This is the opinion of Peter Meakin, an international valuer in Cape Town and the inventor of Meritax™ a new Computer Assisted Valuation and Rating System. He says that his system will generate ninety thousand permanent jobs countrywide.

He claims that no Municipalities in the world are under such a rigorous job-creation directive as in South Africa. He argues that the traditional method of valuing each property separately so that the most valuable house in a suburb pays up to three times more rates than the vacant site next door discourages development and is therefore in contravention of the Act and even ultra vires.

Meakin predicts that in order to comply with the Act, Municipal rates on vacant or meagrely improved land are expected to become so high as to virtually force owners to develop for themselves or to sell.

His system bands properties geographically so that all erven in a suburb are valued equally for rates purposes however much they might be improved.

He predicts that if Meritax™ is adopted by the City then new housing starts and refurbishments will occur on three percent of the eight hundred thousand erven in Cape Town over five years. He estimates that this will result in three thousand new artisan and six thousand new labouring jobs becoming available for five years. In the whole of South Africa this translates into some ninety thousand new jobs for that period.

He explains that Meritax™ is a benefits tax where erven with equal benefits pay equal rates. Benefits are mainly locational. Residential erven in Newlands of similar size enjoy the same proximity to the CBD, motorways, schools, shops and amenities and the same views, weather, fertility. They also enjoy the same services which they pay for separately.

Councils may also consider that it is not sufficient that vacant sites of a similar size in like neighbourhoods should pay the same rates as their neighbours because vacant erven do not buy water, electricity, sewerage and other services from the City leading to a loss of profit.

Meritax™ is suitable for single residential suburbs, farms and industrial erven. Meakin says it will save the country $40M in Municipal expenses annually.

Enquiries to:

The Americas -- Ted Gwartney (tgwartney@aol.com) Europe, Africa and The East -- Peter Meakin (mea44kin@iafrica.com)

(2) Remarks by Peter Meakin

Henry George did not leave a blueprint on how to calculate his famous single taxes or land rents as we now know them. Until recently the best methods at the municipal level have been to value sites as if there were no improvements using the comparable sales method. This is used in site value and in dual-rate rating systems. The accuracy of these valuations has frankly been the downfall of SVR because of the dearth of comparable sales.

This weakness has now hopefully been remedied with my 2005 version of the Meritax™ CAMA Valuation and Rating system. I use geographical bands such as suburbs or townships and then calculate the mean selling price of all improved and vacant plots in each band using data from the Deeds Offices and employing statistical software to eliminate size and value outriders.

The result is that each suburb, or like neighbourhood, therefore comprises plots with the same municipal value. A mansion will therefore pay the same rates as a vacant plot next door. This is surely what George intended because all similarly sized lots in a suburb enjoy the same Georgist benefits or land rents and should therefore pay the same rates and taxes.

The benefits are of course largely locational such as weather, fertility, views and proximity to schools, shopping, jobs, motorways, public transport.

Everybody pays for water, telecoms and other services so the consumption of services is not a benefit to the ratepayer but a cost.

Does Meritax™ truly yield land rents? To answer this first imagine a suburb where all the plots are the same size and the houses are identical in design, size and age and each is valued at $48 000 and rents for (say) $1,000pm. Of this total typically $250pm would be the land rent and $750pm the improvement rent including a provision for depreciation. A 0.63% rate on the $48,000, or any lower percent, will be pure land rent. Anything higher will be land rent PLUS improvement rent. Now imagine a real suburb where the houses are all different and some sites are vacant but the mean values are the same as the above. Therefore Meritax™ is a true land rent system.

There is one alleged weakness in Meritax™. This is that land parcels within a suburb are never exactly the same size and so rates and taxes should be different. My answer is that this is the choice of a Municipality but that if land sizes in the imaginary suburb above are all within fifteen percent of the mean then the house rents will not differ. In fact larger plots may well attract less rent because they require more upkeep.

Meritax is designed to calculate the full land rent where countries adopt a Single Tax fiscus. The rate in the dollar simply increases to compensate for the loss of PAYE, Company and VAT etc.

Apart from the integrity of this idea; its fairness, the cost and work-time of a Meritax™ valuation is some ten percent of other mass appraisal systems such as SIGMA.

The new Meritax™ CAMA Municipal Valuation and Rating System has been launched in South Africa and USA. It will make it easier to persuade States and Municipalities to adopt Georgist principles by its existence, ease of use and cost-effectiveness.

Meritax™ calculates average property sales values in geographical bands such as suburbs or registered townships. The inclusion of improved and vacant prices in the same assessment transforms the rate in the rand to a pure land rent; that is the Georgian rent.

- from THE GEORGIST NEWS Volume Eight, Number Two August 1, 2005