Question

The replacement of taxes on wages, goods, and buildings with taxes on land value would have what effects on output and the business cycle?

Answer 1

Land is a natural resource that existed before mankind.land value belongs to whole community not just few land owners.

Expenditure on public services creates the value of land Compared to taxes on buildings , or wages etc. Land value tax is just and fair way of paying public services.

It will certainly effect on output and the business cycle in a positive aspect:

• LVT would encourage new capital investments.
• It would encourage the use of empty sites.
• LVT cannot be avoided like any other taxes. Land owner need to register their land and they need to pay on time to the government.This will give transparency to the taxation system.
• If LVT is used in an optimum way it will encourage the landowners to use to the land , if not they can sell or can give out for lease. Thus there will be optimum utlisation of land which will furthern enhance the business.
• Cheaper land prices will have bubble effect , it will lead to cheaper or better word more affordable home, business premises.
• Interest rates will also go down without creating inflated prices of home.
• Unbearable debts on ordinary homeowners and and small businesses could gradually be removed.
• LVT is also cheaper to collect as compared to other taxes.
• LVT would certainly improve the business cycle thus it will lead to healthy economy, social inclusions,equal oppertunity, sustainability and a fairer society.