2012 Global Conference

For the first time in its history the International Union for Land Value Taxation and Free Trade will hold its biannual conference in Latin America: in Buenos Aires, Argentina, from the 15th until the 18th May 2012.

Argentina has a somewhat fascinating history in connection with land value taxation. Many of the founding fathers of Argentina were physiocrats. Actually Argentina gained its independence from Spain under the influence of free-masons and physiocrats. The creator of the Argentinean flag, General Manuel Belgrano, one of the most revered heroes of its history was a physiocrat and so it was the first Argentinean President, Bernardino Rivadavia.

In 1826 under Rivadavia’s rule a law was passed forbidding the sale of all public land (90% of the country in those days) that was only to be leased on a system called “emphyteusis”. The law provided for twenty year leases. During the first ten years, the lessee would pay into the Public Treasury an annual fee amounting to 8% of the assessed value in the case of land use for cattle raising land and 4% in the case of smaller parcels used for agriculture. The valuation was to be made by a jury of neighbours and at the end of the ten years, the legislature was to determine the rents to be paid thereafter according to new appraisals.

According to what Dr. Ignacio Nuñez, Rivadavia’s diplomatic envoy to London at the time said to the British Government “the spirit of the project is that publicly owned land should never be held in any other way than by leaseholds… The present taxes bear harmfully upon the people and hinder the country’s development… The rent of land is the most solid and definite source of revenue on which the state must count”. It was confidently believed, according to Nuñez, that the public collection of land rent would make it possible to do away with tariffs and all other taxes.

This act provoked the reaction of the owners of large estates and the greatest of them all, Don Juan Manuel de Rosas, overthrew the government and ruled as dictator until 1852. His cruel tyranny divided the political class into “unitarios” (the liberals expelled) and the “federales” (landowners of each province). However, the law of 1826 was not abolished. It was used to grab more land by the few landowners. Rosas was expelled, the “unitarios” returned and began to rule. However, they also took advantage of the 1826 Law for themselves. In 1857 this law was abolished and branded as a “communist law”.

In 1869 with the landlord class in the government (unitarios and federales) approved the Civil Code and implanted in Argentina the ancient Roman law of land tenure. An important lesson emerges from this story: the law is not sufficient to establish a good economic order. It needs to be sustained by the culture of society. This historical background has always been in the back of the mind of Argentinians. But it was only at the beginning of the twentieth century that the extraordinary ideas of Rivadavia were brought again to light by some Argentinean politicians and the Uruguayan historian Andrés Lamas.

Since then many distinguished Argentinian politicians have tried to introduce land value taxation. There was a Georgist political party in the 1920s that gained some local elections but disappeared within a few years. There were tentative moves to introduce land value taxation in the City of Buenos Aires under several governments but they always met the opposition of the powerful ruling oligarchy. In the Province of Córdoba, one of the must important of the Country, a progressive government of the Civil Radical Union introduced successfully a land value tax, although the rate of the tax was curtailed by the Supreme Court. Other provinces followed Córdoba. In any case the collection of land rent was never a source of fundamental revenue for governments.

Argentina was one of the largest exporters of grains and meat. Governments preferred to raise money for public spending by taxing the export of agricultural production. However, this source fell sharply by the 1914-18 war and protectionism adopted by Europe in 1930. It was a crucial moment for Argentina. It had to choose between ground rent or create taxes on labor, production, and consumption. In 1932 it chose the latter. This is the regime that has ruined Argentina. General Juan Perón who won the Presidency in 1946 had a team of prominent Georgists around him, but he dismissed them rather quickly. Peron could not accept the proposals of these few Georgists because of a clear reason. He preferred a centrally directed economic order planned by the national government.

Thus the tax system established in 1932 remained. This regime obtained the money for the government by taxing wages, corporate profits and all economic activity. He engaged in a policy of inflation and protectionism, but he was clever enough to keep the rent of land – both urban and rural – under strict control. Inflation pulverized rents that were frozen in favour of the tenants and this – together with social legislation – was one of the reasons for the extraordinary popular support for Peron´s system. He did not collect rents as public revenue: he gave them to the tenants.

The Georgist thinkers Antonio Manuel Molinari, Mauricio Birabent, Victorino de la Riega were the teachers of the actual Argentinian Georgists. Some of their pupils acquired political influence in the country: Héctor Sandler, member of parliament and President of the Instituto de Capacitación Económica, a Georgist organization chairing the IU 2012 Conference; Fernando Scornik Gerstein, actual President of the International Union who as adviser to the Argentinian Minister of Economy produced in 1973 a project to introduce land value taxation; Saul Martinez, Director of Public Highways under the government of Raul Alfonsin; Antonio César Copello, under-Secretary of Agriculture, and many others.

Actually there are three Georgists organizations in Argentina that cover the capital city of Buenos Aires, the Province of Buenos Aires and the Province of San Luis. In addition, the Georgists in Argentina have three websites. The economist Guillermo Sandler has his own website profguillermosandler.blogspot.com. The engineer Guillermo Andreau has the blog “The Legal Relativism” with connection to Facebook and Twitter. And the ICE (Economic Development Institute) directed by Dr. Hector Sandler has www.icepal.com.ar

For the coming IU 2012 Conference, Dr. Sandler as a member of The Executive Committee of the IU, has obtained the collaboration of a leading NGO dedicated to the study of Argentina’s state budget problems. This NGO was founded in 1983 and is called ASAP (Argentine Association for Budget and Financial Administration). The ASAP is collaborating now in the organization of the International Union 2012 Conference. ASAP has applied for membership of The IU. ASAP has more than 300 affiliates nationwide. Most of them are accountants and economists.

Further good news: ASAP is a member of another NGO called ASIP (International Association of Public Budget and Finance). ASIP is an international organization that brings together a large number of Latin American countries. At its last meeting decided to support the International Conference of the IU in Buenos Aires. All the Georgists of Argentina hope that a plethora of Georgist from around the world will join them in Buenos Aires.

Those interests in assisting to the Conference should contact Héctor Sandler at the e-mail: hsandler@speedy.com.ar with copy to the accountant Gonzalo Lecuona (Secretary General of the ASAP) gonzalo_lecuona@me.com

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