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In the European Union the extant tax harmonisation across countries is minimal, be it in tax systems or tax rates. In recent years the debate as to whether or not there should be more harmonisation, and in what respect, has been growing. For the debate to be profitable, more information on tax systems is needed. With an eye to advancing this for land value taxation (LVT), the Lincoln Institute for Land policy commissioned this Report. The Institute visualised it as an initial reconnaissance based on a desk study which would be a preliminary to an approach to the European Union, with the Institute’s backing, to ask the Union to consider adopting the topic in a fuller study of its own.
The Report adopts the categorisation of methods used in the authors’ two earlier reports (Lichfield and Connellan, 1997 and Lichfield and Connellan, 1999). In essence this was threefold: land value taxation by annual taxes on specific parcels of land for the purpose of gathering revenue for local government (LVT); policies and measures aimed at recouping to the community some proportion of increases in land value that can be attributed to the community activity which generates urban development (betterment); recovery of infrastructure costs whereby authorities are empowered to levy from land owners and developers some element of the cost in relation to the particular development project (planning gain/impact fees).
The particular contribution of the Report is a database relating to the European Community, covering these three categories with LVT subsumed into the classification of real property taxation. The database is embodied in the Appendices which, country by country, summarises the pertinent information where it exists, and then analyses it by graphs and tables, country by country, over the years 1965-1996. This shows in respect of GDP, the percentage share of total tax revenue and the percentage share of real property tax revenue. In Table I.5.1 the availability of the information, according to the references in the text and Bibliography, is categorised either as existing, not existing or having no information available at this stage. While the database is a considerable advance on what has been available, it nonetheless shows big gaps in the data, and in some cases disagreement between sources of data.
The content of the Appendices is summarised in the General Report preceding. This ends with two sections: main findings and main conclusions.
On the first some form of real property tax is currently levied in all of the 15 EU countries but there is no harmonisation at all in this form of taxation. The extant real property taxes for revenue gathering which are assessed on land value alone are only relatively minor, existing only in France, Denmark, Austria and some very limited measures in Germany, although the land value taxes designed for value capture (betterment) are more prolific. Generally speaking property taxes are not overly significant in fiscal terms as a ratio of GDP.
As to the conclusions, we offer our initial judgement “on the prospect of moving towards the adoption of land value taxation concepts in the European context”. Our view is that since property taxation exists in all the countries in one form or another, it seems a likely candidate for investigation on harmonisation. Therefore, the prospects for land value taxation must also arise, since it exists already in part within general property taxation and its retention is being urged. Furthermore, since both recoupment and infrastructure cost recovery under the planning system are more prevalent than land value taxation per se the prospect for investigation of LVT itself is also increased since it is an alternative to the possibilities under the planning system.
But while the desk study provides a great deal of information not otherwise available for the European Union, it clearly provides an inadequate basis for a full discussion and debate on the topic. This gives strength to the idea of approaching the European Union for a follow-on from a desk study to one based on a network of specialist country representatives.