Regarding NZ’s Buckley Tax Review, Promises and Costs of a Land Tax :
On the one hand, a land tax would induce farmers to make the best possible use of their land, since the tax would be levied regardless of whether the land was in production. But on the downside, this could encourage over-use – since fields lying fallow would still be being taxed – and would probably result in the elimination of much of the remaining native bush on which some of our endangered birdlife still depend.
The over-farming issue is a common misnomer. Farmers live in areas with a lower per acre land value than in a central location of any city. They will have a tax advantage over city slickers with higher land values and therefore land taxes.
The key is that the land is valued yearly. This must be done. Farming land will then be worth more in good crop seasons and less in years of drought. This reduces the need to over-use land.
With the overall tax burden revenue neutral but yet city people paying more of the mix, farmers can afford to let their fields re-generate.
With less incentive for farmers to sub-divide their property on the edge of towns (because Land Tax reduces the speculative windfall), this policy can help ensure they use their land for productive purposes. This reduces the need to cull any more old growth forestry.
With humanity’s survival in the balance, the importance of carbon sinks will rapidly evolve in the very near future. This will provide an additional incentive to the Land Tax system in valuing the earth and in effect re-balancing the playing field back to a de-centralised model.
To ensure the policy is effective as possible, the local municipal rating should be moved off improvements and onto land only. Why penalise capital investment?