Transit can pay its own way with Land Value Capture

Imagine a new streetcar or subway line were built and extra money started magically appearing in cash registers of businesses along it; along the route, especially at stops, landlords suddenly got a cash bonus with their monthly rent cheques....

Transit can pay its own way with Land Value Capture


Relying primarily on gas taxes to fund transit, as suggested by the Anne Golden transit panel, is a socially divisive idea, pitting suburban and rural residents who rarely use transit against urban dwellers who generally drive shorter distances if at all. The war on the car will only get worse.

Transit and other infrastructure should be financed by those who benefit financially from it, not by those who live far away. I’m disappointed the panel didn’t suggest land value capture, which collects the rise in local land values that the new transit generates and uses this money to finance the infrastructure.

People bid up the price of land around new transit, hospitals and schools because of the advantages of living and working near them. This rise in land values is unearned income, what economists call “economic rent.” It is wealth that was created by the government-funded infrastructure and should therefore go back to government to pay for the project and not be a windfall profit to those who happen to own nearby land.

Frank de Jong, president, Earthsharing Canada, Toronto