Land Taxation: an Idea Whose
Time Has Gone
Alan Evans
Henry George
• Proposed in Progress and Poverty in 1879
• People saw the world differently after
reading it.
• Led to the ‘Single Tax’ Movement.
• Still an active idea.
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A Ricardian View - A tax on land values or rent will not
affect the amount of land made available (because it
is fixed), and will not affect the price, OP, to the
occupier – only its value to the land owner.
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Labour Land Value Tax Campaign
• “Would encourage new capital investment
rather than sterile land speculation.”
• “Would encourage the use of empty sites
zoned for development.”
• “Would help avoid urban sprawl.”
• “Would provide automatic compensation fo
those sites which are disadvantaged by a
new development.”
Two Obvious Problems
• How much is the rate of tax?
• How often is the land valued?
• The Labour LVT Campaign assumes that
the tax is relatively high (to incentivise),
and that valuations are frequent, (for the
purpose of compensation).
A Third (Political) Problem
• If it is such a good idea why is it so rare?
• Of the countries in western Europe only
Denmark and France have land taxes, and
in France it is together with a buildings tax.
• (Austria has a tax on vacant land.)
Reason 1 - Practicality
• Taiwan has a land tax.
• But Taipeh has little undeveloped land
coming on the market.
• So land values have to be estimated.
Methodology
• First – value the whole property.
• Second – value the cost of construction of
the existing building.
• Third – subtract one from the other to find
the estimated land value.
Problems
• First, the cost of valuing the land is much
higher than the cost of valuing the property
alone.
• Second, the values obtained are difficult to
defend and open to argument.
The New Zealand Evidence
• Communities can choose which form of
tax to apply.
• Four out of five larger urban areas have
chosen property taxes.
• Land taxes are primarily levied in rural
areas.
Elsewhere
• In the state of Victoria, Australia, the move
has been away from land tax to a property
tax.
• In South Africa choice was possible but
since 2004 a property tax has been
required.
Finally -the Planning Problem
• Nowadays land values depend on what is
permitted.
• So, firstly, the local valuer will not second
guess the planning committee.
• And, secondly, in the UK, where
constraints mean that land values are
high, the relevance of a LVT would be
negligible.
The Political Problem
• When Henry George was writing few
people owned land.
• Now the majority of the population in many
countries own their own homes and
therefore land.
• A meaningful land tax would be political
suicide.