Johannesburg, South Africa has no tax on buildings. The entire property tax is on land. Mason Gaffney, a highly respected land economist and Professor of Economics at UC Riverside, visited Johannesburg. This is what he said about it.
Unhappily, the ANC forced Jo-Burg, against its will, to drop taxation on land values (1918 to 1996). The city is now mired in disinvestment and unemployment. Similar situations occurred in Pittsburgh (Land Value Tax (LVT) dropped in 1990), NYC (LVT was dropped in the late 1930s) and declined until WW2 brought full employment.
"The miracle of Johannesburg: Jo-burg is a Bootstrap City. It should have died when its gold mines played out, like a proper mining boomtown; instead it remains as the economic capital of its nation and half a continent."Johannesburg defies most laws of urban economics, e.g. that mines create no great cities. Explainers still site the mines, but its mines have played out; it should now be a ghost town. It has no harbor, no water transportation, nor even any gravity water supply. It is, in fact, on a ridge top, the Rand or "reef," at an elevation of 5,000 ft. Unlike Chicago or Boston, it has no sunburst of rail lines, except perhaps what it has attracted itself. It is "on the main rail line," Explainers say, but so are 1000 miles of other sites. The natural site lacks outstanding amenities, and certainly can't hold a candle to Cape Town. Jo-burg has no governmental economic base. Surrounding farmland is poor.
Why Johannesburg? Why is it the largest city, the center of finance, industry, commerce, and international air travel? As a public finance economist I may overvalue incentive taxation, but Jo-burg has it. The property tax is on site value only, and at a high rate: they tell me it is 4%. This is what makes Jo-burg distinctive. Challenge and response: Jo-burg had to do something right in order to survive, and that is what it did. It not only survived, it became and remains Number One. Give me a better explanation and I'll back off. I haven't heard one yet."
However these examples do show the stark difference of the before and after. But the detractors will no doubt blame the transition from apartite and the world slumps (2008 and the 1930s) but not the real reason for the decline - the removal of LVT.
Mason's observations are spot on. Jo-Burg is in a God forsaken part of South Africa and had no right to be the economic super-city for all Southern Africa below the equator. Nothing was going for it at all. It comes across as an artificial creation I suppose like Brasilia. Mason hit the nail on the head in defining the success of this anomaly. Land Value Tax (LVT) can makes cities prosper where they have no right to.
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Originally Posted by eduardo89
What don't you understand? 
