In his Three Principles of the People, Dr. Sun Yat-sen, founder of the Republic of China, said that land was the basic problem in improving social welfare. He advocated a land-to-the-tiller policy to abolish farm tenancy and prevent unearned increment in land value.
In 1930, the Central Government promulgated the Land Law, which provided that farm rents should not exceed 37.5 per cent of the annual yield of the main crop. Because of the crisis with Japan and subsequent war, the law was not widely enforced.
When the Central Government moved its seat to Taiwan in 1949, farmers constituted more than three-fifths of provincial population. The number of tenants was more than two-thirds of all farm families. The government concluded that satisfactory solution of the land problem was the first prerequisite to safeguarding of the island and making it a base for mainland recovery.
Land reform was undertaken in a series of steps: farm rent reduction, sale of public land, redistribution of private farm land to put most in the hands of those who till it, and equalization of urban land rights. The first steps have been virtually completed. The last has just begun. It is aimed at providing land for the dweller.
Before rural land reform, tenants paid from 50 to 70 per cent of the main crop to landlords. Beginning in 1949, farm rent was limited to a maximum of 37.5 per cent. Collection of extra payments was prohibited. This enabled 300,000 tenant families, or 50 per cent of the farm population at that time, to save money to buy their own land.
Public land was sold to incumbent tenants beginning in 1951. The purchase price was 2.5 times the annual main crop yield, payable in 20 installments over a period of 10 years. More than 95 per cent of the 100,000 hectares (247,100 acres) of public land has been sold to 200,000 tenant families.
The Land-to-the-Tiller Statute promulgated in 1953 stipulated that each landlord could keep 3 hectares (7.4 acres) of medium-grade paddy field or equivalent. Holdings in excess of that amount had to be sold to the government for resale to tenants.
The purchase and resale price was fixed at 2.5 times the annual main crop yield. Landlords received 70 per cent in land bonds and 30 per cent in the stocks of four government enterprises which were handed over to private ownership. At present, 87 per cent farmers till land of their own.
The Statute for Equalization of Urban Land Rights was promulgated in 1954. Two years later, it was enforced experimentally on 19,200 hectares (47,440 acres) of land in 60 selected areas where city planning had been started. Measures included assessment of land value, taxation on a basis of declared value, purchase at declared value, and accruement of the unearned increment to the public.
Law Amended
Taxes were collected on a progressive scale. The starting point of progressive taxation was fixed at the average urban land value for 5 ares (0.123 acres). By the amendment of 1958, the basic taxation rate was reduced from 1.5 to 0.7 per cent of land value. But when land value exceeded the average, an additional 1 per cent was levied for each excess of 500 per cent. The ceiling was 6.2 per cent.
Except in case of inheritance, the unearned increment accrued to the public at the time of land transfer. If the net increment was less than 100 per cent, the rate was 30 per cent of the increment. When the net increment exceeded 400 per cent, the rate was 100 per cent. Proceeds were used to build houses and welfare facilities for urban people.
Purchase of land at declared value was not effected because of technical difficulties. In view of the rapid increase in population and soaring city land value, the statute was amended again in February, 1964. The major revisions are:
1. Enlarged scope of enforcement. The new statute is applicable to 80,000 hectares (197,600 acres) of urban land.
2. Adjustment of taxation rates. The starting point of progressive taxation is adjusted to the average urban land value of 7 ares (0.173 acres). The taxation rates range from 1.5 per cent to 7 per cent. However, the rate for owner-occupied residential land not exceeding 3 ares (0.074 acres) is 1 per cent. After enforcement of the new rates, 0.21 per cent of the defense surcharge and 0.6 per cent of the household tax hitherto levied on a basis of the land value tax is abolished.
3. If the land value declared by a landlord is lower than the assessment by 20 per cent or more, the government may purchase the land at declared value or levy tax at the assessed value.
Regulations for the enforcement of this statute were passed by the Taiwan Provincial Assembly in May. On July 10, county and municipal governments announced the land values assessed by the urban land evaluation committee of each locality. Landlords in 60 areas were required to make their declarations of land value within a period of one month.
Results were satisfactory. By August 10, owners of 97 per cent of urban land had made declarations. Of the 22 counties and municipalities, 7 counties reported 100 per cent compliance and 5 counties and 1 municipality more than 99 per cent. Taipei city had the poorest response, 90.19 per cent, because land in several districts was being regarded.
Values Soar
Owner-declared values worked out in this way: (1) identical to assessed value, 34.55; (2) 80 per cent of assessed value, 64.44; (3) higher than assessed value, 0.87; and (4) lower than 80 per cent of assessed value, 0.14. Those who did not declare or whose declarations were less than 80 per cent of assessed value were given a 15-day grace period to file their estimates or to revalue their land.
Per ping (0.00082 acres) values in Taipei city were between NT$3 (US$0.075) and NT$81,000 (US$2,025). The average was NT$1,300 (US$32.50). The lowest was NT$1 (US$0.025) in Chiayi county, central Taiwan. The minimum range was in Penghu (the Pescadores) county, between NT$50 (US$1.25) and NT$3,000 (US$75). Compared with 1956, average values were increased by 3 to 6 times. In several districts of Taipei city, the increase was more than 10 times.
The greatest landlord in Taipei city is the National Assets Bureau. It owns a third of city land. The second is the Municipal Government with two-fifths. Other big owners are the National Taiwan University, Taiwan Railway Administration, and Taiwan Sugar Corporation. Big private land owners are mostly industrialists.
Government officials and civic leaders took the lead in making declarations. Prominent figures were Legislative Yuan (parliament) President Huang Kuo-shu and Interior Minister Lien Chen-tung. Of the five Yuan presidents, Huang is the only one who owns real estate.
During the declaration period, the Taiwan Land Bureau mobilized 12,000 workers. Land offices were open until 8 in the evening. As the period neared an end, most clerks worked until midnight.
The new tax will be collected from October 21 through November 20. Seventy per cent of the proceeds will go to the local governments and 30 per cent to the provincial government.
A second stage of urban land reform will be enforced in 20 other areas and a third in 32. The three stages will cover more than a third of Taiwan's cities, boroughs, and towns.
Rural land reform was carried out by a peaceful means. The same is true of the urban program. The implementation of the reforms will help in the development of free China's agriculture and industry, and play an important role in the betterment of the political, social, and cultural life of the free Chinese.