence, which is the original source of all wealth, which is strictly limited in extent, which is fixed in geographical position.’
The core of the argument was that the land owner ‘sits still’ whilst others create the value. ‘Roads are made, streets are made, railway services are improved, electric light turns night into day, electric trams glide swiftly to and fro, water is brought from reservoirs a hundred miles off in the mountains – and all the while the landlord sits still. Every one of those improvements is effected by the labour and cost of other people. Many of the most important are effected at the cost of the municipality and of the ratepayers. To not one of those improvements does the land monopolist, as a land monopolist, contribute, and yet by every one of them the value of his land is sensibly enhanced. He renders no service to the community, he contributes nothing to the general welfare; he contributes nothing even to the process from which his own enrichment is derived.’
And he commented on the equivalent of modern ‘landbanking’ – deliberately withholding land from development whilst its value grows. ‘The greater the population around the land, the greater the injury which they have sustained by its protracted denial, the more inconvenience which has been caused to everybody, the more serious the loss in economic strength and activity, the larger will be the profit of the landlord when the sale is finally accomplished. In fact, you may say that the unearned increment on the land is on all fours with the profit gathered by one of those American speculators who engineer a corner in corn, or meat, or cotton, or some other vital commodity, and that the unearned increment in land is reaped by the land monopolist in exact proportion, not to the service, but to the disservice done. It is monopoly which is the keynote, and where monopoly prevails the greater the injury to society the greater the reward to the monopolist will be.’
And the impact on the taxpayer: ‘The municipality, wishing for broader streets, better houses, more healthy, decent, scientifically planned towns, is made to pay, and is made to pay in exact proportion, or to a very great extent in proportion, as it has exerted itself in the past to make improvements. The more it has improved the town the more it has increased the land value, and the more it will have to pay for any land it may wish to acquire.’
And his prescription? A tax on undeveloped land. ‘This property of yours might be put to immediate use with general advantage. It is at this minute saleable in the market at 10 times the value at which it is rated. If you choose to keep it idle in the expectation of still further unearned increment then at least you shall be taxed at the true selling value in the meanwhile.’
Now there’s an idea that might aid the public finances.
With thanks to David Rodgers for drawing my attention to this remarkable speech, which can be found in full on the Co-operative Individualism website.