Economic Rent

Economic Rent can be described as unearned income, windfall profit, or as revenue without a corresponding cost of production. Rent exists because of the existence of the community, and should accrue to that community in the form of government revenue to pay for programs in lieu of taxes on incomes or consumption.

Economic rent recovery by government does not raise the cost of owning land or using a resource, but shifts monthly payments by the owners or users of a natural resource or land to government in lieu of other taxes, instead of as interest payments to the banks to service a mortgage, or instead of unearned revenue to the owner if there is no mortgage.

Collecting the economic rent from a resource does not inhibit extraction, use or economic activity, since rent is revenue without a cost of production. Owners of resources or land do not require the unearned income in order to stay in business. An accounting profit of 0% - 10% is sufficient to keep a business in production.

Even in the oil industry, rent recovery not slow down oil extraction, but it would make renewables more competitive, since investors in renewables and fossil fuels would each collect the same ROI, on a level playing field. Presently renewables only generate an "accounting profit" (if at all), as they do not generate significant economic rent, making renewables uncompetitive with fossil fuels which generate high economic rent.

Similarly, land value taxes do not raise or lower the cost of owning or holding land. But LVT does mean payments to the municipal, provincial or federal government rather than interest payments the bank to service a mortgage for the land part of property.