Department of Real Estate and Planning University of Reading, United Kingdom
Adam Smith favored a land value tax, arguing that a tax on unimproved land value would not harm economic activity and would not increase land rents.
Across South Africa, Estonia, Australia, Denmark, New Zealand, and Namibia, "there is no firm evidence that LVT was a consistently effective tool for bringing land forward for development." Instead of taxation, more direct measures such as land use planning, development control, and infrastructure investment may be more effective.
Particular types of land can be exempted from land value taxation. Estonia exempts nature reserves, church land, and public water bodies. Queensland Australia exempts land used for agriculture.
Lack of transparency and inconsistency in land valuation methods has led LVT in Australia to become one of their more disliked and least understood taxes.
The technical difficulty of how to value unimproved land, while not insurmountable, is considerable and prone to generating confusion and a lack of transparency. There needs to be a good understanding regarding what LVT is and what it is supposed to achieve and sufficient resource put behind the valuation exercise.”
Whether or not a LVT incentivizes land development depends largely on whether the value of land is assessed according to its "highest and best use" (HABU) or its existing use.
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Implementing a Land Value Tax: Considerations on Moving from Theory to Practice
Land Value Tax
Policy Design Details