Is there a downside to Land (Site) Value Rating?

No criticism of Site Value Rating has been made that can withstand basic scrutiny!
Some of the arguments against it are addressed in this paper.

Flats and Units
Opponents of Site Value Rating used to build their case around the benefits that accrue to well-improved properties, such as flats and units, factories and hotels. But these are assets, adding value to the community, with a high public demand for them. That they receive a benefit is incidental. As long as they pay for the use of their sites, nobody suffers.

The presence of extra people residing in flats, or houses, gives added value to the land, not only to the site on which the flats are built, but to the total land value of the town. It has been claimed that under Site Value Rating, flats do not contribute a fair proportion of revenue to the cost of the garbage services. But large houses, and houses with greater numbers of people, use more services than sole occupants.

It should be noted that businesses do not create the extra land values attaching to business sites. People do. Businesses thrive where people congregate. More people create more business, leading to higher land values.

Does Site Value Rating encourage too many houses on small areas of land?
No; crowding cannot occur if planning and discerning rules are effective.
With home sites reduced in price and improvements exempt from rates, builders would be encouraged to erect the best type of building. It would not be in their interest to spoil the appearance of the site or locality.

Will a Site Value Rate be passed on to buyers?
Would a buyer be compelled to pay a higher price because rates are levied on land values?
No. Competition to sell land actually reduces the price to legitimate builders.

The ‘land is not always a good investment’ argument.
When land rises in value, the profit goes into the speculators pocket. It is a direct loss to the community responsible for the increase in land values.
When a land speculator loses due to land values falling instead of rising as expected, the amount lost by the speculator is not gained by the community.
Hence, the speculator has no just claim for compensation from the community.

The ‘poor widow’ argument
The poor widow, who has a valuable block of land with a small cottage on it, but pays the same rates as a person who has a massive house on their block, may seem to be disadvantaged.
But, it costs the local authority just as much to put the road and footpath in front of each block, and each receives the same service. If a person is in financial need, it should be addressed through the social security system, rather than the rating system.

Ability to pay argument
This argument has run its course. The Federal government is responsible for equity between taxpayers. Local government should provide services, but not attempt to put a separate and additional regime in place to attempt to refine the Federal system. Rates are paid for local services, on the basis that all properties share the benefits.
Although local government is more than just a business, providing services, it is nevertheless important to recognize that it must run on established principles of good business. No business runs on the ability to pay principle. Customers pay in proportion to the benefits received.

Ability to Pay is a nonsense proposition, unless all of a person’s financial details are disclosed. Who wants to go down that path? Check out this link for a demolition of the idea that a (mortgaged) valuable property makes a person richer than a mortgage-free owner.