Agriculture Reference
In-Depth Information
In any case, the debate raged on into the era of land reform which came into effect in 1994.
In May 1995, a Land Tax Sub-Committee of the Katz Commission, sat for the first time
to investigate the possible implications of a land tax in South Africa (Katz Commission,
1998). The White Paper on Land Policy has identified a number of clear advantages of the
rural land tax for South Africa, among which the following have been emphasized:
• Intensification of land use which would lead to landowners releasing surplus land into
market to avoid paying tax on idle land.
• Elimination of land speculation by adjusting the tax to align with the eventual use of
the land and therefore discourage the tendency to acquire land cheaply purportedly for
agriculture and then turn into non-agricultural use which might have higher returns.
It is expected that such a graduated tax in this case will reduce the farmland prices and
will therefore benefit small-scale farmers for whom the high price of farmland is a strong
disincentive.
• The problem of absentee landlords will be eliminated by a rural land tax, so that only
genuine farmers will acquire land. Again, this will bring land prices down.
• When the rural land tax is combined with the removal of existing rules on sub-division
of farmland, it will become easier to re-distribute land from large holdings to medium
and small holdings and this will be beneficial to small-scale farmers who can then acquire
only the size of farmland they can operate.
•
It will be an additional source of budget revenue for the government without
corresponding administrative costs since it is an easy tax to administer.
The recent Land Summit held in Johannesburg in July 2005 came up with the
recommendation that a rural land tax should be introduced in the country and the Minister
of Agriculture and Land Affairs, by her pronouncements, appears favourably disposed to
such a policy regime. It would seem that whether or not a land tax is introduced in South
Africa is only a matter of time.
Despite its relative popularity, a number of issues make the introduction of land taxes
a carefully considered option. These issues relate to the fairness and equity as well as
effectiveness. In this regard, policymakers and researchers outline a number of requirements
for administering a land tax, including having a comprehensive official record (that is, a
cadastral record) of available land portions/plots, their sizes, values, ownership statuses,
production parameters and marketing data, specifically with respect to input and output
costs and prices (The World Bank, 2003). There are also frequent concerns with the basis
for the land tax, i.e. whether it will be based on the land area, its value, or some other
criteria and how to deal with the technical tax administration questions of identification,
assessment and collection. According to Bird (1974), all these require a clear legislative
position on property rights and an administrative structure that routinely collects and
updates information on land and its ownership and sets and implements guidelines for
assessment, collection and enforcement of land tax.
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