Generally, there are three categories of land Value Taxes
- Ground rent in real-estate
- Resource extraction
- Externalities caused by pollution
Mineral Resources Rent Tax
The mineral resource rent tax is assessed on the value of extracted minerals, such as coal, before value is added through downstream activities minus mining expenditure. The value is based on the sale proceeds attributable to the raw material before it undergoes any processing. For coal and iron, the valuation point is the run-of-mine stockpile or when it leaves the point of extraction. Thus the mining profit in this case is actually a rent since it is obtained through exclusive use and disposal over a non-renewable resource that isn't a product of human industry. The effective rate is 22.5% so even here only a fraction of the rent is collected into the public coffers.
The land tax is assessed on the aggregated unimproved value of land held by the same owner. The value is based on 150% of the previous year's unimproved value of land. The tax is only levied on land that exceeds an aggregate value of $300,000 and even after that amount the government only recaptures a small percentage of the land value.
New South Wales, Australia
Like the Land Tax for Western Australia, only a small percentage of the land value (between 1.6% and 2%) is taxed.
The land tax is levied on the taxable value of all land (other than that which is specifically exempt) based on an official valuation. The owners of the land are liable to land tax. The annual land tax rate varies between 0.1% and 2.5% of the assessed value of the land. The council of the local authority is authorized to establish the rate of land tax.
Royalties on resource extraction
The taxes on resource extraction in British Columbia are applied to mining, oil and natural gas, and logging. This includes a mineral land tax levied on the freehold owners of mineral rights, a tax levied on the sale of standing timber or the right to cut standing timber, as well as royalties on oil and natural gas production. The mineral land tax is assessed by the size of the owner’s land and whether or not the land is used to produce minerals. The freehold owner is taxed at a fixed rate of 4.94 per hectare, up to 404,686 hectares, if they employ their land in mining, but are taxed on a sliding scale adjusted by the size of their land if they hold it out of use. A mineral tax is levied on coal, gemstones, industrial minerals, precious metals, and rare earth elements. The logging tax allows a deduction for logs processed into secondary forestry products between 35 and 65% of total processing income.
The tax is assessed on a company's net profit with deductions for the cost of exploration, R&D, financing, operations, and decommissioning. Additionally there is an extra deduction for normal returns on investment called uplift. The Petroleum tax is thus not a tax on any profits but on a subsoil rent at a rate of 54%. This special tax generated $49 billion in revenue for the Norwegian public in the last fiscal year. Like all land value taxes, the Petro tax is fiscally neutral and does not discourage profitable ventures. Furthermore, companies can write off profit losses that they accrue anywhere on the Norwegian shelf against their income.
The Permanent fund dividend is funded by a 25% royalty on oil sale proceeds. It pays out an annual citizen’s dividend to all eligible residents of Alaska. The dividend for the last fiscal year was $1,022. The Alaska Permanent Dividend, like all of the other implementations listed above, is only a partial model because it only includes oil revenue.
Land value taxes, unlike income taxes, cannot be loopholed to death or dodged by setting up offshore shell companies or bank accounts in the Cayman Islands. Compared to income taxes, the land value tax requires much less in overhead costs to administrate. There is no need to hire a tax preparer to file a return or have a top heavy bureaucracy like the IRS; the government or a delegated property appraiser will tell you your liability. The land value tax cannot be passed off to consumers like the VAT or sales tax. The land value tax is not only more efficient, it is also congruous with moral law, especially when used to fund a citizen’s dividend. Since all people have an equal normative claim to use the earth, any deprivation of this claim, through extraction or enclosure, should be compensated with the equivalent value of the natural opportunities lost. On the contrary, personal income taxes, payroll taxes, property taxes, VATs and sales taxes deprive an individual of a portion of the product of his or her labor and thus constitute a breach of self-ownership.