Advertisement

Sirius Minerals and the case for a land-value tax

Why should people who have done nothing in particular receive a huge windfall just because they happen to own land in the right place at the right time, asks Merryn Somerset Webb.

170516-sirius-b
Sirius Minerals is going to make a lot of lucky landowners very happy.

Imagine working for 50-odd years at an RAF radar station in Yorkshire. You retire to a five-acre farm nearby with your comfortable but not exactly luxurious pension. You raise a few dairy goats. Then one day someone comes by and tells you that there are millions of tonnes of a fertiliser called polyhalite under your goats. They're going to start digging it up. And when they do, you'll get a cut of its value. Hello luxury.

Advertisement - Article continues below

That's what's happened to Liz Worthy.

Sirius Mining has broken ground on what the Sunday Times called the "biggest mining project ever undertaken in Britain" and she will get a cut of the £65m-odd a year they think they will be paying out in royalties to around 500 landowners (including the Crown Estate).

However, Worthy won't be getting anywhere near as much as some. Larger scale farms will bank "seven-figure royalty cheques".

It's heartwarming stuff. But is it reasonable? Why should a group of people who have done nothing in particular taken no risk, had no ideas, dug no holes receive a huge windfall just because they happen to own land in the right place at the right time?

It's a question you might also ask about anyone owning land near a big taxpayer funded infrastructure project (Crossrail for example)? And if you think about too long you will end up wondering about the concept of a land value tax as a possible replacement for our current system of taxation. You can read all about that here.

In the meantime, if you aren't lucky enough to own a farm in the right place in Yorkshire but still fancy an outside chance of getting rich from polyhalite you could buy the shares (LSE: SXX). We haven't looked at the company in detail but it is getting into a high-risk business: the construction work will be tough, the project is huge and the market is uncertain. Midas in the Mail on Sunday rates it "an adventurous long term buy."

Advertisement
Advertisement

Recommended

Do you own shares in Sirius Minerals? Here’s what you need to do now
Stocks and shares

Do you own shares in Sirius Minerals? Here’s what you need to do now

Mining giant Anglo American has proposed a cash takeover of Yorkshire-based minnow Sirius Minerals. Unhappy shareholders must decide whether to accept…
20 Feb 2020
Share tips of the week
Share tips

Share tips of the week

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
17 Jan 2020
Share tips: eight stocks that should deliver robust returns
Share tips

Share tips: eight stocks that should deliver robust returns

Ryan Ermey of US publication Kiplinger’s Personal Finance chooses his favourite stocks for the next decade, which should be able to grow for years.
28 Dec 2019
Share tips of the week
Share tips

Share tips of the week

MoneyWeek’s comprehensive guide to the best of this week’s share tips from the rest of the UK's financial pages.
20 Dec 2019

Most Popular

Can Rishi Sunak save the economy with stamp duty cuts and half-price meal deals?
UK Economy

Can Rishi Sunak save the economy with stamp duty cuts and half-price meal deals?

John Stepek runs his eye over the chancellor's £30bn stimulus package and asks if it's enough to get the economy back on its feet after months of lock…
9 Jul 2020
An economics lesson from my barber
Inflation

An economics lesson from my barber

On reopening his shop after lockdown, Dominic Frisby’s barber doubled his prices. It’s all part of the post-Covid inflation process – and we’re going …
8 Jul 2020
What gold, bonds and tech stocks have in common
Stockmarkets

What gold, bonds and tech stocks have in common

"Risk off" or "safe haven" assets such as gold and government bonds have been doing well lately. But so have riskier tech stocks. That seems to defy c…
10 Jul 2020