Two wrongs and no rights
Memorandum on the current situation in Zimbabwe
Author: David Mills
June 2000
Foreword
The Land Value Taxation Campaign (“the Campaign”) was formed in 1987 as a non-party body advocating a national land rent charge to replace conventional taxes which weigh on wealth creation. A statement summarising the argument is set out in “What Is Land Value Taxation?” . The Campaign publishes a newsletter of current commentary, “Practical Politics”, which appears monthly during the Westminster parliamentary year.
The Campaign’s self-imposed remit is to work for the introduction of land value taxation in the UK. It has gone beyond this restriction in this particular instance for two reasons:
1. It has been suggested that money raised from UK taxpayers could be involved in reaching a solution in Zimbabwe, and
2. The particular topic falls directly within the Campaign’s area of interest.
TWO WRONGS AND NO RIGHTS
1. In 1890, Cecil John Rhodes and 200 white pioneers set out for what became Rhodesia, raised the flag, and shared out the spoils. “Between 1908 and 1915, Rhodes’ British South Africa Company put 1.5m acres of the country’s best land into settler hands . . . establishing the pattern for to-day’s ownership” (Michael Holman, “Financial Times”, 11th. March). “White settlers seized the most fertile areas and forcibly removed blacks from their homes . . . Just 4000 white farmers own about 70 per cent of the arable land, while more than seven million blacks scratch a living from communal areas” (David Blair, “Daily Telegraph”, 28th. April). Now, violence has finally broken out against white farmers, with occupation of their lands.
2. Protagonists for these white landowning farmers argue that their expertise is vital, and that their deployment of capital and labour not only contributes to sustaining the local economy, but also provides the exports to earn the currency to pay for essential imports. They claim that seizure of land and subsequent redistribution to “war veterans” and other blacks will not work. Land division into small family-sized holdings makes for inefficient subsistence farming: crop failure, disease, misfortune lead to indebtedness and alienation of land, and eventually to an impoverished landless labour force and the re-emergence of the latifundia, though this time under a black landowning elite.
3. This reasoning is, of course, motivated by considerations of self-interest. However, it contains much truth. Land division is conceptually flawed and morally untenable. Experience in El Salvador following the 1990 Peace Accords clearly demonstrates this. Some families have received better quality land than others; the smallholdings have proved vulnerable to crop failure; the problem of land distribution amongst future generations – the descendants of those families who receive an initial allotment – remains completely unresolved; and the process did nothing at all for the urban poor.
4. To summarise the underlying issues:
A black field hand is no better off working for a black landowner than for a white one.
It is unjust that UK taxpayers (who, incidentally, include welfare recipients returning part of their benefits to the government in VAT) should subsidise an emerging class of black landowners in Zimbabwe through what is supposedly “development aid”.
Land reallocation is arbitrary in this generation, and unjust to future generations; and it does nothing at all for the landless urban poor.
5. A second wrong does not undo a first. Farmers, and other businessmen, white or black, need security of tenure, a fair return for their entrepreneurship, expertise, and labour, and proper remuneration of the capital employed. They do not actually need to hold land as private property, and they have no right to pocket its value as personal income. The correct policy is not to seize land or dispossess anybody, but to collect site rental values for public expenditure, and remit existing taxes. In that way, the whole population shares in the common inheritance – the very earth itself. How else can it be “their country”?<
6. Fortunately, there is a local precedent which Zimbabwe can follow and develop, and it happens that the UK government of the day was involved in it. A Rhodesian Municipal Ordinance of 1914 permitted municipalities to differentiate in their local rating as between land and buildings. Salisbury, Bulawayo, Gatooma, Gwelo, and Que Que all took advantage of this to rate land values at higher levels than improvements.
Land value duties are thus not to be limited to agricultural land, still less to “white-owned” farm land. Assessment and collection need to be pursued with intellectual commitment and energy. The mere announcement of a far-reaching programme of fiscal reform will itself ensure that benefits start to flow.
7. There is a rôle here for foreign governments, in particular, those in the Commonwealth and EU. There exists a considerable body of knowledge on land valuation practice and implementation, not only within the Valuation Department of the UK Inland Revenue Service, but also in Australia, New Zealand and Denmark, where land value taxation has been applied for many years; although, unfortunately, these examples have been primarily for the raising of local government revenue rather than for central government, the valuation procedures and function of the valuer are the same, since they are not affected by the percentage of tax taken nor its destination.
Thus, HM Government and other governments could use their good offices to provide expertise, for example by secondment of staff and/or training local personnel, to establish a functioning system.
8. Under a properly constituted system of land value taxation, holders of land will recognise that, whilst they are required to pay for benefits received – for example, public services and infrastructure provision – they do receive what they pay for. If they use those benefits properly, all is well and good. If not, they have the incentive to dispose of their land holdings to those who can make use of such benefits.