ESTADOS UNIDOS

45 development tax or any other tax on land is that much of what is paid for the use of land reflects socially created demand; and is not a payment to bring land into existence. The community can then capture in land taxes some of the values it has created - including those resulting from streets, schools and other facilities. This, it is maintained, would be a more equitable way of financing local government.

These theories and economics of land value taxation are important to guide the study and determine if the research findings confirm or contradict them.

46 a way that generates the most utility because their taxes are fixed to land value and do not increase based on improvements they make to the property.

This tool splits the standard property tax into its two components of land values and building values. Separate knowledge of land and building value is useful for several reasons. First, depreciation allowances in the tax code make it necessary to separate depreciable value (building) from non-depreciable value (land).

Second, real estate assessors use sales prices of properties to estimate the current market value of neighboring properties for which no recent sale prices are available. Land values of neighboring parcels are generally much more highly correlated than building values, and knowledge of land values increases the precision of real estate assessment.

Thirdly, wherever adopting higher property tax rate on land than on buildings is being considered, a separate knowledge of land and building values is required. The tax rate is increased on the land part of the property and decreased on the building. The increased tax on land has a negative capitalization effect, resulting in land being priced closer to its true market value. Economically, of course, a "high" price for some land is essential to encourage the best employment of it.

The user of land ought to pay the amount of its worth at best use; but the owner, facing no cost of production, need not receive all that is paid. Government can reasonably take part of the total paid by the user. A heavier tax would change the conditions of ownership. The total collected from users would not change, but private owners of land would retain less, enabling the public revenue to increase as the treasury gets more.

47 On the long run, land owners would get less of the increments in land values and the public would get more. Socially created values would then be channeled into government use rather than private uses. Taxes could be related more closely to the cost of governmental services.

However opponents of land value taxation are of the opinion that the unearned increment in land value has been capitalized in the purchase price paid by the owner, thus they question the fairness of imposing a heavy tax on present land values for which owners have paid. The answer is that land value is not a one-off transaction, its value continues to increase way after the first transaction between buyer and seller and it is this increment that land tax wants to capture.

Wilks (1975) second pilot survey for land value taxation at Whitstable, England will be useful in concluding this discussion on principles of land value taxation. His clear view was that the ratepayers own the land out of which the tax emanates and it is up to them to see that the land is developed to its optimum use so as to be able to pay the annual tax. If they do not, no one but themselves can be blamed.

Finally relieving the words of Tideman (2009);

― individuals who have the exclusive use of desirable number plates should pay annually for that privilege; airline companies with exclusive landing rights should pay annually what other airlines would be willing to pay for such rights; and people who have fishing rights that are denied to others should pay annually according to the value of those rights.

48 The general principle involved in all of these examples is that whenever

a government grants a right to some and not to others, those who are granted such rights should pay annually, to the government, the value of those rights, measured by what others who do not have them would be willing to pay to have them”

In summary, the principle of land value taxation is focused on equity and benefit principle on the part of the public and owner of property respectively.

The study is verifying if any land taxation scheme imbibes this principle and if land value taxation is masked with another tax or existing without the public‘s knowledge.