From: hgm@waikato.ac.nz
Newsgroups: alt.callahans
Subject: Re: Taxing natural resources (Was: Mail from Bob English)
Date: 17 Apr 92 21:53:00 +1200
Reply-To: sci.econ
Followup-To: sci.econ
Keywords: asset tax, natural resource tax, property rights
Organization: University of Waikato, Hamilton, New Zealand

In article <1992Apr15.203251.16921@cco.caltech.edu>, lydick@SOL1.GPS.CALTECH.EDU (Speaker-to-Minerals) writes:

I've directed followups to sci.econ, so we can get the heavy stuff out of the
bar.

> In article <1992Apr15.224503.7442@waikato.ac.nz>, hgm@waikato.ac.nz writes:
>>You asked:
>>How is this different than a property tax?
>>
>>It does not tax the improved value of resources only the natural value. The
>>improved value is the result of someone's labour and they are entitled to it.
>>The natural value was not created by anyone's labour and no-one has more right
>>to it than anyone else therefore we have equal rights to it if we have any
>>right at all. To tax property is to create disincentives to work to increase
>>the value of your resource. To tax only the resource itself is to create
>>incentives to use the resource efficiently.
> 
> OK, you've got a theoretical distinction between improved value and natural
> value.  How do you implement such a distinction in practice?  Suppose someone
> controls a parcel of land with substantial mineral resources.  But that land is
> incredibly inaccessible.  He invests his other resources (including labor) into
> making the property more accessible.  At this point, the market value for the
> property will include the value of the improvements he's made.  And there will
> be no way for the market to separate the value of the improvements from the
> natural value of the land.  So how do you figure out what the taxable part of
> the value might be?

You set up a seperate market for the natural value by requiring every owner of
natural resources to rent a licence to use the number of share units of
that natural resource they own. There are periodic fees charged to renew these
licences.  The licences go to
the person (or corporation) prepared to pay the highest fee with first option
at that price going to the current owners of resources. The revenue from these 
licences is distributed equally to everyone so
that everyone can lease one share unit at zero net benefit.This means that
whatever the price of the resource use licence everyone knows they can afford
one share and so can control whether that part of the resource is used or
conserved and who uses it for what. The price of the licence fee thus reflects
everybody's valuation of the resource and not just the values of those who are
able to enter the market.

This licence fee thus extracts the natural resource value from the title. The
market price for the property will then reflect only the improvement value. 

You define a category of natural resource by
observable measurable features. There are classification systems already in
existence for land, for example, which use slope, average sunshine, average
annual precipitation etc. You would not include any social structures such as
proximity to roads or population centres in this. Those things should be dealt
with in some other way. The mineral resource might be classified according to
ease of extraction on site, depth below surface etc..

If your guy has built the road in himself that will be reflected in the
increased market price of his property. If society built the road society may
need some other way of preventing your guy benefitting disproportionately from
their efforts.

Helen Marsh