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How a land value tax could solve many economic headaches

This was first published on RTÉ Brainstorm on the 17th of September available at this link

"LVT would have no impact on most people, but would ensure land is employed for its best use"

Opinion: the introduction of a Land Value Tax would force people to be efficient with their use and ownership of land and help alleviate many of the Irish economy's current woes

How do we solve the housing crisis? Ask the average person and they’ll say ‘build, build, build’. Urban planners are saying we need higher density and they argue this can be achieved without towers in the sky. They detest urban sprawl, describing it as a cancer on communities, identities, and the liveability of urban areas. They point to the plentiful areas of unused and vacant brownfield sites and are protesting to government to sort out land hoarders.

The Minister for Housing says we need to build upwards and remove height restrictions in Dublin. The millennial generation are looking for assistance on rent and housing affordability associated with the rise of expensive cities. The suburbanites suffering from the leapfrogging planning policies between cities and counties of the Celtic Tiger era are shouting for transport improvements and greater connectivity. And, with the rise of urbanisation, rural areas are saying do not let rural Ireland die.

It really is a problematic time and a period of roundabout policy-making. With population increases forecast for the next 30 years and the overwhelming importance of cities in driving future growth, these problems will get bigger. But no one person is responsible and the underlying incentive model is broken.

Taxes act as disincentives to productive activities. Income tax is a disincentive to be productive, VAT is a disincentive to sell and buy and stamp duty is a disincentive to buy assets. Capital gains tax is a disincentive to sell assets, while property tax is a disincentive to make home improvements.