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The First Interval: Evaluating ACT’s Land Value Tax Transition

In 2012 the Australian Capital Territory (the Territory) began a multi-decade task of major land tax reform to exchange taxes on transactions for taxes on the economic rents that accrue to landholders. This report evaluates the economic effects of these changes at the first interval, 2016, to tease out potential lessons from this rare policy experiment.

2016

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One option to protect landowners from the negative impacts of sudden changes in land valuation is to change the land valuation method to assume that current use is the ‘highest and best use’. After raising land value tax rates in an Australian territory, the typical new home buyer will save between $1,000 and $2,200 on mortgage payments. Raising land value taxes in an Australian territory did not affect the total cost of buying a home. The higher tax obligations were offset by lower land prices. Raising land tax rates in Australia appears to have led to a decrease in land speculation.
Cameron Murray
Land Value Tax
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