Number of EU farms drops 20pc

Posted: 05 Dec 2011 02:41 AM PST

By Caitriona Murphy, Irish Independent, Tuesday November 29 2011

The number of farms in Europe fell by a massive 20pc between 2003 and 2010, according to the latest EU agricultural census.

Figures for Ireland show that the number of farms fell by 5.4pc between 2003 and 2007, the most recent year for which figures are available.

More than three million farms have been absorbed into larger farm units. In 2003, there were more than 15m farms in Europe but this had fallen to just over 12m by last year, the census revealed.

The utilised agricultural area fell by just two per cent during the 2003-2010 period, proving that the loss of farms was due to farm consolidation and not land moving out of agricultural production. The average size of a farm has increased from 12ha in 2003 to 14ha in 2010.

Seven member states account for more than 80pc of agricultural holdings in the EU27.

Romania had the highest number of farms in Europe last year, with 3.9m units and 32pc of the EU27 total. It was followed by Italy, where there are 1.6m, accounting for 13.5pc of the EU27 total, Poland on 1.5m farms (12.5pc of total) and Spain on 1m farms. Greece, Hungary and France complete the seven states with the most farms.

Only Malta and Sweden recorded an increase in the number of farms between 2003 and 2010, according to the census.

Decreases

The largest decreases in farm numbers were recorded in Estonia (-46.6pc), Bulgaria (-44.2pc), Latvia (-34.4pc) and Poland (-30.7pc).

The biggest farms in Europe last year were in the Czech Republic, where the average farm size last year was 152ha or 375ac.

The next biggest farms were in the United Kingdom (79ha), Denmark (65ha), Luxembourg (59ha), Germany (56ha) and France (53 ha). The smallest were in Malta (1ha), Cyprus and Romania (both 3ha), Greece and Slovenia (both 6ha).

- Caitriona Murphy

Source

Adam Smith observed that only 2 of the 3 groups made any real contribution to the production process.  The workers contributed their time.  The capitalists contributed their capital that they either bought, but is now used and worth less than before it was used.  The Rentiers contributed their land, but have lost nothing.  Once the manufacturing of the bricks is done, they get their land back and it is still worth the same as it was before.  Any income they made by renting out their land was made without work, and without risk to their assets.  There is a word for someone that only takes, but doesn’t give back: a parasite.  Smith and those who carried on his work used the nicer term, Rentier.  This is where the phrase “economic rent” originates.  It originally described a no value-ad landlord.

Adam Smith and future classical economists existed in a time where the noble families of medieval Europe were still the large landowners.  The nobles had just turned into Rentiers.  Because they owned the land, they were able to rent it out to capitalist and workers and claim a portion of their profits and wages by charging “rent”.  They were able to do this without ever working.  It was unearned income.

Much of the work done by economists from Adam Smith until the late 19th century was all about finding and identifying “rent-seeking”.  These classical economists didn’t want to overthrow capitalism, they wanted to free it from the “rent-seeking” parasites.

Eliminating economic rent is the main objective of Smart Taxes.  That is why we promote Land Value Taxes, Cap and Share and support charging for the use of common resources.  We also promote ending the financial free lunch of our current money system through the green alternative money perspective as well as that of Modern Monetary Theory.  Enough promo:- here is another snippet from Maddog.

In the late 60s and early 70s “economic rent” saw a small revival among select economists.  For those select few, “Rent-seeking” was no longer defined as just “ownership of the land”.  It can take several shapes.  Rent-seeking is any income that is unearned. An alternative definition is “profit without a corresponding cost of production”.  “Economic Rent” can come from ownership of land and just “renting” it out for money. It can also come from collecting so much capital that a firm now has a monopoly and can set the price independent of supplydemand considerations, It can be from government monopoly granting, control of other “land” like our rivers, broadband spectrum, or “mineral rights” of land.  It can come from control of financial assets like capital gains, dividends, and interest on loans(especially usury). It can also come from political favors from the government….

…Political Implications

Economic rent was something I’d learned about in school several years ago and quickly forgot about it once the class was over.  Now in a post bank-bailout world, I ran across it again one day while researching another article, It was like a light-bulb clicking on in my head.  (A high-efficiency light bulb).  This is what progressives are currently fighting against.  This is the concept, the vocabulary, the name for the rage I feel in my gut at what’s happened.  The rentiers have taken over our country by masquerading as capitalists.

August 31, 2011

LVT in the news again – and Local Economy special issue

The last few days have seen several UK broadsheets give coverage to two policy papers up for discussion at the Lib Dems’ Conference next month (17-21 Sep) both of which suggest that UK’s Third Party plans to strengthen its policy on Land Value Taxation (LVT) – for both national (“Facing the Future” puts tax reform top of the priority list) and local government finance. Sunday Times (front page), Independent, Telegraph, Guardian have all covered this.

Meanwhile the international peer-reviewed journal Local Economy has invited PLRG’s Dave & Heather Wetzel and Dr Tony Vickers to guest edit a special issue next year on Land Value Capture. A Call for Papers appeared in the last issue (repeated below) and the deadline for submission of abstracts is 30th September this year.

Tipperary Farmland

The Irish have a lot of learning to do about property taxes.  Following the 1903 Land Acts, the new largely Catholic landowners who displaced the largely Protestant absentee landlords, immediately sought to deny their obligation to the people of the nation that had helped them win their fine farms.  The worst fears of the hero of the Land Struggle Michael Davitt, were realised as the newly minted nation of small freeholders turned its back on the landless labourer, the urban dweller and the poor.  Fianna Fail, the Political Party of the small freeholder grown to encompass the developer and land speculator, went on to first reduce, then abolish and then relieve with capital allowances every fiscal obligation on property owners during their years of uninterrupted power.  Town and country planning became an oxymoron as scattered mansions pimpled the hills and rural villages sprouted suburban dead-end appendixes.   Infatuation with the land’s ability to capture an easy slice of others’ productivity led to the culpable ignorance and over weaning confidence of a whole cohort of Irish politicians, bankers and professional class.  Still they sit on their hands – reluctant to take the first steps to redress the damage to economy and society of the ‘free rides and free lunches’ enjoyed by land ownership.  While a Site Value Tax is in the Programme for Government  as demanded by the IMF, ECB and ESFS, the Irish Department of Finance has made no move to undertake the research and preparatory work needed to implement it.  Word has it, the Department has not been given the political instruction to do so. No Fine Gael nor Labour politician has the ‘magairle’ for the popular backlash.  Translation here.

It is hard to credit that the only research currently being undertaken to prepare for a fair property tax is by a tiny underfunded NGO.  You guessed it -  Smart Taxes.

That long introductory rant  introduces Michael Hudson’s brilliant new piece in New Economic Perspectives on how the gradual reduction of US  property taxes has lead to a form of debt slavery for millions of Americans.  How much worse then it is for the Irish…

Untaxing real estate has served mortgage bankers by freeing more rental income (the land’s site value) to be paid as interest. Property taxes have not absorbed anywhere near the rise in debt-leveraged housing and commercial prices. However, this has not lowered the cost of housing for most people. New buyers must pay a price that capitalizes the property’s rental value. Less and less of this payment has taken the form of local property taxes. More and more has been paid to mortgage lenders as interest. So cutting property taxes has simply left more revenue to be capitalized into higher debt-financed prices.  (link to article)

What Should We Tax?

by Herman Daly

For some time a small group of ecological economists has been suggesting that we switch the tax base from income (value added to natural resources by labor and capital), and on to natural resources themselves. Value added to resources is something we want more of, so don’t tax it (either at each stage of production as in Europe, or at the final stage as income as in the U.S.). The resource throughput, beginning with depletion and ending with pollution (both real costs), is something we want less of in a full world economy, so let’s tax it. Even though resources in the ground and waste absorption services are free gifts of nature in the cost of production sense, they are nevertheless increasingly scarce in a full world. They need a price to be efficiently allocated and not overused. So let’s give them the needed price by taxing them, and use the revenue from the tax (or equivalent cap-auction-trade system) to substitute for the revenue lost from no longer taxing value added. The resource tax should be levied at the point of extraction (severance) so that the higher price will stimulate increased efficiency of use at all upstream stages of production, as well as in the final stages of consumption and recycling. Also depletion is spatially more concentrated than pollution, so in most cases a depletion tax is easier to monitor than a pollution tax.

In addition to this economic argument there is a political one. People do not like to see value that they added taxed away. They resent it, even while accepting it as necessary to fund public goods. But value that no one added, the original in situ value of natural resources and services, many people think should be common property, and most people think should at least be taxed for public purposes. If there is popular resentment it is against the resource owners who receive an unearned income (scarcity rent) over and above the value they truly add to the in situ resource by extraction and purification (echoes of Henry George). Of course oil and coal companies, and other extractive industries, will resist resource taxation (they currently enjoy government subsidies in addition to scarcity rents!), even though they would be expected to legitimately pass the tax on to consumers to the extent that markets allow. It is necessary that consumers, as well as producers, also get the higher price signal and become more efficient and frugal in consumption.

I have been told that we could not substitute resource taxes for value-added taxes because resource rents are a small portion of GDP while value added accounts for nearly all of GDP. You have to put the tax where the money is, I am told. But this is confusion between what is taxed and what the tax is paid with. All taxes are paid out of total income (money is fungible). But the question is, what is the tax proportional to — income or resource use? It makes much more sense for taxes to fall on resource use than on income. A resource tax falls on all citizens in proportion to their resource consumption, how much of a burden they impose on the biosphere, and not according to how much value they add to the resources necessarily extracted. Also, resource taxes are harder to evade than income taxes because, unlike resource depletion, income is not an easily measured physical quantity, but an abstract concept subject to manipulation by lawyers and accountants.

As to the reasonable objection that a resource tax is regressive with respect to income, that can easily be remedied by some combination of the following: (a) retaining an income tax on higher incomes, (b) spending the tax revenue progressively, including by abolishing existing regressive income taxes such as the payroll tax, (c) instituting a significant and progressive inheritance tax. Some object, less reasonably, that higher resource prices due to a resource tax will put us at a competitive disadvantage in international trade. But then so does an income tax, and it is not clear that there would be any net difference between the two in raising the same amount of revenue. In fact, any internalization of environmental and social costs would also raise prices and thereby create a trade disadvantage relative to countries that did not internalize those costs. However, the first rule of efficiency is to count all costs, not to run a trade surplus based on standards-lowering competition to externalize costs.

So why not shift the tax base from value added (earned income) and on to that to which value is added (natural resource throughput)? This would help us to count all costs and minimize depletion and pollution. It would stop penalizing the desired creation of value added by taxing it. It would reduce unemployment. It would use the revenue from natural resource taxes to substitute that from the eliminated value added taxes. The first value-added taxes to be eliminated would be the most regressive ones, thereby serving both efficiency and equity. This seems such an obvious improvement that one wonders why economists remain so in thrall to value-added taxation?

…Some free economic consultancy

As readers of this blog are aware, though, I’m not a fan of giving out for the sake of it – I try and make some sort of constructive suggestion. I’m hoping today’s suggestion will be particularly useful. It’s a simple one. Put every Census district of the country into ten different bands of the approximate cost of land and scale the property tax according to that. There is a wealth of information out there on Ireland’s property market, which the Government can use to find out the approximate “pecking order” of property values around the country. This would then be a very handy interim step towards the introduction of a full and fair land value tax, as discussed last week.

I can go one better than make the suggestion, I can actually do it! The map below puts each of the 3,400 Census districts in Ireland into one of ten land-value bands, from the top 10% around south Dublin and north Wicklow to the country’s cheapest homes in the Upper Shannon region. It’s based on research I’ve been doing in Oxford (a preliminary version of which I presented at the annual Spatial Economic Research Centre conference in London last month). The mapping is entirely thanks to Justin Gleeson of the National Institute for Regional & Spatial Analysis at NUI Maynooth, although the blame for its application for this purpose rests entirely with me. An underlying spreadsheet of the price per Census district is available for the Government, if it is interested.

Suggested bands for an interim property charge in Ireland 

For those who are curious, the map is calculated using the 200,000 advertisements of properties for sale on daft.ie from the start of 2009 to the end of 2010. The underlying analysis gives a like-for-like price per Census district, controlling for a range of property attributes, such as type, bedroom number and bathroom number, and – quite importantly – for the date the property was advertised. In that way, what you’re seeing is stripped of the time aspect, it’s even stripped of the level (so the fact that it is just asking prices doesn’t really matter) – it is just a ranking.  (link to full article)

This is a short and quite startling interview by Michael Hudson where he briefly outlines how even the language of economics has been subverted.

When the Government taxes successful effort, people strive less — some work less, others don’t bother setting up a business, a few relocate overseas — and since hiring is more expensive, fewer jobs are created. But taxing land wouldn’t crimp economic activity, as Adam Smith explained in The Wealth of Nations. It wouldn’t reduce the supply of land, which can’t be spirited away to a tax haven. And it wouldn’t push up rents, which depend on what tenants are prepared to pay rather than landlords’ expenses.

A land tax would actually encourage development. Since it would be payable irrespective of how land is used, it would stimulate the regeneration of derelict sites — such as Battersea power station, where David Cameron launched his election campaign and which has lain idle since 1982. Infrastructure investment that raises surrounding land values, such as Crossrail or a high-speed rail network, would pay for itself and thus escape short-sighted budget cuts. And unlike property taxes, people who do up their homes would not be penalised.

Taxing land values could also limit property bubbles — and the inevitable busts — without discouraging mobility (unlike stamp duty) or business investment (unlike interest rate rises). Relaxing planning restrictions, as Policy Exchange, the Prime Minister’s favourite think-tank, has suggested, would help too. The notion that we can all get rich by swapping more or less the same stock of houses at ever more inflated prices is a dangerous delusion. Property speculation diverts funds from productive investment in promising companies — and when the bubble bursts, the economy plunges into recession, home-owners are stranded with huge debts and banks laid low by bad loans seek bailouts from taxpayers. Isn’t it time we learnt from our mistakes?  (link to full article)

October 28, 2010
UN SWOTs on Land Value Capture on LandValueScape
Tony Vickers

Did you know that the UN supports Land Value Taxation? In 2006, UN HABITAT awarded a contract to the US-based Earth Rights Institute to develop one of several Global Land Tools for the benefit of governments in the majority/developing world: an online “How to do it” course on Land Value Capture. The contract document stated: “Land Value Taxation is the appropriate instrument for the urgent fight against global inequity and poverty”. Securing Land Rights for the poor is seen as crucial to the UN’s Millennium Development Goal 7, which includes the principle of “integrating sustainable development into national policies and programmes, to help reverse loss of environmental resources.”

Earthrights’ co-founder Alanna Hartzok has just contacted PLRG to inform us on project progress in a number of countries, using the SWOT methodology to analyse a country’s current status as regards capture of land values for securing land rights and combating poverty.

Among the components of what the UN-HABITAT regards as good practice for land policies are:-

“Consider fiscal and other measures, as appropriate, to promote the efficient functioning of the market for vacant land, ensuring the supply of housing and land for shelter development; Develop and implement land information systems and practices for managing land, including land value assessment, and seek to ensure that such information is readily available; Make full use of existing infrastructure in urban areas, encouraging optimal density of the occupation of available serviced land in accordance with its carrying capacity; Consider the adoption of innovative instruments that capture gains in land value and recover public investments”.

In the UK today, almost the only people (outside the top decile of income earners) able to enter the domestic property market are those with family already in it, via “the bank of mum and dad”. Therefore it is timely that RICS is taking a long hard look at how tax impacts on the entire property cycle. Our Coalition Government is ‘market friendly’ and should be receptive to ideas that make the housing and land markets work better.

Posted by Tony Vickers at October 28, 2010 5:05 PM

Here it his second video on Irish Taxation Reform. Ronan Lyons on Land Value Tax.

He has identified many of the good reasons to adopt land value tax but seems to have missed out the fact that it would cover zoned land and sites thus expanding the base for the tax allowing a lighter tax on hard pressed home owners.