Land, wealth and taxes, time for change- the options

Introduction

The first post relating to farmland and taxation highlighted a number of issues. One of these is that of the levels of inequality in land ownership with some people and companies owning considerable areas of land.  Some land is owned by what is termed the aristocracy or gentry with other tracts owned by rich entrepreneurs. There is also land owned by the royals including the Duchy of Cornwall and the Duchy of Lancaster and estates such as Sandringham,

 

Work by Guy Shrubshole suggests the following breakdown of ownership:

Aristocracy = 30%

Corporations = 18%

Tycoons – 17%

Public sector – 8.5%

Individual home owners – 5.1%

Charities = 2%

Crown and Royals =1.4%

 

However, there are no figures for the share owned by family farms and small landowners, which renders these figures of limited use.

  

Objectives

To

limit the amount of land any individual, family or company can own;

promote family and community ownership of land;

ensure that those operating farms have either the experience or qualifications to do so;

stop people from using farmland to avoid taxes;

maintain a range of enterprises in rural areas;

maintain a sustainable agricultural system;

develop a sustainable and resilient environment;

 

Background

A number of countries in Europe have regulations regarding the purchase of land including Austria where a purchaser has to be either a farmer or have certain qualifications for experience and Norway where a buyer has to have farming as their occupation. 1

 

Perhaps the most comprehensive approach is that adopted by France where SAFER (la Société d’Aménagement Foncier et d’Etablissement Rural), operates.  The agency which in English means Land Development and Rural Establishment Society), is a government agency set up by both the Ministry of Agriculture and the Ministry of Finance. It dates back to the early 60s when a young farmers’ union, seeing vast strips of land being sold to developers at an alarming rate, pressured the government to act.

 

Today, the SAFER not only aims to protect precious farmland from speculation, but helps farmers acquire land they could not otherwise afford on their own. More recently, its powers have been expanded to encompass regulations to protect the environment and its rich biodiversity.

 

[2  https://www.frenchentree.com/french-property/buying/the-role-of-safer-in-french-property-purchase/]

 

Options

We can identify two broad areas where policy reform is required: - limits on how much land any individual or company can own, and, who can purchase land.

 

How much?

An upper limit could be established based on viability criteria enabling the farmer/landowner to obtain a reasonable income. Such a limit would vary according to the area – upland farms for example would need a larger area to be viable.

 

The question then is what happens to those with land already over the limit?  Should an annual tax be imposed on land above threshold levels. Any funds could be lodged in a land purchase fund to be used for purchases of land. 

 

Where there is a large estate consisting of a number of farms let to tenants should a system be established to enable to the transfer of those farms to the tenants?

 

When the current owner of an estate passed away or wanted to transfer the estate to someone else, should there be a tax on assets above the threshold to enable land to be sold?  Any tax raised could go towards funding the transfer to tenants.

 

Should there be different limits on the amount of land that anyone can purchase where they intend to rent the land out and what criteria should be applied to such potential purchasers?

 

Who

Do we need a system where to buy land the purchaser has to fulfil certain criteria relating to their interest, qualifications and experience?  Would it be appropriate to disqualify people in high paid jobs or certain sectors such as city financiers? 

 

Should a framework be established to enable young farmers to acquire or rent land either by obtaining access to farms where the owner wants someone to use the farm in the future?

 

Do we need to establish community run groups to own some farms and also those areas which are providing public goods – grouse moors, large woodlands?

 

Implementation

Implementation of policy could be carried out by a Land Commission, which would have the following roles:

Monitor existing land ownership and use;

Assess the suitability of potential purchasers to buy and hold land;

Hold funds derived from land taxes;

Organise the transfer of property on estates above the relevant threshold.

 

Conclusion

The current situation of land ownership is flawed with large disparities in ownership levels and a large area owned by a small number of people. Reform is required to create a more equitable system. Debate and discussion is essential if we are to move forward.

 

Sources

1  Glass, Jayne; Bryce, Rosalind; Combe, Malcolm; Hutchison, Norman; Price, Martin Francis; Schulz, Leonie; Valero, Diana E, (2018), Research on interventions to manage land markets and limit the concentration of land ownership elsewhere in the world.

 

2  https://www.frenchentree.com/french-property/buying/the-role-of-safer-in-french-property-purchase/