This week it was reported that the Justice Bamugemereire inquiry to land matters had recommended in their report the taxation of idle private land as a way to improve productivity of the land.
They proposed a threshold of half a square mile or 320 acres
above which idle land should be taxed.
This is a great development, while politically hazardous is
farsighted and inevitable if Uganda is to fulfill its development ambitions.
I would have gone further and taxed all land.
The naysayers will argue that this will disrupt our small
farmers, who cannot make enough money off their little patches to pay tax. And
I would argue all the more reason to tax their land.
"The economics text books say the factors of production are land, labour and capital. Entrepreneurship/ management then manipulates these factors of production to generate economic activity. A deficiency in one, two or all of them is the extent to which economic activity will be generated or not...
As it stands now our convoluted tenure system is a major
reason why our land is idle. We have freehold land, customary land and
leasehold land and everything in between. In more functioning economies the
state owns all the land and the rest of us are tenants on the land, leasing it
from the government. It is so much easier to deal with land issues under those
circumstances.
In a democratic dispensation like we are under now it is unlikely
that our land tenure system will be sorted out soon. Land reform is by
definition politically expensive for those who try it.
One of the main reasons for any sort of land reform is to
increase productivity of land for more people.
That’s why taxing the land becomes useful. So assuming we
impose a tax on all the land, what would happen to the rural man with barely an
acre to his name?
He will have several choices.
One, he can improve his farming methods to ensure he has enough money to pay his taxes. One of the main challenges of our farmers is their poor farming practices which cannot ensure optimal utilization of the land.
Secondly, he can get together with his fellow
small holders aggregate their land, labour and capital to take advantage of
economies of scale to improve their bargaining power in the market for inputs
or with the middle men. If all else fails, our man can lease or sell off his
land to someone who can work it better and meet the tax obligations.
"This is not even original. The colonialists to get us to grow coffee and cotton imposed poll and hut taxes – and liberal doses of kiboko, as a way to incentivize us to grow these crops for which we had no use for, up to that point...
We are not reinventing the wheel.
We need to stop molly coddling our rural cousins, stop patronizing
them, especially if the net effect of this move will mean more incomes and
better living standards for them.
I suspect though that those opposing such moves are the
absentee landlords, who cannot be bothered to increase the productivity of
their land and enjoy the ego trip of announcing h ow they have a farm up
country at the bar. Imposing a tax on their land will mean forgoing their land
either by leasing or selling and deny them the bragging rights among their
friends.
This is an important subject because while our arable land
is reducing by the day because of our negligence or outright abuse, our
population keeps doubling every 24 years. This means we have to not only stop
the loss of our land to bad practices and climate change, but maximize its
productivity to ensure we head off pending food insecurities.
Peruvian Economist Hernando De Soto argued that capitalism,
the manipulation of aforesaid factors of production for profit doesn’t work in
the underdeveloped world because of the ambiguity surround land tenure in our
countries.
According to the Uganda Bureau of Statistics of the seven
million households in Uganda, seven in ten or about five million own their own
homes. Ownership is being used loosely here because there are less than a
million land titles issued in this country and those include factories,
hospitals and schools.
By imposing a tax on land we are going to be forced to title
more land, improving the value of our lands, while we increase productivity and
increase revenue collections.
The knee jerk reaction of society when faced with new taxes
is to resist. This is not a uniquely Ugandan problem. But the benefits that
would came with taxation of land far outweigh the discomfort of the naysayers.
Let us get it done.
No comments:
Post a Comment