Why shift taxes to land value?

Land value is generated from the work and investments of the community around it, like public infrastructure and economic activity. We can capture and reinvest some of this publicly created value to fund tax relief for workers and builders; rebates to every household; and housing, transit, or other public needs. We call this land value return.

One way to do this is a land value tax (LVT), a levy on the value of land itself, excluding the buildings or improvements on it. Unlike taxes on income or buildings, which discourage work and construction, LVT doesn’t penalize productivity. It encourages efficient land use and development over idle speculation. That’s why economists often call it “the perfect tax”, one that could help address key drivers of the housing crisis. Variants of LVT have been successfully implemented around world including in Australia, Taiwan, Singapore, England, and Estonia.

For a quick primer, read the Land Value Tax One-Pager by the Center for Land Economics: “To spur housing growth, tax buildings less and land more”.

How can LVT benefit the housing market and overall economy?

By shifting taxes onto land, away from income or buildings, we can realign incentives in our economy to:

• build more housing and improve affordability

• discourage anti-productive land speculation

• increase returns to employment, business activity, and construction

Research by Common Wealth Canada shows how an LVT in BC could generate enough revenue to replace all property and income taxes in the province. Read more at commonwealth.ca/bc-lvt.