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The Forum > Article Comments > RSPT is not some weird tax invented by Ken Henry > Comments

RSPT is not some weird tax invented by Ken Henry : Comments

By Bryan Kavanagh, published 3/6/2010

The miners have the wrong end of the stick. We should all be paying our land or resource rents to the public purse.

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Yes, EBITDA, Herbert. And, of course it should apply to forestry, fishing, spectrum licences, etc., too, but that aint in the offing - yet.

That would square these natural resource industries with my hotel analogy (EBITDA). THEN, taxes are paid - but they should not be paid. All we should take for revenue is the rent, then get out of the taxation industry business.

To correct a maxim: the only real certainties in life are death and rent, Herbert. Taxes are optional - and wrong.

Thanks for your sensible input. Much appreciated.
Posted by Bryan Kavanagh, Saturday, 5 June 2010 2:39:12 PM
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To clarify Bryan (excuse me if I'm a bit slow). But I think you are saying that:

1. There should be a uniform "rent" for the use of all the public assets identified, not just resources, being 50% of EBITDA.

2. After the "rent" is paid, there are no further taxes.

Thanks.
Posted by Herbert Stencil, Saturday, 5 June 2010 5:33:41 PM
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Land value tax would enhance the government's ability to provide good health, education and services without recourse to taxing away the incomes of people while they are working.

>>Ar, most homeowners are also tax payers.

Good for workers. Good for retirees. Let's acknowledge that our land and natural resources are Australia's wealth and our governments have a responsibility to secure it for all Australians. Margaret

Yes margaret, is this so our incompitent governments can once again waste the billions (of our money).

It's time that all expenditure was taken away from all governments so they can't get thier grubby little hands on it.

Remember, they will still be rich once they are done playing politics and stuffing up our futures. Meanwhile, many of our tax payers will have lost their jobs, houses, businesses and some their lives.

They are just a joke and the polls are showing just that.

Not much support comming from the 'tall poppies' either, I might add.

I think the cats got their tongues!
Posted by rehctub, Saturday, 5 June 2010 8:29:22 PM
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Herbert,

Sorry for being so sketchy. There are two distinct categories of natural resources:-

1. Mining, oil, fishing, forestry, spectrum, aircraft corridors, viz, our licensed natural resources that are permitted to operate as 'going concerns': these should all be at the rate of 50% EBITDA, eventually with no other taxes.

2. All other sites (residential, rural, commercial and industrial) for which title is held.

There are two possible assessment methods, either (a) the estimated rental value of the vacant site, or (b) a rate struck at a percentage of the current vacant site value which aims to approach (a), the site rent. (a) is the preferable option, because when (b) is adopted, the rate in the dollar will have to increase or decline as site values increase or decline. It's best simply to assess the annual rent which will self-adjust to good and bad periods (but under such a system there must be far fewer bad periods.)

Re 2: There is virtually no rental market on the vacant land value of sites except for rural land at the moment, but if real estate is put to the market with a rent revenue liability of $x, or $y, etc., such a market would develop rapidly.

To those who might say: "I've paid the freehold value of my property, why should I pay its annual rental value, you could say: OK, so an upfront payment also means your road is only ever sealed once, the police force and national defence force is only paid once to defend your property, freeways and railways stations are not extended or maintained, etc., etc.
Posted by Bryan Kavanagh, Sunday, 6 June 2010 8:16:41 PM
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Either system would have to be phased in gradually, so that recent purchasers were not unduly penalised, and income/company tax and GST MUST be reduced concomitantly.

As taxes are gradually abolished off employment, production, company earnings and exchange, the revenue system would at last give a green light to producing and getting things done, whilst collecting land and resource rents to the public coffer would quickly chase the speculators (rent-seekers that the current system actually ENCOURAGES to behave like parasites) out of the real estate market.

This is economics' new frontier. It would finally put paid to real estate bubbles and ensuing financial busts. I know, I know: "Try telling that to your local real estate institute!" The question has to be asked: Is there in fact a genuine real estate market if people can simply hold their properties out of the market at their whim for capital gains purposes?

Paradoxically, the real estate market wouldn't experience recurrent busts and real estate agencies would be much better off under such a system, but they're currently under the misaprehension that speculators do add value. If this were really so, they might like to explain what's happening at the moment in Portugal, Ireland, Italy, Greece, Spain (and very soon in the UK and USA ... and later, in China and Australia.)
Posted by Bryan Kavanagh, Sunday, 6 June 2010 8:20:30 PM
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Bryan Kavanagh,
Without the 'paricites' of realestate, as you refer to us, people would have nowhere to live as many are simply not capable of committing to paying off a loan. They can't even avoid paying interest on an 'interest free' deal.

In any case, as the cost of owning a rental property increases, we jack the rents up.

After all, we are not a charity.
Posted by rehctub, Monday, 7 June 2010 7:46:53 AM
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