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Land Value Tax revenue

In 1879, Henry George proposed through his book Progress and Poverty an introduction of Land Value Tax revenue. George had proposed that taxes on unimproved value of land should replace all other taxes. This means that all improved lands with residential and commercial or industrial enterprises should not be taxed. If a piece of land is developed, George suggest that the rent should be taxed instead.

Land value tax revenue collected as explained above should be used in provision of public goods. He further argued that public goods have an impact of influencing land rents. He gave an example of roads and police stations which have an impact of benefiting landowners more than the landless. Provision of public goods is a good way of redistributing rent taxes to the landless in the society.

The only challenge currently is that taxing land cannot produce enough resources to smoothly run government. Therefore, land taxes cannot replace all other taxes as proposed by Henry George.

Henry George was a visionary. He knew that land as a factor of production has a lot of potential. No wonder land rates is the leading source of revenue for many counties in Kenya such as Nairobi, Kisumu and Mombasa.

The difference with George’s time is that nowadays governments tax both developed and undeveloped lands. Landlords pay rates every year for their land. Currently, the Kenyan government is proposing to tax all idle land in the territory. This new tax is going to face a stiff opposition considering that the politicians are the huge land owners.

We will keep monitoring the situation to see how it turns out.

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