Impact of Land Value Tax on the Equity of Planning Outcomes

Abstract

The question of land ownership is fundamental to any modern society and has been blamed as the root of numerous social inequalities. This paper explores one potential solution to the land question, Land Value Tax (LVT), which was first popularised in the 1880s by Henry George. Despite its long history, LVT has not been widely implemented, but recently proposals to replace existing property taxes with this form of taxation have re-emerged on the political scene. While the Welsh Government has recently explored the idea of introducing an LVT, there are limited studies on this form of taxation in the context of a discretionary planning system, such as the Welsh planning system. This paper conducts exploratory qualitative research using Wales as a case study. Data was collected via semi-structured interviews with experts across various related fields, primarily within taxation and planning, to establish the potential effects of LVT in practice, with a particular focus on how it might affect the equity of planning outcomes. Overall, the research showed that despite the strong theoretical potential, fundamental practical issues would diminish the ability of LVT to effectively influence planning. LVT is argued to be largely incompatible with a discretionary planning system (e.g., the Welsh planning system), and therefore, the research concluded that many of the potential benefits of LVT could be better achieved through reforms to existing taxes and planning processes, particularly land value capture mechanisms.