Pre-development Value

 

 

 

Nic Tideman: The Case for Site Value Rating

One activity that is sometimes thought to be unfairly affected by site value rating is farming. To a substantial extent, this concern reflects a misperception of the relation between urban and rural rents. The vast preponderance of land rents are urban. Also, it is important to remember that the basis of site value rating is the unimproved value of land. Much of what farmers do increases the value of land in ways less obvious than buildings. Site value rating of agricultural land should be applied on the basis of what the rental value of the land would be in a completely overgrown condition. But there is an important element of validity in the argument of farmers that they are treated unfairly by site value rating. When site value rating is used to finance public services, farmers can justly say that their land does not benefit from public services in the way that urban land does. Indeed, it has been said above that public services should be financed from the increase in land rents above their value in the absence of economic development. Site value rating of agricultural land, and of the pre-development value of urban land, has as its basis the idea that provenance of nature is the common heritage of all citizens. If we wish only to finance local public services and to reward activities that increase surrounding land rents, then the agricultural value of land, and the pre-development value of urban land should be excluded from the tax base. These should be taxed only when the nation is prepared to accept, and be bound by the consequences of, the principle that the provenance of nature is the common heritage of all citizens. ... read the whole article