LVR: Natural Solution

Land Value Rating (LVR) - the natural source of revenue

Rating Principles

The true principle of rating is that all citizens should contribute to local revenue on the basis of benefits received from local expenditure.

That is, it requires that payment be proportionate to benefit given.
The ideal would be for a local authority to receive the additional income directly associated with the benefit.

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The principle recognises that land owners benefit especially from the services provided by local government, in a way that no other section of the community does. Landowners receive the capital gain on their property, due to the services provided, and paid for, by the whole community. It is an unearned windfall. Hence, they should be expected to meet the cost of providing and maintaining these services.

If a Council spends its revenue wisely, it makes the sites in its area better places in which to live or to use commercially. Roads, drainage, parking, lighting, cleaning, parks, gardens, halls, libraries, playing areas, and health services make land sites more desirable. The opportunity to benefit from these services is directly reflected in the market price for sites.

It is absolutely just that the landholders who continually receive benefits provided at the expense of the community should pay the community for the privilege.

Should local government rate be based on improved or unimproved value of land?
The New South Wales Royal Commission on Local Government Finance and Valuation, 1965 gave a clear-cut answer to the question: "Is a rate on land the most appropriate method of financing the services which councils are authorised to provide, and if not, how should they be financed?" It stated, “A rate on land is the most appropriate method of financing the services which councils are authorised to provide under the Local Government Act.

Land Value is a “people’s value”
Land is nature’s free gift to all mankind. Its value comes into existence with the presence of people

  • If people moved from a particular area the land values would disappear with them, and arise in the new area where they decided to settle.

  • Land value is entirely due to the presence and enterprise of the community.

  • Community services such as schools, transport, health centres, water, sewerage, roads and kerbing all increase the site value.
Land value is community created value. It rightfully belongs to all of the community.

  Land value measures what the community has done for the land owner.
The value of their improvements measures what the owner has done for the community.

The justice of Site Value Rating
Site value differs from improvements. Increased land values are not due to the effort of any individual, but arise because of the presence of the community. Justice decrees that it be taken into the communal treasury and used to defray the costs of the social needs of the people.

  • Land value rating is a proper source of revenue; land values rise because of the presence and industry of the people and the services of government.

  • Land value rating measures the relative advantage of the use of a particular site. The rate levied is a fair and equitable charge for services rendered.

  • Land value rating encourages improvement to land by not rating the improvements.

  • Land value is a constant value and is not affected by the depreciation of improvements.

  • Land value rating on unimproved value has the effect of equality in rating irrespective of the level of development and therefore usage of services.

  • Land value rating ensures vacant allotments pay a fair share for rates.

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A new society
Once Land Value Rating is established, and well understood, it will be possible for the populace to consider the collection of land value on a broader basis, to fund State and Federal services too. The same rules of efficiency and justice apply. More public revenue from land should mean lower taxes on income and production.

A different type of society is possible, if only we are prepared to acknowledge the difference between public and private enterprise:

  • Public investment should fully reward all of us. The returns on that investment belong to all of us, collectively.

  • Private enterprise should fully reward the individual. Society has no right to any of the rewards of that enterprise, which is truly private property.

The collection of the rental value of land will initiate an upward spiral that will revolutionise the way we live, leading to an economy that is both fair and efficient, an environment that is valued at its full worth, and a world without privilege. In short, it will create a new society that properly values each individual and operates with true freedom.

The upward spiral of social advance
Land values are affected by community amenities such as cycleways, streetscapes, parks and gardens, and local clubs and societies. Collection of land rent provides the funds to create and nurture these amenities, and thus inspire an upward spiral of community activity.

The collection of the rental value of land encourages high quality developments, leading to even higher land value. Although land rates and taxes would then also increase, as long as the increased return is shared between the developer and the public authorities, rational developers will continue to invest, and offer ever higher quality developments.

  • More parks, leading to higher land values and thus more public revenue

  • More infrastructure, leading to to higher land values and more public revenue

  • More services, leading to higher land values, and more public revenue

  • More public revenue from land means more parks, infrastructure and services

The upward spiral could continue infinitely, as long as the community ensures that the value it creates is collected and used for more public benefit. That is my vision for the future. “Opportunity for all - Privilege for none”

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