China Looks at Adoption of
the Single Tax on Land Values

Elsie McCarmick

[This article first appeared in Outlook, 13 April, 1921.
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.