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Tax on ‘unearned gains’ is the missing piece of the affordable housing puzzle

Brian Feeney writes in The Conversation (9.5.17) about the housing affordability issue, asking who is entitled to the increase in property values created by planning approvals, population growth, or public expenditure on new infrastructure and urban development? According to the author, the answer might come from an unlikely philosophical source.

'With housing prices still consistently in the news, could the ideas of 19th-century philosopher John Stuart Mill help improve affordability?

'In 2015, some landowners near the proposed Northern Beaches hospital in Sydney were offered more than twice the area’s normal market value for their properties. They stood to make large windfall profits from zoning changes and infrastructure upgrades associated with the A$1 billion-plus public investment in the hospital.

'While many may say “good luck to them”, Mill – a champion of individual freedom – may well have questioned those windfall profits by asking: “Who is entitled to the increase in land value created by planning approvals, new infrastructure, population growth or the general development of town and cities?”

'For Mill, the answer would have been that the increase, which he called the “unearned increment”, rightly belongs to the community rather than the individual landowner. Until well into the 20th century, many political leaders, including Winston Churchill, agreed with Mill.'

 

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