A
land value tax (or
site valuation tax) is a levy on the unimproved value of
land. It is an
ad valorem tax on land that disregards the value of
buildings,
personal property and other
improvements. A land value tax (
LVT) is different from other
property taxes, because these are taxes on the whole value of
real estate: the combination of land, buildings, and improvements to the site. An LVT
does take into account the effect on land value of location, or of improvements made to
neighbouring land, such as proximity to public works or a shopping complex.
Although the efficiency of a land value tax has been known of since
Adam Smith,
[1] it was perhaps most famously promoted by
Henry George in his best selling work ‘’
Progress and Poverty’’ (1879). George argued that the value of land was created by the community, and therefore its rent belonged to the community.
[2]
Land value taxes have been implemented in Taiwan (
Republic of China),
Hong Kong,
Singapore,
Russia and
Estonia, as well as in some localities in the American state of
Pennsylvania, the Australian state of
New South Wales and
Mexicali, in
Mexico. The government of the
Republic of Ireland is considering the introduction of an LVT.