China Looks at Adoption of
the Single Tax on Land Values
[This article first appeared in Outlook, 13
Reprinted from the Single Tax Review, May-June 1921]
SINGLE TAKERS who are tired of straining their eyes toward the
horizon of economic change can find a fair realization of their dreams
by the simple expedient of packing up and moving to Kwantung Province,
China. The Single Tax has made its debut in one of the most populous
and prosperous districts of the Far Eastern Republic. This section of
China knows no income, inheritance, or personal property taxes, and
outside the cities there is no tax on buildings or other improvements.
It is now the purpose of Mr. Liao Chunghai, Commissioner of finance,
to resurvey all the land of the province, register its value, make a
second appraisal in ten years, and appropriate the unearned increment
for the State.
"We are going to try, as far as possible, to put into practice
the principles of Henry George," Mr. Liao told the writer in a
recent interview, "As a matter of fact, what is virtually a
Single Tax has been in existence in the country districts for many
years. The farmer pays only a land tax and is not penalized for having
the energy to improve his property. In the cities, however, the system
is reversed. There the whole burden is borne by the buildings and the
land goes free. This must be changed before Kwantung can claim to be a
real follower of Henry George."
Mr. Liao anticipates no difficulty in carrying out his plan to
collect the unearned increment, for Chinese farmers are accustomed to
fairly high land taxes and Kwantung expects no sensational real estate
booms that would raise the unearned increment to a dizzy figure.
Though there is no direct land tax in the cities, its purpose is met
by an assessment amounting to 8.4 per cent. of the property's value,
which is levied whenever real estate changes hands.
At present Kwantung Province, of which Canton is the capital, is in a
serious financial plight through no fault of its system of taxation.
The militarists from the neighboring province of Kwangsi, who captured
Kwantung during the ascendency of Yuan Shi-kai and who were recently
driven out by the Cantonese, left nothing in the treasury but the
floor. Before retiring out of gunshot the military governor
thoughtfully collected the taxes for three years in advance, and then
departed, owing the public school teachers, policemen, and other
government employees their wages for a period of nine months. The new
Commissioner of Finance is therefore faced with a most unenviable job.
Despite the vacuous condition of the treasury, however, Mr. Liao's
first official act was to close up the city's gambling-houses, from
which the government derived a revenue of ten million dollars a year.
"We hope to make up this deficit, first, by stamping out the
'squeeze' system, whereby several millions were lost to the government
every year; and, secondly, by the resurvey of the land and a
consequent increase in taxation," Mr. Liao explained. "The
surveys on which taxes are now based are so antiquated and inaccurate
that about one-third of the land escapes taxation altogether."
Mr. Liao hopes eventually to eliminate the salt tax, which, he says,
is unjust, because it is borne chiefly by the poor. He wishes to
supplant it by heavier taxes on wines, and tobacco to make up the
temporary deficit. The fact, however, that the foreign Powers permit
China to charge only a five per cent. duty on imports puts a serious
difficulty in the way, for the province, by placing a heavy tax on its
own products, will merely force its new tobacco industry out of
business. The Commissioner of Finance has urgently requested the
Powers administering China's maritime customs to permit a higher duty
on tobacco and wines.
When, in a few years, the province has taken the kinks out of its
finances and the appropriating of the unearned increment by the State
has become a reality, the rest of the globe need merely take a "look-see"
in Kwantung to learn whether or not Henry George had the right
prescription for the world's economic stomach-ache.