Government ignores recommendation by the Thornhill report to include all zoned land in the new property Tax

The Thornhill report into the structure of Property Tax, which has been held outside the public domain until now, is finally published and it has revealed that that the government decided to ignore Dr Thornhill’s suggestion to impose a recurrent tax on development and zoned land. The government decided to forgo taxing €5 billion worth of property from the 250,000 hectors of empty zoned land. Why? If the government had taken their own advice and gone for a Site Value Tax, which was to include all zoned land, instead of this market value, residential, property Tax they would have saved householders on average 30% of the cost. A property tax bill, which is 30% less, would have allowed people who bought at the peak of the boom and who paid massive stamp duty, some small relief from the chronic austerity that they face.

The report reads “The Group notes the recommendation of the 2009 Commission on Taxation for a recurrent tax on zoned development land and suggests consideration be given to the proposal with a view to supporting proper long term planning and sustainable development.”

Why ignore this suggestion? The omission is in effect a method of taking money out of the pockets of Irish house holders and putting it back into the pockets of the very property developers and speculators whose actions caused the property and banking collapse in the first place.

The Thornhill report saw a perfect opportunity to broaden the tax base and share the tax burden with speculators.  This is perhaps why the Thornhill report has been so top secret. The government have been supporting developers and speculators including NAMA while putting householders under intolerable pressure. It’s clear that the government withheld this report until it was too late for any real discussion on the issue. When NAMA took all these properties onto their books there is no doubt that their valuations would have included provision for the Governments proposed property tax. To let them off the hook now is beyond comprehension.

 For more information see http://irishsitevaluetax.blogspot.ie/ and www.smarttaxes.org and read ‘The Fair Tax’  available from Amazon, any good bookshop and emer@smartaxes.org. 

Interviews

Constantin Gurdgiev 087 6164227

Ronan Lyons 086 6045655

Judy Osborne 086 3699575

Emer Ó Siochrú 01 4972564 & 0868267555

Response to Budget for 2013

Response to Budget for 2013 SMART TAXES NETWORK

The PROPERTY TAX

The government has gambled on the ignorance of the Irish people and imposed a grievously unfair, anti-job, anti-urban and uncollectable Property Tax in the Budget for 2013. 

It is grievously unfair because it has exempted the owners of zoned land and development sites from paying the Site Value Tax originally planned so that now all the tax will be raised on homeowners alone. 

Zoned land and development sites represent approximately 1/3rd of potential receipts.  If homeowners pay €.5 billion as the government plans, then developers, speculators and banks are getting a €.25 billion write off every year.  Capitalised this represents up to a  €5 billion ‘dig out’ given to the very people that caused the crisis. 

The ‘Mansion Tax’ does not redress this decision because it will raise a derisory fraction of the sum foregone on development land and sites. It will not be enough to reduce Property Tax on the many distressed boom-time buyers who will be forced to pay the full tax  - if not now when they sell.  

A Site Value Tax would have raised enough revenue to give these families a fairer deal.  

“Why has the government ignored all reasoned and moral arguments for a Site Value Tax? What answer can there be except that it feared that it would depress the value of land and sites held by NAMA, the pillar banks and the loans held by PRBA. This reduction in value should have been taken into account by any competent valuer at the time of transfer as Site Value Tax was in the Programme for Government at the time. Imposing a Property Tax instead is nothing less than another bail-out of developers, speculators and banks at taxpayers expense.” 

Says Emer Ó Siochrú Architect and Development and Planning Valuer and member of the Smart Taxes Network (01 4972564 & 0868267555)

The Property Tax and Mansion Tax are taxes on jobs in the construction sector because the tax will rise as the value of a home is increased by energy saving upgrades and extensions. The fact that valuation bands will be fixed for three years will not redress this damaging disincentive.  Energy upgrades that give significant Green House Gas reductions are costly and most such upgrades include further remodelling and extensions that easily breach the €50k band thresholds. This is exactly the area of work in which many good architects and builders have recently developed significant expertise – now undermined. 

The Property Tax hits apartment owners far harder than a Site Value Tax as it is shared amongst many apartment owners on the same site.  As most apartments are located in the cities particularly Dublin, Property Tax is fundamentally anti-urban.  The Mansion Tax compounds this effect as the highest valuedhomes are located in Dublin although by far the largest homes are located in the open countryside. 

The Property Tax will be very difficult to assess and collect because it is based entirely on self assessment of the current market value of the home.  There are many more variations in homes than there are of locations – size, age, quality and energy efficiency all have to be taken into account. The current market has very few transactions on which to make basic comparisons and of those transactions, very few are in rural locations where every house is typically unique.

The current market is also misleading because it is not normal for 40% of purchasers to be cash buyers as is the case at present.  This is sure signal that the banks are not prepared to lend sufficient money against the incomes of average couples to buy at current prices.  On the other hand, the banks including NAMA and the IBRC have distorted the normal resolution of a property bubble by their policies of forbearance for political and self-interested financial reasons. Their actions have artificially put a floor under housing prices unlike the US which saw precipitous falls, repossessions and finally a rebound from a very low level into a predictable functioning market.

Homeowners will also have to calculate the reduction in value that the imposition of an annual Property Tax will cause, also taking into account the value of the concession offered to buyers in the current year. Under these circumstances at this time, it is problematic for a trained valuer to confidently estimate the value of anyone’s home - or for a government to confidently demand payment.  

In contrast Site Value Tax is based on the market price of the site over a significant time period and double checked against capitalised rental values for the same property. The relative differences in value of sites due to natural and public amenities are then established and an objective map developed that gives a value per m2 for each site.  The homeowner then only has to double check that there are no circumstances that might make their particular site more or less valuable than those in the same street or near area.  Comparisons of sites is much easier than for completed homes. This ease of valuation and collection is demonstrated by the experience of Denmark and the Australian Capital Territories where their Site Value Tax costs a tiny 2% of revenue to collect with the few appeals.

For more information see http://irishsitevaluetax.blogspot.ie/  SVT twitter and www.smarttaxes.org and read ‘The Fair Tax’  available from Amazon, any good bookshop and emer@smartaxes.org. 

Interviews

Constantin Gurdgiev 087 6164227

Ronan Lyons 0866045655

Judy Osborne 086 3699575

Emer Ó Siochrú 01 4972564 & 0868267555

Read this book and Make up your own mind!

Buy 'The Fair Tax' book today!

To order please contact emer@smartaxes.org. 

FAQs about Site Value Tax from 'The Fair Tax' book

Q1: What kinds of property would the Site Value Tax be levied on? 

A1: We propose that Site Value Tax would be payable on the land beneath all residential properties and on all zoned land including residential, commercial and industrial zoning. As soon as is practical, Site Value Tax should replace rates on commercial and industrial buildings so that all owners of developed land and land zoned for development would pay an annual tax based on its site value, computed and collected in a similar way. 

Q2: How is the site value of residential dwellings worked out? 

A2: The simple answer is that the site value comprises what remains of the freehold sale value when the cost of the improvements (as the buildings are called in the jargon) is deducted. But that is a bit too simplistic an answer as freehold sale values go through booms and busts that create great price volatility, giving occasional negative site values. This volatility makes using the freehold sale value an unsatisfactory basis from the taxpayers’ point of view. (See Dave Wetzel’s article in this book for more detail.) A better way to get a consistent site value is to base it on the capitalised rental value of the property. Despite the turmoil of the recent Irish property crisis, rent levels have moved much less than sale values. Although land is hardly ever rented on its own, it is constantly rented with a building on it, and an efficient market exists for the rental of all categories of land and buildings including residential. The question then is: how much of the rent is attributable to the building and how much is attributable to the land? That calculation can be done quite easily and, furthermore, there is a cohort of professional valuers who are trained in the technique. 

Here is a worked example:

Take the case of a newly built three-bedroom house with a garden in a sub- urban Dublin location. Its sale value is €300,000. The house cost €150,000 to build including the builder’s normal development profit. It follows that the balance of €150,000 – half of the total – must be attributable to the site. If the rent is €1,000 a month, i.e., €12,000 per annum, half this sum (€6,000) is for the land. We can capitalise the €6,000 rent of the site by multiplying it by 16.6 (or 6% yield; six times 16.6 is 100*) to give a rent- derived site capital value of €84,000. (*6% is the benchmark yield that NAMA took and it corresponds to the long-run average yield on property in Ireland over the last generation and serves as a reasonable benchmark for long-run costs of borrowing over the next generation).

Q3: How long would it take to assess the site value of all residential properties in Ireland? 

A3: By the method described above, on a case-by-case basis, it would take years or certainly too long to bring in a Site Value Tax in 2013. Luckily, there are shortcuts to obtaining a pretty good interim map of site values using new computerised spatial information or GIS. Irish economist Ronan Lyons has already developed such a map of Irish site values from information collected on daft.ie, the on-line property site. The same system can use better Property Registration Authority (PRA) data to give an almost instant map of site values based on final sale figures, which would serve very well as an interim site value map. 

Q4: How did Ronan Lyons work out the site values using GIS? 

A4: The method Ronan used is called hedonic price regression. Effectively, each property is a collection of attributes such as its location, when it was built or sold, property type, number of bedrooms and number of bathrooms. The hedonic methodology uses large samples of properties to calculate the value associated with each attribute.

Each property’s price can be thought of as being comprised of a location component, a size component, a type component and a residual (the gap between the actual price and the predicted price, which reflects unknown or unmeasured factors). 

For example, suppose the reference point is a three-bedroom one-bath- room semi-detached house in Lucan, whose capital value is €200,000. What is important for a Site Value Tax is the effect of moving one particular property around the country. If the three-bedroom home in Lucan were moved to Stillorgan in South County Dublin, its value would increase from €200,000 to €350,000, whereas if it were moved to Newtownforbes in County Longford, its value would be €100,000.

The difference in construction costs in Dublin and the rest of the country can also be factored in so that the variation in capital prices by area reveals variations in the value of the underlying site and thus of land. But given the importance of rental calculations for underlying property value, Ronan carried out a similar exercise on daft.ie’s lettings database, giving an average rental for late 2011. Assuming a 6% yield for the rental properties, an alternate estimate of the average capital price per district was derived. The average of both these prices gives a price per district that reflects the distribution of prices within an area and across sales and lettings segments, as of late 2011. (See Ronan Lyons’ article in this book.)

Q5: How would site values be estimated for the final system?

A5: A new regulation would require that when new property sales and new leases are registered with the Property Registration Authority (PRA), the site element of the property is estimated separately, using the methods described in Q2. This is not hard to do since it was required for Section 23 tax relief for rented dwellings and for the rural tax incentive schemes, where it caused no problems. Any good valuer can make the calculations, if necessary with the help of a professional course module provided by their institute. These exact site values would be inputted into an on-line GIS land-value map. Homeowners would check the map to see what the site value per-meter-squared rate is for their road or district and multiply that by the area of their site. The value of sites on a road or estate will generally be all the same if the sites are roughly the same size, so one way is just to consult with a savvy neighbour and copy their estimate. If they have trouble they can hire a valuer to do it for them with a tax credit allocated in year 1. These estimated values would be backed up by a simple appeals system to pick up anomalies in site values in a particular district that deviate from neighbouring sites. 

Q6: What kind of factors would cause a deviation from the general site value in a particular district? 

A6: If an old building with a large garden is listed for preservation and could not be altered in any major way, its value would be reduced and therefore its site value would be lower than for unprotected buildings on similar sites nearby. In other words, even though the market value of land in the area is the chief factor affecting site value, it is modified by planning constraints. So, for instance, land zoned for development is subject to the annual Site Value Tax, but designated open space, parks and biodiversity habitats is not. Another factor that affects values is proximity to those services that add value generally but can cause a nuisance if they are too close, such as recycling facilities, waste-water treatment systems or even busy shops. Over time, the online map will be fine-tuned to include all of the factors affecting site values from the information gathered by the appeals system so that it will more perfectly mirror reality. The tax credit in year 1 can be used by homeowners to have their site formally assessed with respect to local planning regulations (e.g. it may be a large site but if the local authority will only ever allow one property on it, this will be reflected in the site value). In this way, Site Value Tax will become the most transparent and most demonstratively fair of all Irish taxes. 

Q7: How will the site value of apartments estimated?

Q7: All apartment complexes have a management company that can work out the site value of each apartment from the total site area attached to the building or building complex – minus the designated open space. The value of apartments varies according to area and floor location and is pretty accurately reflected in their purchase price. So the purchase price can be used to allocate the site value for each apart- ment using the method described in A2. The management company could use their collective tax credits of Year 1 to hire a valuer if needed. Each apartment owner would then pay their share directly to the collection agency. 

Q8: Does the owner of the house or apartment pay or the tenant, similarly to commercial rates? 

A8: Site value tax is emphatically not like rates: It is paid by the owner, not the tenant. It is not a substitute payment for local services such as water services, sewage treatment and waste collection, public transport etc. The tax is paid on the location benefit or the connectivity of the site enjoyed by the property owner which adds to its capital value. Users of these convenient services, whether owner-occupier or tenant, will pay directly for accessing the services in the normal way. This means that no local-authority tenant, social tenant or any tenant for that matter, will pay Site Value Tax. 

Q9: Will local authorities, not-for-profit housing associations or charities that own residential buildings have to pay Site Value Tax? 

Q9: The short answer is yes. It is very important that serviced land is well used and the annual Site Value Tax ensures that it is put to its most efficient use subject to planning constraints. Much local authority, semi-state and charitable land is poorly used and managed in Ireland. The long answer is that the Site Value Tax may not actually be paid but the amount due would be publicly recorded and the tax foregone would be justified. In any case, the Site Value Tax due for social housing sites should be lower than neighbouring non-social housing sites as its use would be planning constrained for a social purpose. (See Dave Wetzel’s article in this book.) However, if the Site Value Tax was not paid or was reduced for social purposes, the benefitting organisation should not be permitted to pocket the whole sale price if the property is subsequently sold for private development.

Q10: How should NAMA property be treated under a Site Value Tax? 

A10: NAMA should be charged the full Site Value Tax as assessed on its property portfolio loans but it should be given the option to retain the Site Value Tax portion that applied to undeveloped land and sites with incomplete developments. The retained Site Value Tax monies must, however, be ring-fenced to complete the infrastructure needed for the development of these sites. The money saved on an annual basis could be used by NAMA to raise long-term capital loans to provide the infrastructure. These capital loans, backed by the Site Value Tax, could be transferred to the relevant Local Authority when the developments are completed and sold. Local Authorities will also enjoy increased Site Value Tax receipts from neighbouring existing and new non-NAMA properties that will benefit from the infrastructure funded by NAMA and from the removal of the blighted half completed or empty sites.

In contrast, a conventional property tax (that does not replace Development Levies) would not raise annual revenue on NAMA-held undeveloped land and incomplete developments but NAMA would have to pay high once-off Development Levies to the local authorities on commencement of any building works on these sites. This is a Catch 22 situation; building works cannot begin confidently without the necessary infrastructure in place and the infrastructure cannot be built without Development Levies that are paid over only when building works commence. 

Q11: How can the government stop the private landlord adding the cost of the Site Value Tax to the rent demand?

A 11: The government can’t stop them but the market will to a certain extent. Tenants are already paying the full market rent and in general cannot pay more to cover the Site Value Tax. Landlords will only succeed in charging extra where the existing rent is under the market value for whatever reason. On the other hand, market rents are likely to fall because more rental property will come onto the market as a result of the Site Value Tax. This is because all property owners will have to pay the Site Value Tax whether the property is occupied or not so they will be very encouraged to make the effort to get some rental income to cover the tax. More properties competing for tenants will bring down rents for everyone. 

Q12: Will the property owner pay Site Value Tax if it replaces current rates on commercial buildings? 

A12: Good question, and the answer is, yes. The landlord pays Site Value Tax, not the tenant. This will give a very welcome short-term boost to retail and industrial tenants. Landlords will try to pass on the burden to the tenant at the next rent review but they will succeed only insofar as market conditions allow. In effect, replacing rates with Site Value Tax allows for a downward revision of rents to realistic levels of the current market. This is a very big reason for small business to put their full support behind the Site Value Tax. 

Q13: Does replacing rates on commercial properties with the Site Value Tax mean the recent rate review was a waste of public money and time? 

A13: No, the recent review of rates has provided most of the required data to establish site values in urban locations, especially in the cities Dublin and Cork where most property is not yet registered with the PRA. 

Q14: Surely Site Value Tax would be an extra burden on homeowners and businesses in a time of recession? 

A14: We recommend that Site Value Tax should replace other taxes and charges because we believe that overall taxes should be reduced to boost spending and investment in a recession. We doubt if we will succeed in persuading the government or the Troika of this at this particular time. But of all the kinds of taxes that could be levied, Site Value Tax is the least damaging to growth in the economy and to the welfare of the people of Ireland. It is far better than an increase in VAT or income taxes. This is because over time, Site Value Tax diverts money that would otherwise go to banks in the form of mortgage payments. Mortgage payments increase the wealth of the 1%: land-value taxes build the common wealth of the 99%. It does that by removing the incentive to invest in land and property for speculative reasons and by undermining property asset-backed lending by banks. This, in turn, frees up bank lending for investment in productive business start-ups and expansion that creates real, lasting jobs. 

Q15: What are the main differences between Site Value Tax and a conventional property tax? 

A15: Site Value Tax is levied on all residential property sites and all empty sites and zoned land, unlike a residential property tax, which is simply a tax on homes. There are a number of good reasons why this difference should matter to Irish people. First, the speculators, developers and banks that own these sites should pay because the location value of their sites was created by public investment and not any action on their part (see Dave Wetzel’s article in this book). The Site Value Tax will ensure that they can never again inflate a development land bubble, which was the root cause of current economic distress in Ireland. Second, Site Value Tax on homeowners will be considerably lower than a conventional property tax for a given revenue (up to 30% lower) because the revenue burden will be shared with the development landowners. Third, Site Value Tax on zoned land will reduce corruption in local planning by removing the incentives for excessive and premature zoning; this is better for local democracy (See Judy Osborne’s article in this book). Fourth, Site Value Tax on zoned land can substitute for development levies, on which many local authorities dangerously relied during the boom; this is better for sustainable planning and resource management. Fifth, Site Value Tax does not tax ‘improvements,’ unlike a property tax, which will go up the more you improve your home – not good for a struggling construction industry. Six, Site Value Tax is the same for an empty or derelict site as for an adjacent well-maintained property, which will encourage irresponsible property owners to sell or improve and let their properties; this is good for responsible property owners, unlike a property tax. (See Dr Constantin Gurdgiev’s article in this book.) Seven, Site Value Tax will be lower on apartments than for a property tax as the site is split over many properties; this is not only fairer but encourages appropriate densities in urban locations with good transport links. Eight, Site Value Tax is easier to assess objectively than a tax that includes buildings with huge variations in size, age, quality and energy efficiency, and will be less open to fiddling and evasion. 

Q16: How can a Site Value Tax be fair if it has no regard for ability to pay? 
 

A16: This is a question that is best answered in three parts: the general case, the case for the short term and the case for the long term. Poorer people either rent or own property of lower value than wealthier people, so in general, Site Value Tax is a progressive tax on wealth where low-income people will pay a very low Site Value Tax. In the short term, however, there may be a mismatch where the owners’ income is low but their home site is valuable. Of those, some will be wealthy owners holding other assets whose low income can be explained by tax planning. But some people will be in genuine diffculty, especially those who bought at the height of the boom and whose income is depleted by debt repayments. These people will get a sliding discount depending on when they bought in the boom. Similarly, elderly people with limited income will have the option to postpone payment until the home is next transferred. (See Ronan Lyons’ article in this book.) There is also the option of giving every resident a modest ‘green space’ allowance or credit to recognise their co-ownership of the land, coupled with a higher rate of Site Value Tax. Depending on how this is set, low-income families in modest homes could be removed from the tax net. It would also have the effect of raising the tax on empty buildings and sites. These benefits would have to be set against the complications of implementation. In the long run, as Site Value Tax displaces other income and transaction taxes and as unearned income from land is severely reduced and investment in productive activities increased, peoples’ incomes will tend to converge and ability to pay should be less of a problem. (See Dave Wetzel’s article in this book.)

 Q17: Who will collect the Site Value Tax and what will the receipts be used for? 

A17: It matters little which agency collects the Site Value Tax. Convincing arguments have been made that the Revenue should be charged with this task rather than individual local authorities, which have difficulty collecting even 50% of commercial rates and water charges. We believe that the local authority agency the Local Government Management Services Board should also be considered as it has the technical and organisational capacity to carry out this function on behalf of local authorities. What is more important is how the receipts are distributed. Receipts from property in a local authority area should be remitted back to that local authority so that wise planning and investment in services that add value are rewarded by higher tax receipts. This basis structure does not preclude pooling a democratic- ally agreed percentage of the tax take to be distributed to weaker local authorities according to a set of clear criteria and objectives. 

Q18: Could local authorities vary the rate of Site Value Tax for their area? 

A18: The Site Value Tax rate should be set centrally, informed by the total sum that the public sector needs to invest in national infra- structure and services. This is because some local authorities may be tempted to set a lower rate in the mistaken belief it would attract new residents or businesses. Experience in the US shows that this leads to a race to the bottom and poor services for everyone. However, it should be open to local authorities (or groups of local authorities) to charge an additional Site Value Tax to pay for a particular project, such as the Western Rail Link for instance. In this case the landowners who would benefit would be asked to vote for an extra Site Value Tax and if a majority agreed, the extra tax would be levied for a specific time. (See Dr. Constantin Gurdgiev’s article in this book.) 

Q19: Will Site Value Taxation have a positive effect on rural industrial development and employment?

A19: Yes. It is likely that some rural towns and villages will find that demand for property in their area will increase and that in turn will provide more employment. Under a comprehensive national site valuation, commercial land values outside of Dublin and to a lesser extent in provincial cities, will be considerably lower, which will attract those businesses that do not need all of the services and benefits of a big city and which will now have a cheaper alternative. 

Q20: If local authorities get the receipts of the Site Value Tax surely they will encouraged to over-zone and over-develop in rural areas? 

A20: All rural areas need development, be it water services, Internet, public transport, schools and so on. Investment is needed to maintain and create jobs to prevent rural depopulation; farming provides relatively few jobs in rural areas. The rural countryside is not primarily a low-density residential area; it is primarily a food-producing and, increasingly, an energy-generating area for the Irish nation. The countryside is also an invaluable ecosystem service provider and bio- diversity habitat that is coming under increasing pressure from urban- generated housing. Site Value Tax will fund local authorities to invest in proper plans and services for rural villages and towns that will provide convenient and generous sites for family houses so that people are not forced to build in isolated fields. Pressure to zone land for speculative housing estates near rural villages will be eliminated as the landowner will have to pay Site Value Tax immediately the land is zoned when he has no new income to cover it. Zoned land will lose much of its sale value as the annual tax is factored in by prospective buyers. This will make the speculative holding of land for development quite uneconomic. Landowners are much more likely to resist zoning than to lobby for it and, as we have learnt from hard experience, local authorities are very sensitive to local landowners’ desires. For the first time in Irish history, ordinary local people will be able to shape their own settlements guided by their collective vision rather than suffer developer-led housing estates.

Q21: Why should rural dwellers pay less Site Value Tax than urban house owners even though their houses are much larger on average than urban houses? 

A21: Not all rural dwellers will pay less Site Value Tax than urban dwellers; it depends very much on each case. Some rural areas have high site values, such as areas within easy commuting distance of a large town, and some urban areas have low values such as in an area dominated by social housing. But in general it is true that self-built one-off houses in rural areas are considerably larger than their urban counterparts. Neither this fact nor their larger sites makes them more valuable than a more compact house and garden; in fact they take longer to sell and they sell for less than their urban counterparts because of their lack of convenience and the extra costs of living remotely. They can be very poor investments for their owners and this is reflected in the site valuation. 

Q22: As agricultural land is not zoned for development, the owner can get planning permission for sites and sell them immediately without paying any Site Value Tax, unlike a zoned site. Would this not encourage more remote one-off houses in the countryside? 

A22: Good question.... and yes, that could be the case. It will be in the interest of the farmer to sell but not of course for the buyer to buy (see Q&A19). Neither would it be in the interest of the settlement dwellers who cross-subsidize the services of remote dwellers. So we recommend that when given planning permission, the site owner should make an upfront payment of 10 times the annual Site Value Tax that would have been due on the site. If development levies are eliminated as we recommend and because remote sites are more costly to service (despite the common perception), the upfront Site Value Tax should be set even higher. But the final answer to remote site development is to provide cheap, generously sized, convenient alternatives sites in well-planned rural villages, a policy that is actually enabled by Site Value Taxation. 

Q23: How can a Site Value Tax succeed in Ireland where there is a strong cultural attachment to land and where people have historically resisted any interference with their use and enjoyment of it? 

A23: It is true that Irish landlords resisted any interference with their landed property and it took a devastating famine and land war to change that. (See Emer Ó Siochrú’s introduction in this book.) The Irish tenant fought for fair land rents, no charges for improvements and better security of tenure. If you substitute tax for rent, Site Value Tax meets all three criteria. Site Value Tax is demonstrably fair, is not a tax on buildings or improvements and will improve security by eliminating property speculation and debt peonage. Today it is the descendants of those tenants who largely own the agricultural land and residential and commercial property in Ireland, unlike in Britain, where the descendants of the invading Normans retain the vast majority of the land.

It seems, however, that some Irish people have misinterpreted history and now identify with the old landlord class. Unfettered private ownership is not in our culture. If you go further back in history to when the native Irish were in full control, their Brehon laws show that much land was held in common and that private lands were subject to further controls and taxes by the clan. The notion of freehold title and the privileges as opposed the responsibilities of its ownership came in with the Normans. It was fully imposed in Ireland by Cromwell in the second conquest when he rewarded the loyalty of his troops with the lands of the defeated people – the first recorded instance of organised ethnic cleansing in Ireland. After years of campaigning, the Irish came very close to a land value tax in 1909 when a People’s Budget was introduced in Westminster that proposed it for both islands. It was vehemently opposed by the House of Lords, whose landed interests would have been severely damaged. In 1912 Prime Minister Asquith agreed a pact with Redmond and the Irish Parliamentary Party to introduce a third Home Rule Bill if the Party supported the Budget and the Parliament Bill, which reduced the power of the House of Lords. The Parliament Act and the Budget were passed, Land Value Tax was excluded and the outbreak of the First World War delayed the Home Rule Bill. The rest, as they say, is history. 

We have now another golden opportunity to set things right, to restore balance to private versus community claims to the land of Ireland. It is very important for our future that we take it.

A Possible Cure for Europe

The Cure for Europe: A Public option for Money and A public Bank By Scott Baker (about the author)     Permalink     OpEdNews Op Eds 11/17/2012 at 03:39:02

opednews.com

In Europe, riots are occurring on a nearly daily basis, and the police seem as beleaguered as the unemployed masses are desperate.  I recently had this exchange with Warren Mosler, one of the co-founders of the Modern Monetary Theory Movement:
SB:  Is it possible for Euroland NOT to implode if they don't set up domestic, sovereign, currencies that are under each country's political and economic control, or at least some sort of "dual currency" where the domestic currency is legal tender injected directly into the economy (not the banks) for public works and other stimulative purposes, and suitable for paying taxes?
WM: (There will be) no default as long as the ECB keeps writing the check. 
SB: Today there were yet more riots in Greece, and Spain is becoming (as bad as) Greece too.  How long can a "bad economy" persist until there's a revolution, or the police just give up protecting their masters?
WM:  We are in the process of finding out. Could turn into Egypt.
"Could turn into Egypt."  Indeed.  The process by which the police stop defending the elites is never given enough consideration in social reform movement analysis, but it is absolutely essential, or at least the threat of it is, in any whole-scale reform or even, revolution.  This was true in Russia, East Germany, Tunisia, as well as in Egypt.  Fortunately, all of these were,for the most part, bloodless revolutions, albeit as yet very much unfinished.  Toppling a regime is not the same as ending a political-economic system; it may even reinforce it, as people come to support a new tyranny over anarchy.

Europe is a different case from the other countries just listed, since they have nothing close to monetary sovereignty, they are completely reliant on an international, stateless European Central Bank, that is, for now, mostly controlled by Germany.  China is probably the most monetarily sovereign nation on the planet, with control extending not just to its central bank over issuance of money, but currency controls too, over relative valuations compared to other nations.   The U.S. does not have total monetary control either, but it is closer in at least having its own national currency, albeit one issued by a private central bank -- the Federal Reserve Note. 
Europe could solve its problems tomorrow if they would:
A.  Allow each country set up its own currency for domestic use, while still keeping the Euro for international and some domestic use.  A viable exchange rate could be established once firm controls on domestic quantity were established (former Libertarian presidential candidate Bill Still wants to go all the way to a return to domestic, sovereign money, but I don't believe complete abandonment of the Euro is necessary or realistic).
B.  Accept the domestic currency as payment for all domestic debts, including taxes.
C.  Channel the new domestic money directly into public works jobs, solving Europe's massive unemployment problems.   Let's stipulate that there are always and everywhere, millions of jobs to be done, and millions of people who want to do them.   It is never a question ofworker will or need, but of funding and political will.   This is a political problem, not an economic one.
D.  Set up national public banks to buy up troubled mortgages at pennies on the dollar, much the way the Occupy group, Strike Debt, is now, but instead of completely forgiving the debt, reissue it at greatly reduced rates and principal amounts. 
On this last point, these new national public banks should also work with newly reformed governments to institute 100% full rental value Land Value Taxation, so that land bubbles such as the one that wrecked Spain, cannot ever happen again - the tax would rise in good times, to stifle rising land speculation, providing ample revenues for government, while also allowing for untaxing all productive activity -- taxes on wages, sales, VAT would all go away.  
It's worth reviewing what happened during Spain's recent land bubble a bit to understand the true cause of this financial crisis.   Their bubble crashed just slightly later then America's, and is still unwinding, with people being evicted from their homes in record numbers:
In the first trimester alone of this year (2011), there have been 15,546 evictions, a 36.8% increase over the same period in 2010. So frequent have they become in Madrid that the number of courtrooms in the city dedicated to hearing foreclosure cases has more than doubled, from six to 13". With an estimated 700,000 houses built during the go-go years of Spain's real-estate bubble still standing empty, there are no signs that the problem will diminish anytime soon. "Housing values are still falling. Unemployment is going to go up even further, and people's ability to meet their payments is going to drop even more," says ( University of Ramon Llull economist) Santiago Niño Becerra. "When it comes to foreclosures, we're going to see some unbearable statistics. It'll require a political solution, not just a financial one."
Lately, the situation has grown even worse, with some people even committing suicide to avoid eviction and homelessness.   Unlike in the United States, losing one's home does notabsolve one of one's debt.
The ultimate political solution Spain, and the capitalist world in general, including America, needs is Land Value Taxation (LVT).   LVT would return the value of the land, created because of population growth and subsequent demand, and not from anything the landowner did, back to the people of the jurisdiction.   Economic rent of all kinds, but especially that of location, iscalculated to be over 1/3 of GDP (economics.ucr.edu/papers/papers08/08-12old.pdf), according to most Georgist economists, more than enough to fund a reasonably sized and efficient government (expensive foreign wars to acquire resources would be unnecessary in a Georgist world too, with people simply being paid for the use of their natural resources instead of robbed of them by imperialist forces).
But, this is a down-the-road solution.   Right now, immediate relief for Europe could be found in a return to sovereign money for domestic purposes, applied to Europe's persistent and destabilizing unemployment problem.   People Unite!   Monetary Sovereignty Now!

A Simple Explanation.

Ronan Lyons did a report for the Smart Taxes group in December 2011 on Site Value Tax.

See Here

This  section  outlines  the  economic  rationale  and  other  key  features  of  site  value  taxation. 

Site  Value  Tax  is  a  charge  on  the  unimproved  value  of  land,  i.e.  it  is  not  directly  affected  by  physical   capital   built   on   the   land   (such   as   buildings   or   other   improvements).   It   is   instead   a   tax   purely   on   the   value   of   location.   It   is   expressed   as   a   percentage   of   the   value   of   the   site   and   is   typically   payable   annually.   As   outlined   below,   the   idea   of   a   Site   Value   Tax   (SVT)   on   the   value   of   a   plot   of   residential   land  has  a  long  pedigree  in  economics.

  

To   start   with   an   example,   suppose   a   three-­‐bedroom   semi-­‐detached   property   in   one   particular   location is   worth  €140,000. The build cost is €125,000 while the plot if land size 0.03 acres is worth €15,000. This  means  the  value  of  an  acre  in  that  location  is approximately €500,000. A Site  Value  Tax if 2% per annum would mean an €300 tax for this property (2% of €15,000). A  two-­bedroom  or  four-bedroom  property  on  the  same  site  would  be  subject  to  the  same  tax  bill,  as  they  differ  in  value  only   by  the  built  capital and  not  by  the  underlying  value  of  the  land. 

Who are we?

We are an apolitical, informal group of individuals from different backgrounds who all happen to agree that Site Value Tax is the correct policy for the Irish Government to pursue. We believe it to be a fairer alternative to the governments proposed Residential Property Tax. We think it will be better for development and business while at the same time discouraging the kind of speculative behaviour by banks and developers that led us into the current economic crisis.

Konrad Dechant

Retired from UCD ( Newman House) .

Researched and co-authored art historical material.

M.Phil and BA (hons) Classical Greek and Biblical Studies.

Long standing Site Value Tax campaigner.

Ethna Dorman CTA. CPO, Chicago Board of Trade, BTh at University of Wales, Lampeter.

 Ethna Dorman is a Mother, Grandmother and Widow. 

In her professional career she worked as a Commodity Trading Advisor and Commodity Pool Operator. She was the first woman to trade on the London Exchange and became Trading Advisor to Comex, New York.

Ethna co-chaired South Ridge Association - an environmental protection group in Princeton, N.Jersey. She chaired the Board of Trustees of Princeton Junior School, Princeton, New Jersey and currently serves on the Board of Governors of John Scottus School in Dublin. . Ethna is a Theologian and a life-long student of Philosophy

Eoin Flaherty 

is a second year student studying History and Economics in University College Dublin. He also works part time for CityLearning, a company which provides eLearning compliance training courses for the financial industry. Eoin is an active member of Young Fine Gael, plays hockey for UCD and is currently involved in starting a past pupils association for the alumni of John Scottus School which he attended. He supports site value tax simply because, socially and economically, it makes sense.

Constantin Gurdgiev

Dr. Constantin Gurdgiev is the Head of Research for St. Columbanus AG, and the Adjunct Professor of Finance with Trinity College, Dublin. He serves as the Chairman of the Ireland Russia Business Association, and holds nonexecutive appointments on the Investment Committees of GoldCore, Ltd. (Ireland) and Heinz GAM, LLC (US).
He also lectures in University College Dublin and is a Visiting Professor of Finance with the Russian State University. Dr Gurdgiev is research-active in macroeconomics and finance, as well as economic policy analysis. In the past, he served as the Head of Macroeconomics with the Institute for Business Value, IBM, Director of Research with NCB Stockbrokers, Ltd. and Group Editor and Director of Business & Finance Publications. Born in Moscow, Russia, Dr Gurdgiev was educated in the University of California, Los Angeles, University of Chicago, Johns Hopkins University and Trinity College, Dublin.  Dr Gurdgiev serves as a Patron of the Phoenix Project. He blogs at true econonomics and tweets as @GTCost

Ronan Lyons MPhil/DPhil at University of Oxford. 
Ronan Lyons is an economist with experience in urban economics, public policy, national competitiveness, property markets and economic development. He is author of the Daft.ie Report and an economic consultant and commentator. He is currently pursuing a doctorate in Oxford University on urban economics and teaches economics to undergraduates at Trinity College, Dublin, and Balliol College, Oxford. He blogs at ronanlyons.com and tweets as @ronanlyons.

Rory Moran BA (Hons) Accounting & Finance 

Rory received his degree from Brighton University in 1999 and after a number of years working and travelling through the Middle East, India and East Asia; he went on to work closely with property developers in Dublin.  A specialist in social media and electronic campaigning, Rory has been fiercely critical of the Governments response to the banking collapse and has been a supporter of Land Tax since the 90’s. Rory tweets as @roryontour

Judy Osborne BA (Econ) Hons., MSc Spatial Planning.

Studying politics at Sheffield University in the late 60's under Professor Bernard Crick and working for ten years as a local history librarian in Brighton, U.K., nurtured in Judy Osborne an interest in local governance that culminated in working with local communities in County Wicklow, Ireland, on the preparation of Local Development Plans. Further work with An Taisce, an MSc in Spatial Planning from DIT and membership of numerous local government committees deepened her experience of development through Ireland’s ‘boom’ era. Judy is currently working in Wicklow as an independent Environmental Planning Consultant and campaigning nationally for responsible development and for Site Value Tax.

Emer O’Siochru BArch MRIAI 

Emer O’Siochru is a registered Architect and a Development and Planning Valuation Surveyor. She is director of EOS Future Design which provides consultancy and develops sustainable buildings, settlements and life support systems. 

Emer has served on the boards of a number of statutory bodies:- Comhar (the National Sustainable Development Partnership), BRAB (the Building Regulations Advisory Board) and Temple Bar Renewal Ltd and of voluntary bodies:- IEN (Irish Environmental NGO Network), the Sustainability Task Force of the RIAI (Royal Institute of Architects of Ireland), the CAI (Consumer Association of Ireland).

Emer is a founder member Feasta: the Foundation for the Economics of Sustainability.

Emer blogs at www.smartaxes.org, and tweets as @eosfuturedesign 

James Pike Dip.Arch. (The Polytechnic), FRIAI, RIBA, Architect.
James Pike was a founder partner in Delany Mac Veigh and Pike, which was set up in 1964.  This practice evolved into O’Mahony Pike in 1992.  He has played a major role over more than 40 years in urban planning and housing in Ireland, but has also been involved in major educational, office, retail, hotel and industrial projects, and in projects in the UK and North Africa. He has played a continuing role in the RIAI since the 1960’s culminating in the presidency for 2006 – 2007.  He is currently on the board of the Irish Architecture Foundation and a founding member of the Urban Forum. He has played a major role in several publications including “Dublin City in Crisis”, “New Housing” and “New Housing in Context” and chapters in ‘Fleeing Vesuvius’ published by Feasta, and ‘Dublin’s Future’, edited by Lorcan Sirr. He wrote the pamphlet “Living over the Shop” for Comhar, the Forum for Sustainale Development, has presented papers at many conferences, written articles for the press and been interviewed for the broadcast media. He currently contributes to the many urban design projects in the practice, and a number of architectural projects, and has promoted a number of research projects with the Urban Forum and on sustainability issues with DIT and UCD since the 1980’s.

Dr William Patrick (Paddy) Prendergast

Paddy has been a lecturer in the Dublin Institute of Technology since 1995. He obtained a BSc. in geology & mathematics from NUIG in 1978 and a post-graduate diploma in surveying from the Royal Engineer School of Military Survey in 1983. He previously served as a military officer in Ordnance Survey Ireland throughout the 1980's and early 1990's as part of their senior management team. He has been actively involved in the development of the surveying profession in Ireland via his participation on the council of the Irish Institution of Surveyors (IIS) where he served as President from 2000 to 2002. He also represented Ireland on the European umbrella organisation for national professional associations of surveyors (CLGE) where he also served as President from 1998 to 2001. He received his PhD from Trinity College Dublin in 2005. He currently chairs of the IIS Commission on Land Registration and he also chairs the Inter-Professional Task Force on Property Boundaries. His main academic interest is the implementation of Land Administration Systems and Spatial Data Infrastructures to underpin coherent land management in Ireland.

Web site: http://www.dit.ie/geomatics/

There are lots more people to be added. If you are one of them, please send Rory at sitevaluetax@gmail.com your profile pic and a description of your qualifications and background as above.