Why tax buildings?

1. Levying rates on buildings leads to less building and less improvements.

2. Removing rates and taxes from buildings results in more buildings.

So basic! It is self-evident – but it still needs to be said.

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AAV levies rates on buildings.
Why do we continue to use a system that stifles building construction?
See: What’s wrong with AAV?

Land Value Rating (LVR) levies rates on the land only. That is fair and just, because services provided by Councils add value to the land, but not to buildings.
See: What’s right with LVR?

Changing to Land Value Rating is easy. All that is needed is for part of the rate now levied on ‘land and buildings’ to be levied on the land only. The tax rate on buildings would be reduced to zero, while rates on land would be increased correspondingly. Overall, the rates revenue received by the Council would remain the same.

Improved land (houses, etc) would pay less. Vacant land would pay more. That is fair. People holding land out of use should be penalized. Too many people have a vested interest in the vacant land industry!

Land should be used by people needing housing, or wanting to start a business. Holding land out of use decreases the amount available for enterprising people, and assists only the speculators who prefer not to work for their income.

demands that we collect the land value that is created by the community, for community benefit.

Tasmanians, be warned. There is a push to replace the absurd AAV system with the equally absurd Capital Improved Value system (CIV). It is misguided thinking. Access Economics said the Land Value Rating is the superior system based on their eight criteria, and they used muddled thinking on the final criteria, Ability to Pay. The argument that CIV reflects better capacity to pay is demolished here.

AAV has lost favour because it penalizes production and high quality development. Capital Improved Value suffers from exactly the same failings. Think for yourself, and demand that Land Value Rating be introduced.

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