Frequently Asked Questions

Land Value Tax, usually known as "LVT", is a system of property taxation that taxes the unimproved value of "land". "Land" in economics is all natural resources that are in a fixed supply, and includes actual land - sites and locations of buildings and so on - but also in the theory includes things like airspace, the electromagnetic spectrum. Because the supply of land is fixed ("They ain't making it any more") it cannot increase to meet demand so its value changes.

Unlike other forms of property taxation, such as the Council Tax in the United Kingdom, LVT only applies to the value of a site regardless of what is or isn't built on it. It doesn't penalise the capital investment in improving or making more efficient use of a site. A site with the potential in planning to hold ten houses would be taxed at the same value whether it actually had ten houses built on it (and effectively the tax was split between ten home owners) or was a run down industrial site bringing negligible rental income to its owner. The owner of such a site would therefore have an incentive to develop the site to its full potential within its permitted planning use.

Because it doesn't distort decisions about the investment of labour or capital it has been regarded by many "free market" economists, such as Adam Smith and Milton Friedman, as a better form of taxation than taxing incomes or capital wealth, and it's most prominent proponent, the American Henry George, proposed that it be a "Single Tax" replacing all other taxes on economically beneficial processes such as income and investment.