Land tax could hamper property market: Nepru

THE Namibian Economic Policy and Research Unit (Nepru) has warned that the newly-introduced tax on farmland could have an unforeseen and long-lasting impact on the property market.

Nepru says in its quarterly economic review that the land tax has two primary aims: raising funds for land redistribution and discouraging foreign ownership and multiple ownership of farms. A Namibian farm owner starts at a base tax rate of 0,75 per cent of the 2002 value of the land, with an increase of 0,25 per cent for every additional farm.A non-Namibian is taxed at 1,75 per cent for the first farm, with an increase of 0,25 per cent for every additional farm.”This provides an incentive for an owner of numerous farms to sell additional farms and it also discourages foreign ownership of farms,” said Nepru.However, a closer look at the concept showed that the implementation of the tax could place farmers in a tight corner, prompting them to do away with less profitable farming operations.”A land tax may also have an unforeseen additional effect, as it will place an additional burden on less profitable farming operations.”In some cases the added tax may be enough to convince a farmer of a marginal farming business to place his or her property on the market, where the Government has first option to purchase the farm for redistribution.”This is a process that will require monitoring, since the effect of crowding out domestic marginal farmers clearly runs counter to the Government’s aims of helping disadvantaged smallholders,” added Nepru.Meanwhile, Government has complained that bureaucratic red tape is holding back the land-reform process.Speaking at a symposium on land reform in Namibia and South Africa at the University of Namibia, Lands Permanent Secretary Frans Tsheehama said the slow pace of land reform was a cause for concern.He said the procedures that needed to be followed before Government could acquire a farm were the prime cause of the delay.As a result, said Tsheehama, land offers received could not be adequately assessed on time.A Namibian farm owner starts at a base tax rate of 0,75 per cent of the 2002 value of the land, with an increase of 0,25 per cent for every additional farm.A non-Namibian is taxed at 1,75 per cent for the first farm, with an increase of 0,25 per cent for every additional farm.”This provides an incentive for an owner of numerous farms to sell additional farms and it also discourages foreign ownership of farms,” said Nepru.However, a closer look at the concept showed that the implementation of the tax could place farmers in a tight corner, prompting them to do away with less profitable farming operations.”A land tax may also have an unforeseen additional effect, as it will place an additional burden on less profitable farming operations. “In some cases the added tax may be enough to convince a farmer of a marginal farming business to place his or her property on the market, where the Government has first option to purchase the farm for redistribution. “This is a process that will require monitoring, since the effect of crowding out domestic marginal farmers clearly runs counter to the Government’s aims of helping disadvantaged smallholders,” added Nepru.Meanwhile, Government has complained that bureaucratic red tape is holding back the land-reform process.Speaking at a symposium on land reform in Namibia and South Africa at the University of Namibia, Lands Permanent Secretary Frans Tsheehama said the slow pace of land reform was a cause for concern.He said the procedures that needed to be followed before Government could acquire a farm were the prime cause of the delay.As a result, said Tsheehama, land offers received could not be adequately assessed on time.