1. LAND RENTAL CAPTURE IN THE UNITED KINGDOM
Ted Gwartney

2. LAND RENT IS THE BEST SOURCE OF PUBLIC REVENUE
Land is a free gift of nature
Land rental value is an economic surplus that belongs to everyone
Adequate to fund public needs

3. ONLY A SMALL AMOUNT OF LAND RENT IS CURRENTLY CAPTURED DIRECTLY FOR PUBLIC PURPOSES

4. UNITED KINGDOM
It is possible to estimate the rental value of all land in the United Kingdom quickly, accurately and at a reasonable cost.

5. In 1975, I was Appointed as the Assessment Commissioner and Chief Executive Officer of British Columbia Assessment, from 1975 until 1986.

6. The existing records of all of the United Kingdom assessment agencies can be used as a basis (such as the Valuation Office Agency (VOA), the Business Rate Tax and the Eurostat‑OECD compilation guide on land estimation).

7. BRITISH COLUMBIA CANADA The area of BC is km² United Kingdom Area 242,500 km² BC is 3.9 times larger Number BC properties 2,044,482 In British Columbia we had 180 cities and rural districts to assess.

8. British Columbia is 3.9 times larger in size than the United Kingdom
British Columbia is 3.9 times larger in size than the United Kingdom

9. The BC government wanted to improve the property tax and capture a greater proportion of revenue from land and natural resources. Assessments had been frozen for 30 years (like the Council Tax).
In 1973, I was hired as a consultant to make recommendations for improving the assessment methods in the Province.

10. An all-party committee of the Legislature conducted a comprehensive study of assessment and taxation.
I recommended a province-wide Assessment Authority that was independent of the taxing function.
Annual reassessment of land and improvements separately would be made at market value to achieve equity in real property taxation.

11. New Systems were developed for data processing, mapping, assessment roll production, statutory reports, appraisal and office systems.
Success was achieved by simplifying the handling of property transfers, expanding training programs, creating appraisal manuals, expanding technical support and developing a mass land and property valuation system.

12. PROPOSAL OBJECTIVE
Capture Land Rent a Plentiful Source Of Public Revenue
Reduce Taxes On Buildings, Workers, Homeowners, Producers And Merchants
Enhance The Wealth Of All People

13. BRITISH COLUMBIA TODAY
Today, British Columbia Assessment has been in business for 44 years.
BCA set the standard for updating assessed values annually. It is considered the most efficient assessment organization in the world.

14. 2017, $7.90 billion in property tax revenue, $4 billion from land, was generated for communities to provide benefits for British Columbians.
Population 2018 as per estimated data is BC 4.75 Million, England 55.8 Million
Land Assessed Value for All parcels
Assessed Value for Improvements
Total Value of all real estate: $1.86 trillion

15. METHODS USED TO VALUE THE LAND RENTAL VALUES
1 – Develop Land Database
2 – Study Comparable Rentals
3 – Develop Valuation Models
4 – Apply Valuation Models

16. APPRAISING LAND RENTAL VALUE
TECHNIQUES USED IN
APPRAISING LAND RENTAL VALUE
Land Rental Comparison with Adjustments
Proportional Land Rental Relationships
Value Allocation with Land Ratios
Developmental Analysis Land Residuals
Subdivision Development of Land

17. LAND RENTAL COMPARISON
Ground rent leased land
Tear down sales
Land residual sales
Sale price times cap rate = land rental value

18. LAND RENTAL ADJUSTMENT GRID ADJUSTMENTS MADE FOR DIFFERENCES RENTAL PER SQUARE METER
VARIABLE =
STANDARD
>
SUPERIOR
<
INFERIOR
Base rental - $
$80
Downtown - miles 5 $0 3
+ $4 7
- $4
Size - square feet
10,000
12,000
8,000
Transport - blocks 1
+ $8 6
- $6
Recreation - block 10
- $3
Adjusted rental - $
$100
$63

19. LAND VALUE MAP

20. IS LAND RENT ADEQUATE TO FUND PUBLIC PURPOSES?
California, Australia, Harrisburg and England

21. CALIFORNIA USA
The opportunity to test the claim that land rent provided sufficient revenue to pay for all public expenditure came with a political initiative to correct a lack of revenue in my home state of California.

22. California is 1.75 times larger in size than the United Kingdom
California is times larger in size than the United Kingdom

23. UNITED KINGDOM AND CALIFORNIA
United Kingdom Land Area (242,500 km²)
California (424,083km²) is 1.75 times larger in size than United Kingdom
California population 39.8 Million
United Kingdom population 55.8 Million
Estimated Total value of real estate: $8.36 trillion, more than 50% is land value

24. For the 2011 election year, an Initiative was proposed to replace all existing taxes in California with the capture of land rent.
The plan was to eliminate taxes on sales, income and buildings and replace the lost revenue with a charge of 75% of annual land rental values.

25. Being a former assessor in the state of California, I was invited to review the Comprehensive Tax Reform Initiative.
I estimated that sufficient revenue could be raised from land rent to replace the revenue that then flowed to all state and local governments.
To arrive at this conclusion, I had to evaluate existing data and make adjustments and assumptions to fill the data void.

26. Had the Comprehensive Tax Reform Initiative become law in 2011 based upon collecting 75% of land rental values,
the State of California could have replaced all of the existing revenue sources (sales taxes, income taxes and building taxes) $159 billion in annual revenue and
raised additional revenue of $43 billion over current revenue.

27. The California Legislative Analyst’s Office approved my fiscal analysis of the initiative.
Unfortunately, an initiative required signatures on petitions from 8% of the registered voters and the cost of securing these signatures was prohibitive, so the initiative did not get on the ballot.

28. AUSTRALIA
Australia has some of the best records available on land rental values. Studies by Terry Dwyer and Bryan Kavanagh concluded land rent represented more than 25% of gross annual domestic product. Australia’s land rent is adequate to eliminate taxes on buildings, wages, production, commerce and investment and fund all government services.

30. LAND RENT RATES

31. HARRISBURG TWO TAX RATES
Land Tax Rate 6 X Building Rate
Land Tax Rate
Building Tax Rate
Increased Land Tax Rates
Over 20 Year Period

32. RESULTS IN HARRISBURG New investment $3.1 billion New businesses 4,000
Vacant properties cut by 85%
Crime rate reduced 54%
Fire rate dropped 76%
Unemployment cut in half

33. ECONOMIC RESULTS Land Cost Less Rents Decreased New Businesses Started
Investment In New Production
New Jobs Created
Wages Increased
Benefited All Including Poorest

34. GROSS DOMESTIC PRODUCT
GREAT BRITAIN 2017
GROSS DOMESTIC PRODUCT
IN BILLIONS OF POUNDS

35. One-Half Trillion Pounds Abolish The Council Tax, Business Rates and
GREAT BRITIAN
The Total Potential
Land Rent Is Over
One-Half Trillion Pounds
This is the value measurable in the markets today
Abolish The Council Tax, Business Rates and
Stamp Duty

36. THE 1 PERCENT’S PROBLEM
Joseph Stiglitz, Nobel Memorial Prize in Economics, Vanity Fair. (May 31, 2012):
Much of the inequality in our economy has been the result of rent seeking, because, to a significant degree, rent seeking re-distributes money from those at the bottom to those at the top…. rent seeking distorts resource allocations and makes the economy weaker.

37. THANK YOU
Ted Gwartney