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Geographers link NAMA, Democracy and Land Reform

From a link posted in Tasc, I found this great new site run by Maynooth Geographers with the intriguing title “Ireland After Nama”.   Smart Taxes has been occasionally criticised for departing from our funded remit which is devising a better set of fiscal mechanisms to deliver sustainability for Ireland.  Land Value Tax (LVT) has been a big part of that agenda in our first year.  We think NAMA will impact negatively on the delivery of Land Value Taxes as a substantive, efficient LVT would capture  the ‘long term economic value’ created by an economic upturn for national and local government coffers, thus byepassing NAMA.    Thus it is likely that the existence of a government-owned NAMA with its prime objective to maximise the value of its portfolio of Irish property loans will obfuscate effective land taxation reform.

Smart Taxes does not support the The 80% betterment or windfall tax included in the NAMA Bill as such a transaction tax will inevitably  freeze the development property market (unlike an annual tax on the rental value of zoned land).  The windfall tax will not apply to already zoned land (for its current use) so that it may have been conceived as a mechanism to preserve and enhance the NAMA zoned development land portfolio.  An important, perhaps unintended, consequence is that it would actively inhibit the de-zoning of surplus to requirement development land which is absolute foundational condition for sustainable settlement planning in many rural areas.

We also of course had deep concerns about the burden the taxpayer will carry given the undoubted risk brought by government underwriting of NAMA that will leave little room for the ‘low tax economy ‘ which was and still is , part of the framework set for the Commission on Taxation and thus Smart Taxes deliberations.

However, we had not twigged the deep philosophical disadvantages of NAMA in terms of the land reform agenda identified by our geographer friends…

In the foundational text for modern political theory – Politics – Aristotle was very concerned with conflicts arising from private ownership of property. Although he did not state it explicitly, he was essentially broaching the question of class conflict in ancient state systems. He felt that if in a perfect democracy there were extremes of rich and poor, the poor would use their democratic right to initiate land reform and confiscate property from the rich. He considered this to be unjust on the basis that if one considered this to be just then ‘all the acts of a tyrant must of necessity be just; for he only coerces other men by superior power, just as the multitude coerce the rich’. One could debate Aristotle’s judgement about justice and injustice at length. But it is his potential solutions to the problem that are most insightful and have most contemporary relevance. In democratic states, he saw two ways of dealing with the difficulty: the first option was to reduce inequality so that the poor would not be inclined to initiate land reform; the second option was to reduce democracy so that the poor would not have the power to initiate land reform. The question then arises as to which of Aristotle’s two solutions the state is currently pursuing with regard to contemporary failings arising from private ownership of property: so, is NAMA an attempt to reduce inequality or reduce democracy?  Link to article.

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