{"id":109985,"date":"2020-12-22T16:56:35","date_gmt":"2020-12-22T23:56:35","guid":{"rendered":"http:\/\/www.lankaweb.com\/news\/items\/?p=109985"},"modified":"2020-12-22T16:56:35","modified_gmt":"2020-12-22T23:56:35","slug":"land-tax-only-way-to-save-the-economy-kick-start-economy-level-the-economic-playing-field-and-payoff-public-debt","status":"publish","type":"post","link":"https:\/\/www.lankaweb.com\/news\/items\/2020\/12\/22\/land-tax-only-way-to-save-the-economy-kick-start-economy-level-the-economic-playing-field-and-payoff-public-debt\/","title":{"rendered":"Land Tax: Only Way to Save the Economy, Kick-start Economy, Level the Economic Playing Field and Payoff Public Debt"},"content":{"rendered":"

Dilrook Kannangara<\/em><\/span><\/h2>\n\n\n

Government revenue as a percentage of GDP has steadily\nfallen down over the past three decades to close to 11%. The government has to\nprove all services it provides and repay loans and interest from this revenue.\nDebt repayment and interest expenses alone equals total government revenue. For\nthe rest of government expenses, it has to borrow again. The only way to\novercome this debt trap is to increase government revenue.<\/p>\n\n\n\n

However, taxing income (income tax, PAYE) is counter\nproductive as it takes away people\u2019s money that would otherwise go into\nconsumption (short term economic growth) and savings (long term economic\ngrowth). Taxing consumption (VAT, turnover tax, SNL, NBT) shrinks the economy\nas people cannot afford higher consumption. <\/p>\n\n\n\n

There is a way to both increase government revenue and\nwhile not burdening those who shoulder the economy. That is to tax space \u2013 land\nand occupied area. It must be done based on average land value of each GN\ndivision, land or building extent and a percentage. A building with multiple\nfloors will have the land area multiplied by the number of floors. Colombo City\nwill have a higher value per 1 square meter of land than a rural area. Obviously,\npeople occupying sizable land in Colombo City have the means of paying their\ndue share of tax. This will net all tax frauds and those who evade tax. It will\nalso force them to put their high value assets to economic use. A tax-free\nthreshold must be introduced so that most land and basic living space will not\nbe taxed. Obviously, government land and government department owned land will\nnot be taxed.<\/p>\n\n\n\n

It will prune out unprofitable and environmentally\ndestructive industries and replace them with highly productive industries.<\/p>\n\n\n\n

Along with the introduction of the land tax, the\ngovernment can remove income taxes and reduce VAT which will stimulate economic\ngrowth. Land tax will tax some foreign and Diaspora land owners who don\u2019t pay\ntheir due share of tax in Sri Lanka. Land tax must not be covered under double\ntax agreements. The tax must be tied to the property and not the owner. Not\npaying the land tax over a few years should lead to confiscation of the land.<\/p>\n\n\n\n

It will increase state revenue to 15% of the GDP and help\nthe government payoff debt without hurting the economy.<\/p>\n\n\n\n

At the same time the government must take a tough\ndecision to confiscate all private property currently leased to the government.\nRent and lease payments the government pays to private owners is exuberant and\nit is a rip off. The saving would be substantial. Going forward the government\nmust construct its own buildings for all government departments, ministries,\netc. In fact, the government must construct buildings and rent them out to private\nbusinesses and houses which will generate an income for the government without\nhaving to do anything else.<\/p>\n\n\n\n

Paying off the debt will continuously save an enormous\namount of state revenue which can go to development. Once that happens, the\nland tax can be revoked and replaced with the current regime of taxes.<\/p>\n","protected":false},"excerpt":{"rendered":"

Dilrook Kannangara Government revenue as a percentage of GDP has steadily fallen down over the past three decades to close to 11%. The government has to prove all services it provides and repay loans and interest from this revenue. Debt repayment and interest expenses alone equals total government revenue. For the rest of government expenses, […]<\/p>\n","protected":false},"author":1,"featured_media":0,"comment_status":"open","ping_status":"closed","sticky":true,"template":"","format":"standard","meta":{"footnotes":""},"categories":[44],"tags":[],"class_list":["post-109985","post","type-post","status-publish","format-standard","hentry","category-dilrook-kannangara"],"_links":{"self":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/109985","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/users\/1"}],"replies":[{"embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/comments?post=109985"}],"version-history":[{"count":0,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/posts\/109985\/revisions"}],"wp:attachment":[{"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/media?parent=109985"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/categories?post=109985"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.lankaweb.com\/news\/items\/wp-json\/wp\/v2\/tags?post=109985"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}