Many argue the next world war will be for water but in South Africa, if Julius Malema’s rantings are to bear truth, it will be about land. Flashback to his call for white blood outside the Newcastle court recently. In a brilliantly researched response to Malema’s call for change in land ownership, Rian Malan scrolled through the masses of history to determine who the benefactors should be of the land he occupies. It’s a story that’s gone viral, and the reaction was mixed, but the foundations had been laid. In response, Peter Meakin, a professional valuer, put together some fast facts about land, as understood by him. It’s not the answer to all South Africa’s ills, but it’s a good place to start. It may even prevent further barking up the wrong trees. – Stuart Lowman
By Peter Meakin*
- That the Creator did not sign the first sales agreement for Rian Malan’s plot, or any others. He was clearly not a willing seller. All later sales are therefore suspect.
- That unused land is sold at a p/e ratio of 15. But land does not perceptively depreciate; for all intents and purposes it remains in an out-of-the-box condition, in perpetuity, unless illegally fouled by man or beast. The real p/e ratio should therefore be in perpetuity.
- That no one has any moral claim to the ownership of things which they did not make. Land, the spectrum, oxygen, rivers and oceans etc. are nature’s endowment to all citizens.
- But everyone owns his or her businesses, bricks and mortar, forests, crops machinery and equipment. This is sacrosanct private property.
- The hard earned income taxes and vat lowers the tax on land, leaving unearned land rents to the owners who sell these rents.
- If public revenues were confined to land rents (a rates and taxes surcharge) they would exceed the ±R750bn income taxes and vat payable to SARS in 2016/17. That is because unused land is not currently taxed.
- Landowners don’t pay taxes but advance funds to Treasury and wait for land prices to rise for reimbursement.
- SA will become a tax haven, like Hong Kong and Singapore. These islands have no mining or agricultural sectors but their citizens are five to ten times wealthier than South Africans (in GDP per capita PPPP). In the 1960s they were all equally poor. Both are now the most desirable destinations for foreign investment because taxes are so low.
- That the indigent and illiterate can do ten times better on 0.5ha of arable land than working for a minimum wage. Rian Malan can grow 6 tons of food on his plot, enough for two families of four.
- There are 27m ha of unused arable land in South Africa, according to Frost and Sullivan.
Under a single land tax regime Rian Malan et al occupy their land in perpetuity and pay rates but no income taxes or vat. This is what is anticipated in sec 25.5 and 229 of the Constitution. It was the system introduced by Governor Craddock in the 1820s called perpetual quitrent tenures. It was repealed in the late 1900s and made redundant in 1914 by Smuts Income Tax Acts.
- Peter Meakin is chairperson of the South African Constitutional Property Rights Foundation (SACPRIF www.sacprif.org), a voluntary think tank based in Cape Town. He’s also a professional property valuer.
