Principles of Public Finance
[Reprinted from Land & Liberty, Summer
THE SCOTTISH Office paper Identifying the Problems states
that the Scottish Parliament will be able to abolish the feudal system
and replace it with a system of outright ownership of land. However in
paragraph 7.3 an alternative is suggested, viz.: "a radical
updating of the Crown's role, for example for the Crown to hold all
land in trust for the public, and on behalf of the overall public
interest, no matter who owns it".
This latter alternative is the correct approach. To allow land to be
held in private hands free of any obligation to the rest of the
community is morally wrong, is condemned by scripture, and has been
shown by history to lead to disastrous fiscal and environmental
consequences. It led to the belief that the bounty of the planet is a
commodity to be exploited. Public opinion today, by contrast, calls
for the earth's resources to be nurtured, cared for, and shared.
Any policy for land reform must look very closely at the history of
land tenure. Under the feudal system which arose out of the collapse
of the Roman Empire, all land was held in return for an obligation,
sometimes of service, sometimes of payment, whether in kind or in
money. As a result land paid virtually all the costs of government. In
the later Middle Ages the step by step growth of trade, industry,
banking, and finance, immensely increased the value of urban land in
towns and cities. Land began to be bought and sold free of its
obligations. The cities flourished. The countryside decayed, until
relieved in modern times by subsidies at the taxpayer's expense.
Feudalism is now a term which carries connotations of privilege and
oppression. It was indeed a system of unequal hereditary status. Yet
its system of land tenure stood for a kind of justice, because no one
was so high that his privileges were not conditional upon the
discharge of obligations, and no one was so low that he was without
certain rights. Although in practice it often fell short of this
ideal, it was only when feudalism began to disintegrate that privilege
became wholly divorced from obligation. Those holding immediately
under the Crown had shrugged off their obligations, while feuars lower
down the scale remained bound by their dues. The increasing treatment
of land (whether in town or country) as de facto absolute
private property free from obligation deprived the Crown of its land
revenue, and compelled it to resort to taxation on anything other than
land to meet the expenses of government. The history of English
taxation is set out in Stealing our Land?
With few exceptions (e.g. Udal tenure in Shetland and Orkney, and
certain allodial church lands), England and Scotland differ from the
continental European systems based on Roman law under which a
landowner has dominium. In Scotland the Crown as Paramount
Superior is the ultimate owner of the land. Under English law the
Crown is the sole owner of land, the subject having freehold tenure
(Lat. tenere) from the Crown. This is indeed sketched out in
paragraph 7.2 of the Scottish Office paper.
This is not a vestigial remnant of the early Teutonic and Celtic
systems in which ultimate ownership of all land was vested in the
chief or king, not as his private property, but in his capacity as
trustee for the tribe or nation. Title to English land derives from
William I's conquest, and probably took this form because of William's
need to establish an armed guard over his conquered Saxon subjects,
whilst also rewarding his followers. In Scotland the paramountcy of
Edward I was acknowledged in 1291 by the 13 competitors for the
NEVERTHELESS in Scotland the old grouping of society by family and
kindred inherent in the clan system had an influence on the feudal
system which replaced it. Behind both systems lay the basic
understanding that Mankind has to have land, and cannot survive
without it. People need land to live on, and to live from. It provides
their food, their drink, the materials available for their work, and
all their other needs. It follows as a matter of Natural Law
that throughout life they must get their living from the resources of
Nature which are available from the position they occupy on 'land' in
its geographical sense. Deprived of free access to land, they are
unable to support themselves.
The feudal system placed the ownership of land in the Crown, just as
the clan system had done in the chief, who was parent, ruler, and
landowner on behalf of the clan. Both systems implied a trust that all
would be provided for. But as stated in paragraph 7.2 of the paper, "in
time the system became commercialised, and superiorities were
frequently sold as investments...."
This "commercialising" of the feudal system and of the clan
system resulted in the problems which gave rise to the need for land
reform and the setting up of the Scottish Office's Land Reform Policy
Group in 1997. Large numbers of good honest clansmen lost their land
in the clearances of the eighteenth and nineteenth centuries, when the
superiors or their factors breached custom and trust in the pursuit of
commercial gain. Similarly many Scots were turned out to find refuge
in city slums by the greed of the unscrupulous. It is fair to point
out that in many cases this was done in blind ignorance of the
inevitable consequences. Nevertheless the nation's wealth was reduced
by what they would have been contributing had they not been evicted,
and was later further reduced by taxation to provide the survivors
with Poor Relief, now called 'social security' or 'welfare'.
To interfere with the Paramount Superior role (ownership) of the
Crown would be a great mistake. Enlightened policy would allow the
Crown to retain this role and through it to resume direct control of
land use and development as a trust for the people. Paragraph 7.2
notes: "the [feudal} system was also used as a form of
development control, so that the grant of land by a superior would
typically contain many building conditions and restrictions on the use
The ability of the superior to demand significant sums
of money in return for granting consents will [in the projected
At present the state has limited success in controlling land use and
development through Town and Country Planning legislation. To retain
ownership in the Crown with power to enforce public rights of this
kind upon its vassals would cut down the immense complication and
expense of present Town Planning law, and make it more effective.
to demand significant sums of money in
return for granting consents" (see above) is a natural
phenomenon deriving from the very substantial value of planning
consents, which may sometimes be worth millions of pounds. But great
or small, the current planning legislation has no means of collecting
their value. The reforms primarily envisaged in the Paper will not put
an end to the availability of these "significant sums of
money". They will simply go into different private pockets. In
the hands of a superior who has done nothing to produce the rise in
value, they constitute unjust enrichment; which is why they are
impliedly condemned in paragraph 7. 2 of the Paper. If consent for
change of use or development were required from the Crown as Paramount
Superior, these sums would come to the Crown, in whose hands they
would constitute a natural source of public revenue, to be used for
the benefit of the community who created their value. The remark at
the end of paragraph 7. 3 that it "would be a ... costly
development" is simply not true. It would be a source of revenue,
allowing relief from some of the taxes which inhibit production.
THE COURSE here suggested is hallowed by history. It is also enjoined
by the Judaeo-Christian Scriptures. After the promised land of Canaan
was given to the chosen race to conquer and divide by lot between the
families of each tribe, the Torah had to ensure that families would
never lose their inheritance. It had to prevent the land falling into
the hands of those who could thereby enrich themselves, and oppress
the poor, with the result that the rich man faring sumptuously has
Lazarus laid at his gate full of sores. The Lord had warned Moses
in Mount Sinai: "The land shall not be sold for ever: for the
land is mine; for ye are strangers and sojourners with me". In
a note on the Hebrew text of this verse Chief Rabbi J.H. Hertz writes:
This verse enunciates the basic principle upon which all
these enactments [of the Torah] rest. 'The earth is the Lord's"
(Ps. 24: 1), and His people hold their lands in fee from Him. The
ground itself, then, was not a proper object of sale, but only the
result of man's labour on the ground.
To ensure that the land is held on trust for all is the proper
function of the law of property. Mosaic law established this by the
Jubilee, which Christ preached in the New Testament. He also
described the kingdom of heaven, where beggars rejoice, and the
oppressed inherit the land. The physical division of land is, of
course, impossible in a developed economy. But there is no difficulty
in sharing the rent it increasingly yields.
Unfortunately, the word "land" brings to mind for many
people only rural acres. The oblivion into which land disappeared when
built upon contributed to the disintegration of the feudal system,
because it left the towns generally paying much less, and the country
much more, than their fair share in taxes. "Holdings over 1,000
acres" (paragraph 8. 5) are likely to be holdings of country land
valued at so much an acre, whereas a few square feet of City land are
frequently worth more than several hundred acres of some types of
country land. Priority in registration should be given to unused or
under-used urban land, which restricts the expansion of business,
while increasing urban sprawl.
The natural source of the Crown's revenue is the land it owns and
should continue to own. When the Crown lost its feudal land rents and
dues, it began to tax everything imaginable other than land, with
disastrous results. Penal taxation upon production and trade
restricted enterprise. Direct taxes on incomes were avoided and evaded
-- no new phenomenon this --and smuggling to cheat the customs and
excise was rife.
Plus ca change, plus c'est la meme chose. Worst of all the
poor were made to pay taxes. Today the poor (including those in
receipt of welfare) are being subjected to indirect taxation on the
necessities of life. Much of this is hidden. For example, whilst
everybody knows about taxes on whisky, beer, and tobacco, few
appreciate that a substantial part of the price of bread covers tax in
the form of PAYE on all wages paid during its production -- at the
farm, at the mill, at the bakery, and at the shop. The price has also
to cover fuel and other taxes on transport between these stages, and
VAT on machinery used at each of them. If land is to pay its proper
contribution to the expense of government, a public computerised
map-based land register is essential. Only then can the Scottish
Parliament make the best use of its tax raising powers, based on an
overall assessment of the wealth of the nation.
- Holdsworth, Historical
Introduction to the Land Law, Oxford: 1927, p.3.
- Kenneth Jupp, Stealing our
Land: law, Rent, and Taxation, London: Othila Press Ltd. 1997
- Num. 26, 55-6; 33, 53-4: Jos.
- Lk. 16: 19-20.
- Lev. 25: 23.
- J. H. Hertz, The
Pentateuch and Haftorahs, London: Soncino Press, 1970, 2nd
edit. P.534 (n).
- Lev. 25,10.
- Lk. 4:16 ff: citing Is.
- Mt.5: 3ff.
- Jubilee 2000 (20 pp.)
by the present writer explains the Hebrew and Greek scriptural
texts on this subject.