Punitive Land Tax Is A Recipe For Disaster
By: Kaire MbuendeLAND reform has been on the political agenda of the Namibian nation since independence.
There are those communities who lost their ancestral land through the expropriation of their land by the successive colonial states. At independence there were high expectations about the restoration of their ancestral land. That was not to be however as the government of Namibia adopted another approach to drastic land reform.
The land reform policy rested on four pillars, the first being the transfer of commercial farms from whites to the previously disadvantaged through market mechanism (willing seller, willing buyer). The government also made available financial resources through the Agricultural Bank to realise this objective.
The second pillar was the buying of commercial farms by the government for resettlement purposes. Funds were provided for in the national budget for this purpose.
The third pillar is the improvement of land management in the communal areas with a view to improving productivity.
The fourth pillar is the development of undeveloped land through drilling and establishment of the necessary infrastructure in order to increase the total farming area in the country.
The first two pillars have been achieved with mixed success whereas the latter two were not successful at all.
The buying of land by individuals through government financial assistance and by the government for resettlement purposes was compounded by a number of problems. One of them was the limited availability of commercial farmland on the market. That is, those who own land were not willing to sell even when they were not using the land optimally. The government introduced the land tax as a way of forcing those who are not using the land optimally to do so or to sell. As such the Namibian land tax was not necessarily punitive but encouraged productivity among land owners. A departure from encouraging productivity among farmers in order to contribute to economic development and poverty reduction may have unintended consequences. Resourceful farmers who are willing to invest may be forced to sell and be replaced by farmers who may not be necessarily enterprising.
One factor that contributed to the slow process of land reform is the high price of land. The price of land is highly inflated and does not correspond to the agricultural value of farms. Notwithstanding government policy not to allow foreigners to buy land easily, they are the ones buying under the current regime as the farms have been priced beyond the reach of most Namibians. The foreigners are buying our farmland at highly inflated prices as a way of hiding their money instead of genuine interest in Namibian agriculture. They end up renting out these farms to Namibian farmers.
Therefore, the astronomical increase in land tax will not bring down the price of land but will serve to justify the highly inflated prices and even further increase them. This will put the price of farms even further beyond the reach of Namibians.
The valuation of farms has been traditionally done in relation to their carrying capacity or agricultural value and not so much in relation to market value. It is not so much a question of how much one is prepared to pay for the farm but rather what you can get out of it. If the valuation of farms for land tax purposes has gone up for instance by 500 percent does it mean that the carrying capacity of the farm has also gone up by 500 percent? That is indeed an unlikely scenario as the carrying capacity is limited by size of land, rainfall, topography and other natural factors.
Furthermore, one other factor that has contributed to increase in the price of land was the price of produce. If the valuation of land is going up then it should not only take into account the natural factors but also the price of the products. As it is at the moment the price of livestock is down and those of inputs have gone up.
In short, there is no justification for increasing the evaluation of farms from an agricultural point of view. Every effort should be made to bring down the prices instead of increasing them and any measure that will serve to increase the price of land beyond the current level should be discouraged.