Monday, May 05, 2003

Advice for Councillors: The Henry George Rule
'City Council doesn't have enough money for all the projects that this rule says it should do. The nature of property taxes gets in the way. Increases in the market price of the land go to the owners. Property owners collect the benefits that city council pays for. When Toronto builds a subway, the landowners get rich, but the rest of the city pays the bills.

'The result is that City Councils invest less than they should in their cities because they don't get paid for the benefits the projects would produce. Local governments are usually inefficient because they can't collect fair value for what they produce.'

This article is a rare exception to the fact that not enough emphasis is placed upon the concept of landrent as a social fund which should be invested by the public authority expressly in order to return an increased revenue: ie, future revenue should guide current expenditure. The public and the government should view landrent collection and expenditure in this light. It gives a focus for expenditure and a sense of ownership and entitlement to revenue generated.

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