Concerns about urban policies also raise questions about the current
relevance of Georgist ideas. For example, it is pertinent to ask whether
a more uniform land tax would encourage the more efficient utilisation
of urban space. George argued that, in order to cover the costs of a
higher rate of land tax, landowners would be forced to put their land
to its most productive use, and could not afford to hold it idle. Here
is a clear link with the modern concerns to discourage ‘urban sprawl’ and
to promote ‘urban consolidation.’ To the extent that a higher
land tax would encourage the development of more housing in existing
urban areas, the pressures for housing development in outlying areas
would be significantly reduced. This, in turn, could reduce the burgeoning
demand for transport that is currently characteristic of large cities.
Land tax also impacts on the politics of peripheral urban expansion.
Currently, the prospect of huge capital gains resulting from decisions
by local governments to rezone land from rural to urban acts as an incentive
for landowners on the fringes of built-up areas to lobby for changes
that will allow increased development. Hence, landowners push for rights
to subdivision, irrespective of whether or not there is actual demand
(Day, 1995: 3). By creaming off the gains from windfall increases in
land values, land tax obviates this bias towards relentless urban expansion.
However, the question remains: would a uniform land tax be sufficient
to produce more efficient patterns of urban development? Or would there
still be a need for direct land use controls? Land tax can certainly
be a tool for discouraging the wasteful use of land. It tends to discourage
people from purchasing excessive amounts of land or leaving it idle.
However, it may also encourage the overdevelopment of land in order to
produce the income stream necessary to pay the higher rate of tax.
Critics of urban consolidation such as Patrick Troy (1996) have examined
the potential problems of such overdevelopment, including a range of
environmental impacts such as altered hydrological processes. It seems
to be an overly bold claim that a Georgist land tax alone would be sufficient
to achieve optimal urban development patterns. Land use controls a necessary
adjunct to land tax - in setting minimum requirements for green space,