By MICHAEL HUDSON, Prof. of Economics

http://www.counterpunch.org/hudson08182009.html

Listen to audio interview here: http://www.infowars.com/iceland-pushes-back-against-neolib-bankers/

It would seem (I only claim knowledge acquired through Google here) is that the aim of the DC tax is to penalise owners of “nuisance property” which are urban sores. That is not an unimportant detail because, it seems, one of the ways of exempting yourself from the tax is to show that you are seeking to sell or rent the property.

This tax may not be unlike the requisition order when it comes to outcomes but it is certainly identical in methods. The “loopholes” are not to be shrugged off: in the 1970s an unscrupulous Minister used them to penalise the political unfriendly and award the political friendly.

As to your hope of “market forces” preventing sellers passing on this would-be tax on purchasers, I know of no one who sells at a loss or no profit margin other than in the short-term or in an act of individual desperation.

Incidentally, I note that most gripes about new developments seem to be against knocking down buildings to construct something in which the largest possible amount of housing units are crammed into the same footprint causing a feeling of congestion.

As you say “any property” is taxed and that’s not just Sweden. In that sense Malta’s case is probably unique in that there are no property taxes.

The case you mention does not sound very different from what’s the case in Malta with regards to capitals gains tax on sale of first residence.

Oh I see: I had no idea ‘pound’ was the preferred usage in English! Not that it matters much since you’ve euros now.

[Daphne – Pound and lira mean the same thing. Ultimately, they both reference the same measure of silver.]

Mr. Majistral

The District of Columbia in the USA does seem to have a vacant property tax, which is based on owner registration, and also on reportings. This is the USA, which has land to spare.

What does this has to do with requisitions?. The rational is simple. You can own as much as you like, but anything beyond your basic accomodation requirements, and you have to pay.

I disagree that this has anything to do with ideology or class conflict, but more with better use and administration of land. True that not all 2nd vacant property (under the same name) can be for sale, but no tax is completely perfect or without loopholes. You are using land anyhow, which is scarce.

Such a tax can also be applied to developers, market forces preventing them from passing it to the buyers.

“Could you please name the “countries, democratic and normal” which impose a tax on vacant property?”

I was born in one: Sweden. Any property, vacant, commercial, residential is taxable according to its value. I believe non vacant property is only taxed on acquisition though (over and above vat), but I’m really not sure.

@Sandro Pace

Could you please name the “countries, democratic and normal” which impose a tax on vacant property? I know of many such countries which impose property taxes but, so far, I have not managed to ascertain whether the tax you mentioned ever existed outside AD’s electoral manifestoes.

The reason why is simple. It is legally very difficult to determine what is “vacant” (a point AD made even more difficult for themselves by proposing to exclude “summer residences”). Which can only lead, first of all, to lots of “discretion” of slapping the tax. And how do you know if a property is vacant? Which invariably leads to a network of street spies.

Sounds uncannily like the 1970s and requisition orders doesn’t it?

Recession or not we had this situation coming. Probably for the first time since the Phoenicians set foot on these islands, the price of property is going down. Two factors cannot be overlooked. (1) There is gross oversupply and (2) there is very little land left to develop within the development zones.

In the 1970s and 1980s large tracts of agricultural land were being ripped up for development, mostly to be sold as plots for homes, which was why land was cheap. I bought my plot in 1977 for Lm900 – laughable money by today’s standards. Others got them completely free with a small amount of “cens” from the government. That situation was unsustainable, and – rightly so. Brakes were applied to the development zones. Result – land shot up in price to the point that the few plots of land that remain for terraced houses now cost as much as buying a finished house.

Then there’s the issue of oversupply. With land for development becoming ever more scarce, contractors started paying good money to buy terraced houses and even villas, demolishing them and building apartments in their place. Result – land on which previously existed a dwelling for one family now contained anything between four and eight apartments, if not more.

When the going was good, many home owners saw the opportunity to make a quick buck, sold their house to a contractor, moved into a flat and were left with a nice balance in their bank account. It’s going to be a different story when the time comes for them to sell that flat.

The result is that we have thousands of unsold flats all over the island, even in areas which were once traditionally house-only areas. And the inexplicable thing is that they are still being built by the score.

[Daphne – Yes, I agree. I saw it coming 20 years ago. And that’s why, when the block my husband and I lived in on Sliema’s Tower Road was sold for demolition and redevelopment almost 20 years ago, I refused to go for a replacement flat. I correctly predicted that a house with a garden, which was worth less at the time, would before long end up being worth several times more.]