Information AboutLand Tax |
| CATEGORIES ABOUT LAND VALUE TAX | |
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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 person {Link without Title} . An additional argument for LVT is that land values are created mainly by changes that are not the result of the landowner's own effort; for example, the creation of new infrastructure, or a re-zoning, can dramatically change the value of a piece of land. An LVT provides a way of recouping some of the windfall 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 works in reverse also. If a development has a negative impact (the closing of a nearby transport link, for example) on land values, the owner of a site is compensated by an automatic ''reduction'' of the charge on the property. The Tax is often said to be justified for 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. The biggest problem that has been found in practice with Land Value Tax lies in the valuation process. The notional value for taxation purposes is often allowed to diverge from the actual market value. When this is allowed to go too far, it leads either to people paying an unfairly high or low amount of tax, or to sudden large changes in the level of the tax owing to the politically unpopular revaluations to market value occurring in a single year after long periods of no change rather than small changes occurring every year in step with changes in the true market value. ARGUMENTS/BACKGROUND FOR AND AGAINST In the 1931 Budget included an LVT, but before it came into force it was repealed by the Conservative-dominated National Government that followed shortly after. Claimed advantages There appears to be a correlation between high LVT and growing economic prosperity, as predicted by Georgist theory. {Link without Title} In Mikhail Gorbachev suggesting that Russia use Land Value Taxation in its transition towards a Free Market economy. Claimed advantages. (as per the )
And is it fair? Land (unlike goods and services) has no cost of production. If an ample supply of land of equal desirability were available everywhere, there would be nothing to pay for its use. In reality land acquires a scarcity value owing to the competing needs of the community for living, working and leisure space. Thus land value owes nothing to individual effort and everything to the community at large. It belongs justly and uniquely to the community. Conversely, the reward for individual effort can belong only to the one who earns it, to spend, save or give away as he or she may see fit. Because of differences in positional advantages, fertility or natural resources, some locations are more desirable than others. Demand for access to these features gives land its rental value. Land Value Taxation, being assessed on these values, is fair in its incidence. Criticism/Arguments against "If it's so good, why is it used in so few places?" Marx's criticism of land tax (as anything more than one of the measures to be imposed during the move to communism) was relatively influential - he argues that "The whole thing is...simply an attempt, decked out with socialism, to save capitalist domination and indeed to establish it afresh on an even wider basis than its present one." He also opposes the way that land value tax emphasises the value of land - arguing that "Theoretically the man George is utterly backward! He understands nothing about the nature of surplus value and so wanders about in speculations which follow the English model but have now been superseded even among the English, about the different portions of surplus value to which independent existence is attributed--about the relations of profit, rent, interest, etc. His fundamental dogma is that everything would be all right if ground rent were paid to the state." See Marx's letter at [http://www.marxists.org/archive/marx/works/1881/letters/81_06_20.htm] IMPLEMENTATION/ADVOCACY LVT is charged in Estonia , 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. Some cities in the has taxed land at a rate six times that of improvements since 1975, and this policy is credited with reducing the number of vacant structures in downtown Harrisburg from about 4,200 in 1982 to less than 500. 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 is also used as a generic term for certain kinds of natural resources other than areas of ground.) ACTUAL LAND VALUE TAX IMPLEMENTATIONS List of local governments which tax land at a different rate from improvements Local governments in Pennsylvania which use the two-rate tax system as of 2003 include:
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