The Case for Land Value Capture
[A statement submitted to the United Nationsl ECOSOC
High Level Segment
conference scheduled for 2-9 July, 2012]
Land Value Capture is a creative public finance policy that utilizes
incentive taxation mechanisms that promote productive capacity,
employment and decent work while enabling inclusive, sustainable and
equitable economic growth.
UN Habitat Action Agenda Section B. 56(h) states: "Consider the
adoption of innovative instruments that capture gains in land value
and recover public investments." The UN Habitat Global Land Tool
Network advocates public recovery of land values as a fair and
effective way to meet the Millennium Development Goal of significantly
improving living conditions for at least 100 million slum dwellers by
The Vancouver Action Plan - founding document for UN Habitat -
Social justice, urban renewal and development, the
provision of decent dwellings and healthy conditions for the people
can only be achieved if land is used in the interests of society as
. Taxation should not be seen only as a source of
revenue for the community but also a powerful tool to encourage
development of desirable locations, to exercise a controlling effect
on the land market and to redistribute to the public at large the
benefits of the unearned increase in land values
increment resulting from the rise in land values resulting from
change in use of land, from public investment or decision or due to
the general growth of the community must be subject to appropriate
recapture by public bodies.
Land value capture - aka land value taxation - is an equitable,
efficient way to obtain public revenue. The more governments rely on
land value capture for revenue, the lighter need be the tax burden on
labor and production.
Land rent (surplus value attaching to land) is a significant amount.
Detailed studies by Land Values Research Group indicate that surface
land rent is at least one third of GDP in many countries.
When robustly implemented, land value capture eliminates incentives
for land speculation; stabilizes land prices; and maintains land
affordability. Recovered land rent can 1) operate, maintain and extend
services and infrastructure; 2) fund revolving loans for housing and
micro enterprises; and 3) repay bonds issued to build public
Programs to house poor people often flounder because unaffordable
housing prices are primarily the result of rising land values compared
to purchasing capacity. Land value capture reduces and stabilizes the
costs of land. Low-income families can thus more easily secure shelter
at prices they can afford.
Land value capture promotes rational and balanced development. Growth
radiates smoothly from more intensive use in the urban centers to
rural areas without pockets of vacant or poorly utilized land in
between. Urban sprawl is curtailed and rural land is more readily
retained in its natural state, available for parks and nature
preserves. Rational and balanced development decreases costs for
transportation, utilities, fire and police protection. Land value
capture is therefore an essential component of good urban planning.
This creative approach to financing public goods and sustainable
development is a holistic and practical policy directive that can be
implemented on local, regional, and/or national levels.