By Jennifer Maiko Bradshaw
OneCity councillor Christine Boyle has an incredibly important motion coming up this week.
It’s got the Vancouver and District Labour Council excited.
Others have advocated for a land-value tax before. UBC professor Patrick Condon called it the “tax to solve the housing crisis”. Raza Mirza, council candidate of ProVancouver, also wrote an article in favour of a land-value tax.
So what’s all with all the excitement? What is a land-value tax, anyway?
Land-value taxes were popularized in the 19th century by Henry George, a progressive political economist. His central claim: people should own only the value that they produce themselves, and not the economic value of the land itself. Land prices are all about location, location, location. Most increases to its value, particularly in urban centres and suburban perimeters, comes from the community at large.
In Vancouver, land values are rising so quickly that landowners are earning hundreds of dollars an hour simply sitting on it. Some landowners are also disproportionately enjoying value lift caused by public infrastructure, such as the Canada Line or a nearby park, but aren’t currently required to share that value lift with the public.
That value lift could instead be collected by a land-value tax. Because this lift is not collected on productive activity by the owner, this is what economists call an “efficient” tax—it does not depress productivity, unlike income taxes. Taxes on land are equitable and fair, and furthermore, economically efficient.
So why haven’t we already adopted the land-value tax?
The main problem is political: the landowner lobby would fight it tooth and nail, as they have fought the miniscule increase in the school tax. The landowner lobby is a special interest group that enjoys considerable mobilization advantages. While the benefits of any revenue collected will be public, nonexclusive, and widespread, this special interest group has a concentrated interest in preventing the tax.
On the one hand, the large group of individuals experiencing a small increase in their standard of living don’t have much reason to actively mobilize or raise funds to support the tax.
On the other hand, this small group of wealthy landowners has a very good reason to mobilize, and do. This pattern is seen often with special interest groups and is a cause of democracies adopting policies that aren’t in the best interests of the electorate as a whole; for example, the powerful sugar lobby in the U.S. or the rice lobby in Japan advocate for tariffs that protect them from competition, but keep prices high for consumers of those goods in their country.
The squeaky wheels get the grease.
We might be able to overcome this collective action problem and implement a land-value tax. The only loser is the passive, rent-seeking landowner. The question is if the public can mobilize effectively to drown out the few but loud voices pressuring our governments to act in their best interests over the interests of the public.