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, for example.
Local government planning controls are also important to prevent incompatibility
of land uses, such the development of hazardous or unhealthy industrial activities
adjacent to residential areas. Targeted decentralisation policies are a means
of encouraging the further development of regional centres. Such policies
can work in conjunction with land taxes to ease growth pressures in the larger
cities, while addressing long-standing spatial, social and economic inequalities
(Stilwell, 2000: 254-260). The desirability of promoting more decentralised
regional development is consistent with a Georgist perspective, but not altogether
compatible with the claim that land tax would facilitate urban consolidation.
It seems clear that it ‘overburdens’ land tax to expect it alone
to produce the best spatial outcomes, taking account of all the economic,
social and environmental issues involved in urban and regional policy. The
various other policy instruments – including regulations relating to
green space, zoning, and the provision of public infrastructure to pave the
way for decentralisation – are important complements to land taxation.
In other words, land tax is best regarded as a necessary but not sufficient
condition for more effective spatial policy. ... read the whole article