Land tax impact on agriculture?

Some points raised here while a tax deferral reduces the impact of this kind of tax on landholders while still providing a steady incentive for development or sale, that doesn’t take into account people whose livelihood does depend on owning large amounts of land - farmers. Could or should we add an exemption for agriculture, livestock, etc?


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Twisty, as a farmer, what taxes apply to your business at the moment? Just generally I mean.

all of them. we’re a business like any other.

In addition to the taxes, I’d imagine there would be regulations and related considerations to do with land management eg water usage, conservation of endangered flora/fauna, environmental impact of feed stock/pesticides/land management techniques etc. I know our Tas branch has loads to say on onerous state regulation of farmers, what about NSW?

The exemption already in the policy is this:

  • Apply a per-meter tax free threshold to exclude low-value land including agriculture.

Farmers would pay nothing, in effect. Far less than now, because taxes that actually do affect them would be gone.


Why Tax land? Does it hold some form of value and to whom? What is the history behind land values and land tax(Including Rates)?

Is the core problem is the method of applying value to land and the value of ownership of the land. look at what individuals are doing, the rules and regs behind it and make changes based on it… If some entity buys the title over land then squats because they are speculating decrease the land value over time based on non usages of the prescribe usage of the land. Even if it goes into negative value. It would force their hand… maybe…

Then again if they are not squatting they are rent seeking both evils maybe…

The general philosophy around taxes, is a preference for taxing limited resources instead of taxing behaviours that we’d like more of.

Land tax is considered a “progressive tax”.
Land is a limited resource, particularly in densely populated regions like cities.
Land tax is also really hard to avoid by individuals or corporations. We know who owns it, so we know who owes the tax.
Land values are defined mostly as the real-estate people say, by location, location and location.
Taxing land also prevents it being purchased just for speculation, instead preferring that it be put to best use.
Another more philosophical consideration, is that when one person/corporation owns a piece of land, they are depriving the rest of the population from using it, so you can think of land tax as compensation to rest of the population for their exclusion from it.

Other taxes like income tax, are considered to be more regressive taxes.
People and corporations doing productive work, creating value etc. should be valued. Taxing it takes away from that. Similarly for consumption taxes, that tax trade. When we’d really like there to be more trade, why tax it.

Given these considerations, it makes sense to move some of the tax burden from income and consumption taxes across to land tax.

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Personally I find the idea of exempting agriculture outright from land tax to be problematic. The reduced land tax burden for agriculture should come from the lower value of the agricultural land itself, which is usually zoned purely for agricultural use and thus the (lower per m^2) land value reflects a lower potential land use. The tax rate shouldn’t need to be lowered for it - although that is an option too. Providing blanket exemptions for agricultural zoning allows land bankers (including foreign state owned firms) to come in and buy up lots of farm land, while leaving it underutilised. We want farmers to be purely in the business of farming - farm their land or lease/sell it to those who will, not merely hold it for speculative purposes. An option to make this viable for commodity cycle fluctuations is to make the land tax completely deferrable until death or transfer, and ensure frequent valuations so the lower value of potential crops then quickly reflects in the lower value of that farm land.

The important thing is to abolish any taxes on capital improvements made on farms.

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This is an area to look into. Land taxes could also be used as a mechanism to help encourage adopt better farming practices for their lands by adjusting tax rates accordingly.