B.C.’s Big Fix: Land Value Tax
Solving our biggest challenges begins with the biggest asset in our economy: land.
Land value tax can help restore affordability and fairness — replacing anti-productive taxes on income and property, lowering housing costs, and better rewarding the workers and builders who power B.C.
Updated September 2025
At-a-Glance
We model 3 scenarios for a Land Value Tax (LVT) in British Columbia:
1) Replace Anti-Productive Taxes on Property: an LVT capturing 0.8% of land value could generate enough revenue to fully replace all major property-related taxes—eliminating municipal and provincial property taxes, property transfer taxes, and the speculation & vacancy tax (SVT).
2) Replace Taxes on Income & Property: an LVT capturing 1.8% of land value could replace all provincial personal income and corporate taxes and all property taxes in B.C.
3) Annual Household Rebates: an LVT capturing 0.7% of land value could provide every B.C. household an annual rebate of $6,500, leaving nearly all households with more income.
Scenario 1: Replace anti-productive taxes on property
Scenario 2: Replace taxes on income & property
Scenario 3: Annual household rebates
Introduction
British Columbia faces one of the most acute housing affordability crises in the country. Homes are expensive primarily because land is expensive. While homes deteriorate and depreciate over time, losing value; the land beneath them rise in value over time thanks to the work and investments of society around it. This is why property has generally been such a good investment and store of value — even if the house loses value, the publicly-financed land appreciation more than makes up for it.
When we talk about rising home prices, we’re actually talking about rising land prices. For the average residential property in Canada, land accounts for nearly 60% of the property price, but in B.C.’s urban areas this is as high as 80%. Over the past 20 years, the combined value of all homes in Canada has doubled, while combined land values have nearly quadrupled. Taken together, these trends have inflated property prices far beyond income growth, leaving housing increasingly unaffordable and homeownership a distant prospect for too many British Columbians.
Land Value Tax (LVT) offers a fair and practical solution. LVT can shift the tax burden away from workers, builders, and businesses, and onto land value created by public investments and infrastructure. This could bring down prices and encourage more housing supply, while transforming the housing market from primarily serving investors to serving families and the broader community.
How LVT works
When you tax something, you typically get less of it. Taxes on income, productive capital, and improvements discourage work, productive investments, and construction. Taxes on pollution and smoking have the same effect, except they’re intentionally designed to discourage unwanted behaviours.
However, this does not apply to taxes on land for the simple reason that its supply is generally fixed— that is, with very few exceptions, you cannot change the amount of land available. As a result, raising taxes on it does not reduce the amount of land or create the anti-productive outcomes you see with most other taxes.
The inverse is also true. When you lower taxes on a good, you encourage more consumption of it. This typically spurs more production, bringing prices to a new, often lower, equilibrium. However, lowering taxes on land spurs demand without a corresponding increase in supply, leading to higher overall prices.
Real estate, which is predominantly land value, is by far the largest tax-shielded asset class in Canada and the single biggest driver over rising net worths. This makes it an attractive long-term investment, particularly given its double status as both a financialized investment and a primary input to society’s needs. This, we believe, is a central driving force of our affordability and productivity crises.
Taxing land lowers its returns as a long-term investment, bringing down prices and shifting profits away from holding land towards putting it to productive use. This could lower the cost of new builds and the amount of mortgage debt households need to take on when buying a home.
On its own, land value taxes would go a long way to reverse the incentives at the centre of our housing crisis. But the full opportunity comes from how LVT revenue is used to benefit the broader community.
Replacing Property Tax with Something Better
A Land Value Tax is a tax on the unimproved value of land—not the buildings, homes, or improvements constructed on it. Unlike traditional property taxes that penalize people for developing land, LVT targets only the location value—value created by public investment, infrastructure, and the broader community, not by individual effort.
LVT is often proposed as part of a tax shift—replacing existing taxes that discourage productivity, investment and development. The most common application is to shift property taxation off of buildings and improvements, and onto land value alone.
This approach is commonly described using various terms:
Split-rate property tax: A system where land is taxed at a higher rate than buildings. (Lincoln Institute)
Building exemption: A full or partial exemption of improvements from property taxation. (Governor of Colorado)
Universal property tax abatement: A policy that reduces the tax rate applied to all privately-created building values. (Strong Towns)
These all describe variations of the same basic idea: Shift taxes off what people build, and onto what makes land valuable in the first place—location, infrastructure, and value created by the community.
Simplified visualization of Property Tax vs. LVT
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Pennsylvania
Harrisburg, PA adopted a split-rate tax in 1982, taxing land at four times the rate of buildings:
Vacant buildings declined by 90%
The number of businesses increased by 360%
90% of property owners paid less in taxes
Allentown, PA adopted a similar system in 1996, taxing land at five times the building rate:
Construction and renovation increased by 32% (1.8× higher than a comparable city)
70% of households saw tax reductions
In at-risk neighbourhoods, that rose to 90%
Detroit
The Lincoln Institute of Land Policy estimated that an LVT property tax shift proposed in Detroit could:
Provide tax relief for 97% of residents and 70% of small businesses
Reduce tax delinquencies, foreclosures, and speculation
Spur inclusive economic development, support homeownership and promote neighbourhood revitalization.
These examples show that removing taxes on buildings can reduce barriers to housing supply, support local economic growth, and deliver more equitable tax outcomes.
Beyond property taxes, LVT could also replace income taxes on employment and businesses. This would boost returns to work and investments, creating a more competitive and dynamic B.C. economy overall. Alternatively, LVT revenues could be returned back to residents as annual household rebates, leave nearly all households with more disposable income and giving everyone a direct stake in the province’s economic progress.
Below, we explore 3 scenarios for LVT in B.C.:
Replacing anti-productive taxes on property
Replacing taxes on income and property
Delivering annual household rebates
Scenario 1: Replace anti-productive taxes on property
We’ve modelled a bold version of this policy where all taxes on buildings and improvements are eliminated, and replaced by a single Land Value Tax. An LVT capturing 0.8% of land value in B.C. could generate approximately $12 billion in annual revenue, sufficient to replace:
All property taxes (municipal and provincial) — meaning you can build more and better without having to pay higher taxes
All minor property taxes (SVT, property transfer taxes) — meaning fewer hidden expenses in moving to right home for your needs
Due to data limitations across B.C. municipalities, we have not modelled partial exemptions or marginal shifts. Instead, this model demonstrates what is possible with a full transition to land-only property taxation.
Capturing 0.8% of land values would require a __% tax rate on non-agricultural land. Since LVT lowers the price of land, a higher tax rate is necessary to capture the same percent value. In this scenario, a _% LVT would reduce land prices by __%, resulting in a tax burden equivalent to _% of present prices.
The average B.C. house price of just over $1,000,000 would decrease by __% to just under $_, drastically reducing the immense debts that home purchasers must incur and spend their lives paying.
What this looks like
A median-income family ($101,520 in 2022) with an average residential property for that income of, $817,000 (of which $517,000 is land) would:
Pay roughly $____ in LVT
Save $____ in Property Taxes
Save $____ in Provincial Income Taxes
Net approximately $___ less income
While a sudden change to this effect might leave this homeowning family paying slightly more, implementing these changes over time would likely raise work incomes significantly. Meanwhile, nearly every renter would be better off and enjoy the benefits of the tax cuts.
Scenario 2: Replace taxes on income and property
With an LVT capturing 1.8% of present land values, B.C. could eliminate:
All provincial personal income taxes - meaning you keep more of what you earn
All property taxes (municipal and provincial) - meaning you can build more and better without having to pay higher taxes
All minor property taxes (SVT, property transfer taxes) - meaning fewer hidden expenses in moving to right home for your needs
All corporate income taxes - meaning more capital for much-needed investments and higher profitability for business and the workers they employ
Capturing 1.8% of land values would require a 5.4% tax rate on non-agricultural land. Since LVT lowers the price of land, a higher tax rate is necessary to capture the same percent value. In this scenario, a 5.4% LVT would reduce land prices by 68%, resulting in a tax burden equivalent to 1.8% of present prices.
The average B.C. house price of just over $1,000,000 would decrease by 40% to just under $600,000, drastically reducing the immense debts that home purchasers must incur and spend their lives paying.
What this looks like for households
A median-income family ($101,520 in 2022) with an average residential property for that income of, $817,000 (of which $517,000 is land) would:
Pay roughly $8,600 in LVT
Save $3,200 in Property Taxes
Save $4,700 in Provincial Income Taxes
Net approximately $700 less income
In our first two scenarios, we see the potential for land value (B.C.’s greatest asset) to replace anti-productive taxes on improvements, workers and overall productivity. This change could transform the competitiveness and liveability of the province by making it a much more affordable place to live, work, and invest.
Of course, such major changes to the tax landscape can take place selectively, incrementally, and gradually over time. We can start by replacing the most anti-productive taxes and build from there.
Scenario 3: Annual Household Rebates
A more moderate LVT capturing 0.7% of land value could provide every B.C. household with an annual rebate of $6,500.
This would more than offset the increased tax cost for nearly every homeowner.
It would help compensate the millions of renters who have contributed to a booming housing market, without being able to benefit from its upside.
It would stimulate the economy by unlocking more unproductive land capital and transforming it into spending power.
It would ensure all British Columbians can benefit from rising productivity and prices, not merely those already with a foot in the door of the housing market.
Capturing 0.7% of land values would require a 1% tax rate on non-agricultural land. In this scenario, a 1% LVT would reduce land prices by 28%, resulting in a tax burden equivalent to 1.8% of present prices.
We see in this example that even a very modest LVT of 1% could transform the prospects of B.C. families. The average homeowning family would see their net income rise by $2,500 even after accounting for the tax. The average renting family would see their income rise by nearly the full amount of the rebate, $6,500.
In addition, housing prices would fall by an average of 16% across the province, and even more in urban centers where housing is in highest demand.
What this looks like for households
A median-income family ($101,520 in 2022) with an average residential property for that income of, $817,000 (of which $517,000 is land) would:
Pay roughly $3,500 in LVT
Receive a $6,500 dollar rebate
Net approximately $3,000 more income
This scenario would leave all renters and all but the top 10% of homeowners better off from an income standpoint, while still enabling housing prices to come down.
Why B.C.?
British Columbia is uniquely positioned to benefit from a shift to land value taxation:
B.C.’s property assessment system was designed for this: B.C. is the only jurisdiction in Canada that independently and annually assesses the value of land separate from buildings, providing reliable data for LVT. In fact, B.C. Assessment may have been intentionally designed to eventually do land value tax.
Land dominates property value: In Metro Vancouver, where the housing affordability crisis is most acute, over 80% of property value is in the land alone, vs. an average for 60% across Canada.
A New Model for Fairness, Affordability, and Growth
This tax shift would reward those who build homes and contribute to the economy—not just those who hold land and wait for it to appreciate. It’s a simple idea with big benefits. Fairer taxation, more housing, and no new taxes—just better ones.
Our model shows that British Columbia can do this today—and by showing what’s possible, we hope other provinces will be inspired to follow.
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So long as land—what drives home values—is an investment, housing will be expensive. A land value tax would reduce demand for land as an investment, encourage more housing supply where needed, and help restore affordability for all.
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Report: $240B/year of economic rent from Canada’s land and natural resources
In this paper, we estimate the total economic rents (or unearned profits) from Canada’s land and natural resources that could be captured as new revenue, without inhibiting productive investment. A land value tax that captures 3/4 of the rental value of land could generate enough revenue to raise the 0% personal income tax bracket to $88,000/year.