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<p>This paper explores the potentiality of implementing a land value tax (LVT) aimed at displacing the existing taxes on real estate and partially the taxes on personal income as a first step towards the implementation of an ecological tax reform. The LVT is simulated in the context of Bizkaia, a Spanish province with fiscal autonomy. A hedonic price model allowing for spatial correlation is used to estimate the tax base and collection capacity. Following Lyons’ (2012) approach, we set as a collection objective the amount derived from the shift of all taxes on real estate and the income tax returns of nearly 75% of the population representing the lowest taxable bases and calculate the average tax per square metre for the whole territory. Then, the proposed LVT is applied proportionally to the site value for each property according to different zones. We find that a proportional rate of 1.05% on the land value would be sufficient in order to carry out the proposed tax displacement. Our findings suggest that focusing tax systems on the predistribution of income rather than on its redistribution may well set fiscal policy on the path towards a sustainable and fair economy.</p>

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Paving the way towards predistribution: a study on the introduction of a land value tax

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  • 出版模式：

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  • 发表日期：

    2025年2月17日

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  • Jesús Olea,
  • David Hoyos,
  • Javier García-Enríquez

摘要

This paper explores the potentiality of implementing a land value tax (LVT) aimed at displacing the existing taxes on real estate and partially the taxes on personal income as a first step towards the implementation of an ecological tax reform. The LVT is simulated in the context of Bizkaia, a Spanish province with fiscal autonomy. A hedonic price model allowing for spatial correlation is used to estimate the tax base and collection capacity. Following Lyons’ (2012) approach, we set as a collection objective the amount derived from the shift of all taxes on real estate and the income tax returns of nearly 75% of the population representing the lowest taxable bases and calculate the average tax per square metre for the whole territory. Then, the proposed LVT is applied proportionally to the site value for each property according to different zones. We find that a proportional rate of 1.05% on the land value would be sufficient in order to carry out the proposed tax displacement. Our findings suggest that focusing tax systems on the predistribution of income rather than on its redistribution may well set fiscal policy on the path towards a sustainable and fair economy.