Video: Land Value Taxation and Agriculture

Frank de Jong

Expensive farmland close to millions of people is best suited for school kids on field trips, families on farm vacations, and young people learning about agriculture, and for growing labour-intensive crops like organic vegetables, fruit, meat and eggs, not low-value crops like corn and soy.


Land outside cities is often underused because it is owned by developers keeping it out of best use, waiting to collect massive capital gains when it is rezoned into sprawl. Under LVT this land value upkick would be captured by government, reducing the incentive for sprawl. Without these huge profits infill would become equally attractive to developers.

Presently farmers are taxed on land and buildings, sales tax on tools, seeds and machines, pay income taxes, and are forced to pay farm labour more to cover payroll deductions. This discourages farmers from hiring employees, building extra buildings, selling value-added products, or bringing tourists and school children on to their land.

Under Land Value Taxation farmers would only be charged the rental value of their land, but not be taxed at all on buildings, employees, machines, or farm profits. Farmers would be encouraged to construct extra buildings and hire people to grow value-added, specialized crops.

LVT collects the rental value of land, the amount a farmer would pay to farm there, it doesn't raise or lower the cost of owning land at all. When the rental value of land is collected by government, land no longer has an upfront cost, which is great news for young farmers trying to buy land. Under LVT, a young farmer would only need a bank loan to finance buildings
and machinery.

LVT would also collect the rental value of supply management quotas, eliminating the upfront cost of quota. This is also great news for young farmers allowing them to start farming without large bank loans to finance quotas.

And if a farmer took land out of production for water, soil or wildlife conservation, this land would no longer have commercial value and the LVT payable would drop.

Land Value Taxation is a fair and efficient market mechanism that would stop speculation and leave more land to nature. It will reward local farmers who grow quality food for local people, and give young farmers access to land and quota they could otherwise never afford.