Land value tax

Background

One of the main arguments for LVT is that it encourages the efficient use of land, particularly in urban areas - one estimate of the efficiency gain puts it at £15,000 a year per personhttp://www.newstatesman.co.uk/landreform/lr200409200007.htm An additional argument for LVT is that land values depend heavily on matters externality|beyond the control of the land owner - for example, the creation of new infrastructure, or a rezoning of land can dramatically change its value. An LVT provides a way of recouping some of the changes to land values that occur as a result of investment by government, placing less of the burden on taxpayers who don't benefit. The tax is often said to be justified for economics|economic reasons because if it is implemented properly, it should not distort market mechanisms or otherwise damage the economy the way most taxes do. It is also said to be justified for reasons of fairness by asserting that the tax is equivalent to a fee for protection of land ownership, which is the primary activity of any state. It is a cheap (and therefore efficient) tax to administer because much less effort is required to track land ownership than to track income or sales transactions. Tax evasion on land is much more difficult than on financial wealth. For the same reason, it is also much more effective than a development or planning gain tax, which can be avoided by failing to develop. As well as these pragmatic arguments LVT can be justified from the philosophical premise that the natural world was originally the common property of all persons, and therefore the LVT is not really a tax, but simply the collection of rent on behalf of the proper owners (the community). A consequence of this argument is that land should be taxed to the maximal extent and all proceeds should be equally distributed to each citizen as a citizen's dividend. This implementation of the LVT amounts to a moderate form of land reform. The most influential advocate of this position was the political economist and activist Henry George. Many contemporary American advocacy groups trace their heritage back to his thoughts and writings.

Implementation/Advocacy

LVT is charged in Estonia, Republic of China|Taiwan, Singapore and Hong Kong, and many more countries have used it in the past, particularly Denmark and Japan. It is currently being introduced in Namibia, and there are campaigns for its introduction to South Korea and Scotland. Several cities around the world also use LVT, including Sydney, Canberra, Mexicali and Fairhope, Alabama. In addition, some governments like Saudi Arabia and Alaska raise a large part of government revenues from fees related to extraction of minerals or oil. In the United Kingdom, LVT was an important part of the platform of the Liberal Party (UK)|British Liberal Party during the early part of the twentieth century - Lloyd George and Herbert Asquith proposed "to free the land that from this very hour is shackled with the chains of feudalism".http://www.newstatesman.co.uk/landreform/lr200409200008.htmIt was also advocated by Winston Churchill early in his career.http://web.archive.org/web/20011217193137/home.vicnet.net.au/~earthshr/winston.htmlLabour Party (UK)|Labour's 1931 Budget included an LVT, but before it came into force it was repealed by the Conservative-dominated National Government that followed shortly after. In 1990, several leading economists – including 4 Nobel Prize winners – http://www.counterpunch.org/schaefer02272004.htmlto then President of the Soviet Union|President Mikhail Gorbachev suggesting that Russia use Land Value Taxation in its transition towards a free market economy. Some cities in the United States|USA, including Harrisburg, Pennsylvania, have recently introduced a ''two-rate'' property tax, which can be seen as a compromise between pure LVT and an ordinary asset-value property tax. This system was abandoned in Pittsburgh when an ineffective property assessment system led to a drastic increase in assessed land values during 2001 after years of underassessment. The United States and some other countries have also started charging fees for use of spectrum or fees related to pollution; non-traditional variations on Land Value Taxation. (Note that in economics, land (economics)|land is also used as a generic term for certain kinds of natural resources other than areas of ground.) There appears to be a correlation between high LVT and growing economic prosperity, as predicted by Georgism|Georgist theory. http://www.progress.org/archive/geono05.htm

External links

http://www.urbantools.net

http://www.marylandlandtax.org

http://landvaluetax.org

http://www.labourland.org

http://www.libdemsalter.org.uk

Dave Wetzel, ''The New Statesman'', 20 September 2004, http://www.newstatesman.co.uk/landreform/lr200409200007.htm

http://www.hallwatch.org/proptax/about/landtax/index_html