AUSTRALIA: Abolish selected taxes and watch the territory thrive

Jack Waterford (''Prairie populist would smile at Stanhope budget initiative'', May 10, pB2) is not alone in his sympathy for Henry George.

As every properly educated economist knows, there are only three things you can tax land, labour and capital.

Only one of them does not stop working, breeding or being reproduced.

Only one produces a true enduring surplus over cost.

That is the major reason why prominent economists, from the 18th century French physiocrats, through Adam Smith to the present day have endorsed the taxation of unimproved land values as uniquely efficient.

Unfortunately, few people today (including, sadly, economists and politicians) study the history of economic thought. Few people know that Sir Samuel Griffith and Sir John Quick, two of the founding fathers of Federation, were keen advocates of land value taxation and leasehold tenure.

In 1988, the ACT should have adopted the policy of financing infrastructure through land rates and only renewing leaseholds at market rents.

It should have abolished stupid taxes like payroll taxes and stamp duties and competed with Sydney and Melbourne.

If it did so, the ACT would be a much better place to work and live. Housing and utility costs would be lower and there would be more employment opportunities outside of government.

We might even have a couple of dams built and have the truly green garden city Canberra was meant to be.

Terence Dwyer,
visiting fellow, Crawford School of Economics and Government,
Australian National University