Raising Public Investment Funding: Comparative Analysis of Land Value Taxation

Abstract:     
Value-capture approach to public investment financing envisions creation of the policy tools to adequately capture the privately accruing changes in the value of sites and/or consumption that arise from public infrastructure investments. In the present paper, we provide a comprehensive discussion of the concept of value creation arising from public investment. In contrast to the existent literature, we consider a dynamic model of value creation consistent with the economic framework of multiplier effects of public and private spending and investment. In addition, unlike most of the literature on taxation finance, we distinguish two unique stages of demand for funding: Early stage capital allocation linked to the full capital cost of the project; and Later stage O&M financing support. We briefly introduce and discuss all internationally available policies used for raising revenue to finance public investment, and draw on some international experience to highlight their main shortcomings and benefits. Following this, we rank the existent policies with respect to their efficiency in addressing the dynamic nature of public investment.

Number of Pages in PDF File: 23

Keywords: property tax, land value tax, site value tax, public investment, public infrastructure

JEL Classification: E62, H21, H24, H71, P43, R53

Accepted Paper Series