Land value tax

Aland value tax(LVT) is a levy on the value oflandwithout regard tobuildings,personal propertyand otherimprovementsupon it.Some economists favor LVT, arguing it does not causeeconomic inefficiency,and helps reduceeconomic inequality.A land value tax is aprogressive tax,in that thetax burdenfalls on land owners, because land ownership is correlated with wealth and income.The land value tax has been referred to as "the perfect tax" and the economic efficiency of a land value tax has been accepted since the eighteenth century.Economists sinceAdam SmithandDavid Ricardohave advocated this tax because it does not hurt economic activity, and encourages development without subsidies.

LVT is associated withHenry George,whose ideology became known asGeorgism.George argued that ta xing the land value is the most logical source of public revenue because the supply of land is fixed and because public infrastructure improvements would be reflected in (and thus paid for by) increased land values.

A low-rate land value tax is currently implemented throughoutDenmark,Estonia,Lithuania,Russia,Singapore,andTaiwan;it has also been applied to lesser extents in parts ofAustralia,Germany,Mexico(Mexicali), and theUnited States(e.g.,Pennsylvania).

Terminology

It is also known as alocation value tax,apoint valuation tax,asite valuation tax,split rate tax,or asite-value rating.

Economic properties

Efficiency

Asupply and demanddiagram showing the effects of land value taxation. As the supply of land is fixed, theburdenof the tax falls entirely on the landowner. There is no change in the rental price and quantity transacted, and nodeadweight loss.

Most taxes distort economic decisions and discourage beneficial economic activity.For example,property taxesdiscourage construction, maintenance, and repair because taxes increase with improvements. LVT is not based on how land is used. Because the supply of land isessentially fixed,land rents depend on what tenants are prepared to pay, rather than on landlord expenses. Thus, if landlords passed LVT on to tenants, they might move or rent smaller spaces before absorbing increased rent.

The land's occupants benefit from improvements surrounding a site. Such improvements shift tenants' aggregatedemand curveto the right (they will pay more). Landlords benefit from price competition among tenants; the only direct effect of LVT in this case is to reduce the amount of social benefit that is privately captured as land price by titleholders.

LVT is said to be justified for economic reasons because it does not deter production, distort markets, or otherwise createdeadweight loss.Land value tax can even have negative deadweight loss (social benefits), particularly when land use improves.EconomistWilliam Vickreybelieved that:

"removing almost all business taxes, including property taxes on improvements, excepting only taxes reflecting the marginal social cost of public services rendered to specific activities, and replacing them with taxes on site values, would substantially improve the economic efficiency of the jurisdiction."

LVT's efficiency has been observed in practice.Fred Foldvarystated that LVT discourages speculative land holding because the tax reflects changes in land value (up and down), encouraging landowners to develop or sell vacant/underused plots in high demand. Foldvary claimed that LVT increases investment in dilapidatedinner cityareas because improvements don't cause tax increases. This in turn reduces the incentive to build on remote sites and so reducesurban sprawl.For example,Harrisburg, Pennsylvania's LVT has operated since 1975. This policy was credited by mayorStephen R. Reedwith reducing the number of vacant downtown structures from around 4,200 in 1982 to fewer than 500.

LVT is arguably anecotaxbecause it discourages the waste of prime locations, which are a finite resource.Manyurban plannersclaim that LVT is an effective method to promotetransit-oriented development.

Real estate values

The value of land reflects the value it can provide over time. This value can be measured by theground rentthat a piece of land receives on the market. Thepresent valueof ground-rent is the basis for land prices. A land value tax (LVT) will reduce the ground rent received by the landlord, and thus will decrease the price of land, holding all else constant.The rent charged for land may also decrease as a result of efficiency gains if speculators stop hoarding unused land.

Real estate bubblesdirect savings towardsrent-seekingactivities rather than other investments and can contribute torecessions.Advocates claim that LVT reduces the speculative element in land pricing, thereby leaving more money for productive capital investment.

At sufficiently high levels, LVT would cause real estate prices to fall by ta xing away land rents that would otherwise become 'capitalized' into the price of real estate. It also encourages landowners to sell or develop locations that they are not using. This might cause some landowners, especially pure landowners, to resist high land value tax rates. Landowners often possess significant political influence, which may help explain the limited spread of land value taxes so far.

Tax incidence

A land value tax hasprogressive taxeffects, in that it is paid by the owners of valuable land who tend to be the rich, and since the amount of land is fixed, thetax burdencannot be passed on as higher rents or lower wages to tenants, consumers, or workers.

Practical issues

Several practical issues complicate LVT implementation. Most notably, it must be:

• calculated accurately and fairly (and fairness is always subjective)
• high enough to raise sufficient revenue without causing land abandonment, but if land is abandoned, it could be claimed by the State (as occurs underIsrael's Absentees' Property Laws)
• billed to the correct person or business entity
• Political Resistance: Landowners, particularly those with substantial holdings, may oppose LVT due to its potential to significantly increase their tax burden. This resistance can lead to political challenges in implementing and sustaining an LVT.
• Effect on Rural Landowners: In rural areas, where land values are lower but the land size per owner might be large, the tax might seem unfair or burdensome compared to urban areas where land values are higher.
• Effect on Planning 1: Whereas in a conceptual world LVT drives efficient use of land, extantplanningrestrictions mitigate against that efficiency. Moreover when external developments increase the notional land value (by increasing amenity, for instance) existing landowners may object if such a development increased LVT while they are not allowed to realise the benefit.
• Effect on Planning 2: LVT in real estate should encourage high-rise building to maximise land-use efficiency. However amenity improvements required for those high-occupant developments are shared unequally across low-occupancy neighbours.
• Market Fluctuations: The real estate market is subject to fluctuations, which can lead to significant changes in land values and, consequently, the taxes owed. This volatility can make it difficult for landowners to plan financially.
• Economic Impact on Property Development: While LVT encourages the efficient use of land, it could also discourage development in areas where the anticipated increase in land value may not justify the initial investment costs, potentially leading to underdevelopment.

Assessment/appraisal

Compare toReal estate appraisal

See also:Land (economics)

Levying an LVT requires an assessment and a title register. In a 1796United States Supreme Courtopinion,Justice William Patersonsaid that leaving the valuation process up toassessorswould cause bureaucratic complexities, as well as non-uniform procedures.Murray Rothbardlater raised similar concerns, claiming that no government can fairly assess value, which can only be determined by afree market.

Compared to modern property tax assessments, land valuations involve fewer variables and have smoothergradientsthan valuations that include improvements. This is due to variation of building design and quality. Modern statistical techniques have improved the process; in the 1960s and 1970s,multivariate analysiswas introduced as an assessment tool.Usually, such a valuation process begins with a measurement of the most and least valuable land within the taxation area. A few sites of intermediate value are then identified and used as "landmark" values. Other values are interpolated between the landmark values. The data is then collated in a database,"smoothed" and mapped using ageographic information system(GIS). Thus, even if the initial valuation is difficult, once the system is in use, successive valuations become easier.

Revenue

In this case, land is taxed at 100% of its value, eliminating the landowner surplus completely. The ownership of land becomes worthless except to those who value it higher than market rents.

In the context of LVT as asingle tax(replacing all other taxes), some have argued that LVT alone cannot raise enoughtax revenue.However, the presence of other taxes can reduce land values and hence the revenue that can be raised from them. ThePhysiocratsargued that all other taxes ultimately come at the expense of land rental values. Most modern LVT systems function alongside other taxes and thus only reduce their impact without removing them. Land taxes that are higher than the rentalsurplus(the full land rent for that time period) would result in landabandonment.

LVT Impracticalities

In some countries, LVT is impractical because of uncertainty regardingland titlesandtenure.For instance, a parcel of grazing land may be communally owned by village inhabitants and administered by village elders. The land in question would need to be held in a trust or similar body for taxation purposes. If the government cannot accurately define ownership boundaries and ascertain the proper owners, it cannot know from whom to collect the tax. Clear titles are absent in many developing countries.In African countries with imperfect land registration, boundaries may be poorly surveyed, and the owner can be unknown.

Incentives

Speculation

Further information:Speculation

The owner of a vacant lot in a thriving city must still pay a tax and would rationally perceive the property as a financial liability, encouraging them to put the land to use in order to cover the tax. LVT removes financial incentives to hold unused land solely for price appreciation, making more land available for productive uses. Land value tax creates an incentive to convert these sites to more intensive private uses or into public purposes.

Incidence

The selling price of a good that is fixed in supply, such as land, does not change if it is taxed. By contrast, the price of manufactured goods can rise in response to increased taxes, because the higher cost reduces the number of units that suppliers are willing to sell at the original price. The price increase is how the maker passes along some part of the tax to consumers.However, if the revenue from LVT is used to reduce other taxes or to provide valuable public investment, it can cause land prices to rise as a result of higher productivity, by more than the amount that LVT removed.

Landtax incidencerests completely upon landlords, although business sectors that provide services to landlords are indirectly impacted. In some economies, 80 percent of bank lending finances real estate, with a large portion of that for land.Reduced demand for land speculation might reduce the amount of circulating bank credit.

While landowners are unlikely to be able to charge higher rents to compensate for LVT, removing other taxes may increase rents, as this may affect the demand for land.

Land use

Further information:land use

Assuming constant demand, an increase in constructed space decreases the cost of improvements to land such as houses. Shifting property taxes from improvements to land encourages development. Infill of underutilized urban space is one common practice to reduceurban sprawl.

Collection

LVT is less vulnerable totax evasion,since land cannot be concealed or moved overseas and titles are easily identified, as they areregisteredwith the public.Land value assessments are usually considered public information, which is available upon request. Transparency reduces tax evasion.

Ethics

See also:Georgism

Land acquires ascarcityvalue owing to the competing needs for space. The value of land generally owes nothing to the landowner and everything to the surroundings.

Religion

TheCatholic Churchassertsin its 1967 "universal destination of goods"principle:

Everyone knows that theFathers of the Churchlaid down the duty of the rich toward the poor in no uncertain terms. AsSt. Ambroseput it: "You are not making a gift of what is yours to the poor man, but you are giving him back what is his. You have been appropriating things that are meant to be for the common use of everyone. The earth belongs to everyone, not to the rich."

— Pope Paul VI,Populorum Progressio(1967)

In addition, the Church maintains that civil authorities have the right and duty to regulate the legitimate exercise of the right to ownership for the sake of the common good, including the right to tax.

Equity

Everybody works but the vacant lot –Henry George

LVT considers the effect on land value of location, and of improvements made to neighbouring land, such as proximity to roads and public works. LVT is the purest implementation of the public finance principle known asvalue capture.

Apublic worksproject can increase land values and thus increase LVT revenues. Arguably, public improvements should be paid for by the landowners who benefit from them.Thus, LVT captures the land value of socially created wealth, allowing a reduction in tax on privately created (non-land) wealth.

LVT generally is a progressive tax, with those of greater means paying more,in that land ownership correlates to incomeand landlords cannot shift thetax burdenonto tenants.LVT generally reduceseconomic inequality,removes incentives to misuse real estate, and reduces the vulnerability of economies to property booms and crashes.

History

Pre-modern

The philosophies and concepts underpinning land value taxation were discussed in ancient times, stemming from taxes oncrop yield.For example,Rishisof ancient India claimed that land should be held in common, and that unfarmed land should produce the same tax as productive land. "The earth...is common to all beings enjoying the fruit of their own labour; it belongs...to all alike"; therefore, "there should be left some for everyone".Apastambasaid "If any person holding land does not exert himself and hence bears no produce, he shall, if rich, be made to pay what ought to have been produced".

Menciuswas a Chinese philosopher (around 300 BCE) who advocated for the elimination of taxes and tariffs, to be replaced by the public collection of urban land rent: "In the market-places, charge land-rent, but don't tax the goods."

During the Middle Ages, in the West, the first regular and permanent land tax system was based on a unit of land known as thehide.The hide was originally the amount of land sufficient to support a household. It later became subject to a land tax known as "geld".

Physiocrats

Anne Robert Jacques Turgot,a leading physiocrat

Thephysiocratswere a group ofeconomistswho believed that the wealth of nations was derived solely from the value of landagricultureorland development.Before theIndustrial Revolution,this was approximately correct. Physiocracy is one of the "early modern"schools of economics.Physiocrats called for the abolition of all existing taxes, completelyfree tradeand asingle taxon land.They did not distinguish between the intrinsic value of land and ground rent.Their theories originated inFranceand were most popular during the second half of the 18th century. The movement was particularly dominated byAnne Robert Jacques Turgot(1727–1781) andFrançois Quesnay(1694–1774).It influenced contemporary statesmen, such asCharles Alexandre de Calonne.The physiocrats were highly influential in theearly history of land value taxation in the United States.

Radical Movement

A participant in theRadical Movement,Thomas Painecontended in hisAgrarian Justicepamphlet that all citizens should be paid 15poundsat age 21 "as a compensation in part for the loss of his or her natural inheritance by the introduction of the system of landed property." "Men did not make the earth. It is the value of the improvements only, and not the earth itself, that is individual property. Every proprietor owes to the community a ground rent for the land which he holds."This proposal was the origin of thecitizen's dividendadvocated byGeolibertarianism.Thomas Spenceadvocated a similar proposal except that the land rent would be distributed equally each year regardless of age.

Classical economists

Adam Smith, in his 1776 bookThe Wealth of Nations,first rigorously analyzed the effects of a land value tax, pointing out how it would not hurt economic activity, and how it would not raise contract rents.

Ground-rents are a still more proper subject of taxation than the rent of houses. A tax upon ground-rents would not raise the rents of houses. It would fall altogether upon the owner of the ground-rent, who acts always as a monopolist, and exacts the greatest rent which can be got for the use of his ground. More or less can be got for it according as the competitors happen to be richer or poorer, or can afford to gratify their fancy for a particular spot of ground at a greater or smaller expense. In every country the greatest number of rich competitors is in the capital, and it is there accordingly that the highest ground-rents are always to be found. As the wealth of those competitors would in no respect be increased by a tax upon ground-rents, they would not probably be disposed to pay more for the use of the ground. Whether the tax was to be advanced by the inhabitant, or by the owner of the ground, would be of little importance. The more the inhabitant was obliged to pay for the tax, the less he would incline to pay for the ground; so that the final payment of the tax would fall altogether upon the owner of the ground-rent.

— Adam Smith, The Wealth of Nations,Book V, Chapter 2,Article I: Taxes upon the Rent of Houses

Henry George

Henry Georgein 1865

Main articles:Henry GeorgeandGeorgism

Henry George(2 September 1839 – 29 October 1897) was perhaps the most famous advocate of recovering land rents for public purposes. A journalist, politician, andpolitical economist,he advocated a "single tax"on land that would eliminate the need for all other taxes. George first articulated the proposal inOur Land and Land Policy(1871).Later, in his best-selling workProgress and Poverty(1879), George argued that because the value of land depends on natural qualities combined with the economic activity of communities, including public investments, theeconomic rentof land was the best source of tax revenue.This book significantly influenced land taxation in the United States and other countries, including Denmark, which continuesgrundskyld('ground duty') as a key component of its tax system.The philosophy that natural resource rents should be captured by society is now often known asGeorgism.Its relevance to public finance is underpinned by theHenry George theorem.

Meiji Restoration

After the 1868Meiji Restorationin Japan,land tax reformwas undertaken. An LVT was implemented beginning in 1873. By 1880 initial problems with valuation and rural opposition had been overcome and rapid industrialisation began.

Liberal and Labour Parties in the United Kingdom

In theUnited Kingdom,LVT was an important part of the platform of theLiberal Partyduring the early part of the twentieth century.David Lloyd GeorgeandH. H. Asquithproposed "to free the land that from this very hour is shackled with the chains of feudalism."It was also advocated byWinston Churchillearly in his career.Themodern Liberal Party(not to be confused with theLiberal Democrats,who are the heir to the earlier Liberal Party and who offer some support for the idea)remains committed to a local form of LVT,as do theGreen Party of England and Walesand theScottish Greens.

The 1931 Labour budget included an LVT, but before it came into force it was repealed by the Conservative-dominated national government that followed.

An attempt at introducing LVT in the administrativeCounty of Londonwas made by the local authority under the leadership ofHerbert Morrisonin the 1938–1939 Parliament, called the London Rating (Site Values) Bill. Although it failed, it detailed legislation for the implementation of a system of LVT using annual value assessment.

After 1945, theLabour Partyadopted the policy, against substantial opposition, of collecting "development value": the increase in land price arising from planning consent.This was one of the provisions of theTown and Country Planning Act 1947,but it was repealed when the Labour government lost power in 1951.

Senior Labour figures in recent times have advocated an LVT, notablyAndy Burnhamin his 2010 leadership campaign, former Leader of the OppositionJeremy Corbyn,and Shadow ChancellorJohn McDonnell.

Republic of China

TheRepublic of Chinawas one of the first jurisdictions to implement an LVT, specified in its constitution.Sun Yat-Senwould learn about LVT from theKiautschou Bay concession,which had successful implementation of LVT, bringing increased wealth and financial stability to the colony. TheRepublic of Chinawould go on to implement LVT in farms at first, later implementing it in the urban areas due to its success.

Early neoclassicists

Alfred Marshallargued in favour of a "fresh air rate", a tax to be charged to urban landowners andlevied on that value of urban land that is caused by the concentration of population.Thatgeneral rateshould haveto be spent on breaking out small green spots in the midst of dense industrial districts, and on the preservation of large green areas between different towns and between different suburbs which are tending to coalesce.This idea influenced Marshall's pupilArthur Pigou's ideas on ta xing negative externalities.

Pigou wrote an essay in favor of the land value tax, calling it "an exceptionally good object for taxation." His views were interpreted as support forLloyd George'sPeople's Budget.

Nobel laureates

Paul Samuelsonsupported LVT. "Our ideal society finds it essential to put a rent on land as a way of maximizing the total consumption available to the society....Pure land rent is in the nature of a 'surplus' which can be taxed heavily without distorting production incentives or efficiency. A land value tax can be called 'the useful tax on measured land surplus'."

Milton Friedmanstated: "There's a sense in which all taxes are antagonistic to free enterprise – and yet we need taxes....So the question is, which are the least bad taxes? In my opinion the least bad tax is the property tax on the unimproved value of land, the Henry George argument of many, many years ago."

Paul Krugmanagreed that LVT is efficient, however he disputed whether it should be considered a single tax, as he believed it would not be enough alone, excluding taxes on natural resource rents and other Georgist taxes, to fund a welfare state. "Believe it or not, urban economics models actually do suggest that Georgist taxation would be the right approach at least to finance city growth. But I would just say: I don't think you can raise nearly enough money to run a modern welfare state by ta xing land [only]."

Joseph Stiglitz,articulating the Henry George theorem wrote that, "Not only was Henry George correct that a tax on land is nondistortionary, but in an equalitarian society... tax on land raises just enough revenue to finance the (optimally chosen) level of government expenditure."

Other economists

Michael Hudsonis a proponent for ta xing rent, especially land rent. ".... politically, ta xing economic rent has become the bête noire of neoliberal globalism. It is what property owners andrentiersfear most of all, as land,subsoilresources andnatural monopoliesfar exceed industrial capital in magnitude. What appears in the statistics at first glance as 'profit' turns out upon examination to be Ricardian or 'economic' rent. "

Rick Falkvingeproposed a "simplified taxless state" where the state owns all the land it can defend from other states and leases this land to people at market rates.

Fred Foldvary,an Austrian economist, has expressed support for the LVT and has integrated Georgist and Austrian models into his theory of the business cycle. "Conventional macroeconomics lacks a warranted explanation of the major business cycle, while the Austrian and geo-economic Georgist schools have incomplete theories. A geo-Austrian synthesis, in contrast, provides a potent theory consistent with historical cycles and with explanations about the root causes."

Implementation

See also:Property tax § By jurisdiction

Australia

Land taxes in Australia are levied by the states. The exemption thresholds vary, as do tax rates and other rules.

InNew South Wales,the state land tax exempts farmland and principal residences and there is a tax threshold. Determination of land value for tax purposes is the responsibility of the Valuer-General.InVictoria,the land tax threshold is$300,000on the total value of all Victorian property owned by a person on 31 December of each year and taxed at a progressive rate. The principal residence, primary production land and land used by a charity are exempt from land tax.InTasmaniathe threshold is$25,000and the audit date is 1 July. Between$25,000and$350,000the tax rate is 0.55% and over$350,000it is 1.5%.InQueensland,the threshold for individuals is$600,000and$350,000for other entities, and the audit date is 30 June.In South Australia the threshold is$332,000and taxed at a progressive rate, the audit date is 30 June.

By revenue, property taxes represent 4.5% of total taxation in Australia.A government reportin 1986 forBrisbane, Queenslandadvocated an LVT.

TheHenry Tax Reviewof 2010 commissioned by the federal government recommended that state governments replacestamp dutywith LVT. The review proposed multiple marginal rates and that most agricultural land would be in the lowest band with a rate of zero. TheAustralian Capital Territorymoved to adopt this system and planned to reduce stamp duty by 5% and raise land tax by 5% for each of twenty years.

Canada

LVTs were common in Western Canada at the turn of the twentieth century. In Vancouver LVT became the sole form of municipal taxation in 1910 under the leadership of mayor,Louis D. Taylor.Gary B. Nixon (2000) stated that the rate never exceeded 2% of land value, too low to prevent the speculation that led directly to the 1913 real estate crash.All Canadian provinces later taxed improvements. The 2022 value of land in Canada, as reported by the National Balance Sheet, is $5.824 trillion. LVTs can be somewhat controversial in Canada because of the already high cost of property that many Canadians struggle to afford.

Estonia

Estonialevies an LVT to fund municipalities. It is a state-level tax, but 100% of the revenue funds local councils. The rate is set by the local council within the limits of 0.1–2.5%. It is one of the most important sources of funding for municipalities.LVT is levied on the value of the land only. Few exemptions are available and even public institutions are subject to it. Church sites are exempt, but other land held by religious institutions is not.The tax has contributed to a high rate (~90%)of owner-occupied residences within Estonia, compared to a rate of 67.4% in theUnited States.

Hong Kong

Government rent in Hong Kong,formerly the crown rent, is levied in addition torates.Properties located in theNew Territories(includingNew Kowloon) or located in the rest of the territory and whose land grant was recorded after 27 May 1985, pay 3% of the rateable rental value.Hong Kong is unique in a way because the government owns virtually all the land and allows for long term leases which is how they make their income off property.Hong Kong levies a property tax known as "rates," which is a tax on the occupation of property or payable by the owner of unoccupied property. This is calculated as a percentage of the property's estimated rental value, assessed quarterly.

Hungary

Municipal governments in Hungary levy an LVT based on the area or the land's adjusted market value. The maximum rate is 3% of the adjusted market value.

Kenya

Kenya's LVT history dates to at least 1972, shortly after it achieved independence. Local governments must tax land value but are required to seek approval from the central government for rates that exceed 4 percent. Buildings were not taxed in Kenya as of 2000. The central government is legally required to pay municipalities for the value of land it occupies. Kelly claimed that possibly as a result of this land reform, Kenya became the only stable country in its region.As of late 2014, the city of Nairobi still taxed only land values, although a tax on improvements had been proposed.

Mexico

The capital city of Baja California,Mexicali,has had an LVT since the 1990s, when it became the first locality in Mexico to implement such a tax.

Namibia

A land value taxation on rural land was introduced in Namibia, with the primary intention of improving land use.

Russia

In 1990, several economists wroteto thenPresidentMikhail Gorbachevsuggesting thatRussiaadopt LVT. Currently, Russia has an LVT of 0.3% on residential, agricultural and utilities lands as well as a 1.5% tax for other types of land.

Singapore

Singapore owns the majority of its land, which it leases for 99-year terms. In addition, Singapore taxes development uplift at around 70%. These two sources of revenue fund most of Singapore's new infrastructure.

South Korea

South Korea has an aggregate land tax that is levied annually based on an individual's landholding value across the whole country. Speculative and residential land has a progressive tax rate of 0.2–5%, commercial and building sites 0.3–2%, farm and forest lands 0.1% and luxury properties 5%.

Spain

Main article:Impuesto sobre Bienes Inmuebles

Taiwan

As of 2010, land value taxes and land value increment taxes accounted for 8.4% of total government revenue in Taiwan.

Thailand

The Thai government introduced the Land and Building Tax Act B.E. 2562 in March 2019, which came into effect on 1 January 2020. It sets a maximum tax rate of 1.2% on commercial and vacant land, 0.3% on residential land and 0.15% on agricultural land.

United States

Main article:Land value tax in the United States

In the late 19th century George's followers founded asingle tax colonyatFairhope, Alabama.Although the colony, now a nonprofit corporation, still holds land in the area and collects a relatively small ground rent, the land is subject to state and local property taxes.

Common property taxes include land value, which usually has a separate assessment. Thus, land value taxation already exists in many jurisdictions. Some jurisdictions have attempted to rely more heavily on it. InPennsylvania,certain cities raised the tax on land value while reducing the tax on improvement/building/structure values. For example, the city ofAltoonaadopted a property tax that solely taxed land value in 2002, but repealed the tax in 2016.Many Pennsylvania cities use a split-rate tax, which taxes the value of land at a higher rate than the value of buildings.

Germany

In 2020 the state parliament ofBaden-Württembergagreed on a modified version of the LVT. Starting in 2025, 1.3‰ of the land value is taxed annually. The modification concerns tax reductions for different land uses such as (social) housing, forestry and cultural sites.Baden-Württembergis the only state inGermanyto replace its previous property tax by a LVT.

The decision has been met with criticism. It's argued that the change unequally benefits wealthy real estate owners who previously had to payproperty tax.

Countries with active discussion

China

China's Real Rights Law contains provisions founded on LVT analysis.

Ireland

In 2010 the government ofIrelandannounced that it would introduce anLVT,beginning in 2013.Following a 2011 change in government, a property tax was introduced instead.

New Zealand

After decades of a modest LVT, New Zealand abolished it in 1990. Discussions continue as to whether or not tobring it back.Earlier Georgist politicians includedPatrick O'ReganandTom Paul(who was Vice-President of the New Zealand Land Values League).

United Kingdom

In September 1908, Chancellor of the ExchequerDavid Lloyd Georgeinstructed McKenna, theFirst Lord of the Admiralty,to build moreDreadnoughts.The ships were to be financed by an LVT. Lloyd George believed that relating national defence to land tax would both provoke the opposition of theHouse of Lordsand rally the people round a simple emotive issue. The Lords, composed of wealthy landowners, rejected the Budget in November 1909, leading to a constitutional crisis.

LVT was on the UK statute books briefly in 1931, introduced byPhilip Snowden's 1931 budget, strongly supported by prominent LVT campaignerAndrew MacLaren MP.MacLaren lost his seat at the next election (1931) and the act was repealed. MacLaren tried again with aprivate member's billin 1937; it was rejected 141 to 118.

Labour Land Campaignadvocates within the Labour Party and the broader labour movement for "a more equitable distribution of the Land Values that are created by the whole community" through LVT. Its membership includes members of the British Labour Party, trade unions and cooperatives and individuals.The Liberal Democrats' ALTER (Action for Land Taxation and Economic Reform) aims:

to improve the understanding of and support for Land Value Taxation amongst members of the Liberal Democrats; to encourage all Liberal Democrats to promote and campaign for this policy as part of a more sustainable and just resource based economic system in which no one is enslaved by poverty; and to cooperate with other bodies, both inside and outside the Liberal Democrat Party, who share these objectives.

The Green Party "favour moving to a system of Land Value Tax, where the level of taxation depends on the rental value of the land concerned."

A course in "Economics with Justice"with a strong foundation in LVT is offered at theSchool of Economic Science,which was founded byAndrew MacLarenMP and has historical links with theHenry George Foundation.

Scotland

In February 1998, theScottish Officeof the British Government launched a public consultation process on land reform.A survey of the public response found that: "excluding the responses of the lairds and their agents, reckoned as likely prejudiced against the measure, 20% of all responses favoured the land tax" (12% in grand total, without the exclusions).The government responded by announcing "a comprehensive economic evaluation of the possible impact of moving to a land value taxation basis".However, no measure was adopted.

In 2000 the Parliament's Local Government Committee'sinquiry into local government finance explicitly included LVT,but the final report omitted any mention.

In 2003 the Scottish Parliament passed a resolution: "That the Parliament notes recent studies by theScottish Executiveand is interested in building on them by considering and investigating the contribution that land value taxation could make to the cultural, economic, environmental and democratic renaissance of Scotland. "

In 2004 a letter of support was sent from members of the Scottish Parliament to the organisers and delegates of theIU's 24th international conference—including members of theScottish Greens,theScottish Socialist Partyand theScottish National Party.

The policy was considered in the 2006 Scottish Local Government Finance Review, whose 2007 Reportconcluded that "although land value taxation meets a number of our criteria, we question whether the public would accept the upheaval involved in radical reform of this nature, unless they could clearly understand the nature of the change and the benefits involved.... We considered at length the many positive features of a land value tax which are consistent with our recommended local property tax [LPT], particularly its progressive nature." However, "[h]aving considered both rateable value and land value as the basis for taxation, we concur with Layfield (UK Committee of Inquiry, 1976) who recommended that any local property tax should be based on capital values."

In 2009,Glasgow City Councilresolved to introduce LVT by saying "the idea could become the blueprint for Scotland's future local taxation".The Council agreed toa "long term move to a local property tax / land value tax hybrid tax". Its Local Taxation Working Group stated that simple [non-hybrid] land value taxation should itself "not be discounted as an option for local taxation reform: it potentially holds many benefits and addresses many existing concerns".

Zimbabwe

InZimbabwe,government coalition partners theMovement for Democratic Changeadopted LVT.

Belgium

Bernard Clerfaytcalled for the overhaul of the property tax in the Brussels region, with a higher tax for land values than for buildings.

Tax rates

EU countries

Country	Average rate	Lowest rate	Highest rate	Year	Name	Description
Denmark	2.612%	1.6%	3.4%	2022	grundskyldspromille / ejendomsskat	The municipality (kommune) decides the local tax rate within 1.6 and 3.4 percent
Estonia	N/A	0.1%	2.5%	2022	maamaks	The tax is determined by the local municipality. If the total sum to be paid annually is under 5€ then no tax is applied. Land containing a residential dwelling occupied by the land's owner is exempt if the size of the land does not exceed 0.15 ha in urban areas and 2.0 ha in other areas. The local municipality can grant further exemptions to pensioners and disabled or repressed people.
Latvia	N/A	0.2%	1.5%	2022	Nekustamā īpašuma nodoklis

See also

• Citizen's dividend
• Classical economics
• Danegeld
• Ecotax
• Equity in taxation
• Excess profits tax
• Geographic information system
• Geolibertarianism
• Georgism
• Inheritance tax
• International Union for Land Value Taxation(The IU)
• Land (economics)
• Land monopolizationandreform
• Land speculation
• Land tenureandregistration
• Law of rent
• Lockean proviso
• Natural resource economics
• Open letter to Gorbachev
• Optimal tax
• Physiocracy
• Pigovian tax
• Progressive tax
• Property rights (economics)
• Property Tax
• Prosper Australia
• Rent-seeking
• Scottish League for the Taxation of Land Values
• Single tax
• Tax reform
• Tax shift
• Value capture
• Wealth tax
• Windfall tax

References

Sources

• Coughlan, J. Anthony (1999)."Land Value Taxation and Constitutional Uniformity".George Mason Law Review.7(2): 261.

Further reading

• Somerset Webb, Merryn(27 September 2013)."How a levy based on location values could be the perfect tax".FT.Retrieved29 September2013.
• "Why a Land Value Tax is Inevitable".29 September 2018.

External sources

• New South Wales Land Tax Management Act 1956 (Australia)