Earth Rights Institute - Working Groups

DENMARK - Analysis and SWOT

by Ole Lefmann

The author would like to thank Professor Peter Birch Sørensen, Copenhagen, for comments on an earlier draft. The viewpoints expressed below are those of the author.

The practice of Land-Value Taxation has deep roots in Danish history, possibly antedating the first historically known King Svend Forkbeard (985-1014). Often in history powerful men succeeded to withhold the rent of land they should collect on behalf of the King; in fact most unrests and hostilities through history were over capture of the rent of land, which wording means the result of production when rewards have been paid to manpower for labour and to investors for investments.

Many times through history when the economy of the society needed restoration, rulers took to one or another type of LVT that mended the mess.

Progress and defeat. Modern Land Value Taxation began its progress in Denmark in the 1880’s and went on until in 1960 it began to decline because of a fatal failure during its implementation.

When it was introduced in Denmark in the middle of the 1880’s many Danes found it being a revitalization of the Old Danish tax on yield-ability of land (nature); and it did not take long before politicians seriously discussed the practicality of the idea.

In 1905 was established the political party The Radical Liberals who proposed Land Value Taxation instead of taxes on labour and consumption. Though this party in the beginning had only few seats in the parliament a widespread sympathy among politicians of other parties enabled it to gather sufficient support to have some legislation in favour of Land Value Taxation passed through Parliament.

However, this did not satisfy impatient Land Value Taxers who now entered a coalition with other radical idealists and named it The Justice Coalition. In 1919 this organisation transformed to the political party called The Danish Justice Coalition, in English tongue usually called The Danish Justice Party.

With one Land Value Taxation party already in the Parliament, a second wooing to the electorate and several supporters in the seats of the traditional political parties Land Value Taxation legislation speeded up. Various kinds of Land Value Taxation were introduced at the three governmental levels - municipalities, counties, and the State. They were all far from the ideal LVT-system - but the idea was seriously discussed and gradually progress was made.

After World War II, in 1948, the Danish Minister of Finance appointed a commission whose members should scrutinize the possibilities and consequences of introduction of Full Ground Duty (Land Value Taxation levied to the full on market prices of all land in Denmark). That commission published its report in 1954 in which the majority recommended a tax of 4% on publicly assessed marked prices of all land in Denmark.

In 1957 the three political parties: the biggest the Social Democracy and the two smaller: the Radical Liberals and the Danish Justice Coalition Party got enough votes to construct the so called Ground Duty Government; called so because at its inauguration it declared that it would collect as much rent of land as would be politically possible.

This declaration and the facts that many Politicians and Civic Servants were convinced of the virtues and advantages of Land Value Taxation; that pilot projects and tests had been carried through (after 1915); that 45 years negotiations had taken place about how to phase out old taxes, about the preferable proportion between tax on land values and tax on improvements including buildings, and about the preferable relations between various levels of governments; that a ministerial Sub Committee appointed 1948 had scrutinized possibilities and consequences of a general and full governmental collection of the annual rent of all land in Denmark and recommended LVT to the State in its report in 1954, convinced building entrepreneurs and other developers that high land-value taxations would now become the reality, which made it interesting for them to shift their passive investments in land on to productive investments.

During the Ground Duty Government (1957-1960) Industrial production went up - it more than doubled; private investments were three times bigger than public investment; employees and entrepreneurs earned higher real income than ever before; inflation disappeared almost; savings soared immensely; unemployment almost disappeared to around 1 percent; foreign dept was reduced considerably; domestic and foreign trade expanded, and at the end of the period (1960) all economic forecasters expected further economic progress and prosperity.

How much of the progress was due to the formation and activities of the Ground Duty Government is difficult to estimate exactly, as other countries experienced economic progress in the same period; but in Denmark the progress was eminent.

Nevertheless, in 1960 when the mandate to the Ground Duty Government should be renewed all the three government parties lost seats, but The Danish Justice Coalition Party lost all theirs. After the election the Social Democratic Party was still able to take power together with the Radical Liberals, but none of them promoted Land Value Taxation to the State any longer. The new government expected land value speculation to increase because of the overall economic optimism, and LVT would have been the rights means, but ins