A Development Levy reduces the purchase price paid to the original vendor. It reduces
the otherwise privatized unearned gain. It does NOT increase the price.
Land Price only arises because the community fails to collect the annual
"economic rent" properly due to it. It then becomes capitalized
as selling price.
Land Value is a differential value. It has no cost of production. Any
annual charge, such as Rates or a Land Tax, thus reduces the price by the
amount of the charge capitalized at the current rate of interest. A
Development Levy is a one-off capital charge which directly reduces the
price (or the profit) accordingly. By contrast, taxes on goods and services,
as products of labour, increase the price.
Infrastructure/natural monopoly reticulation is a core function of Central &
Local Government. which has a direct cost/benefit reflection in land values.
The capital cost of this benefit must be recovered in the short, medium and longer
term from the land values, rather than be privatized.
Capitalised annual "economic rent" (land price) is the underlying
cause of currency inflation.
Money is a measure of value for the labour content of goods and services
for the purpose of exchange, now, progressively or later. Introducing
the capitalized future value of a gratuitous licence which has no labour
content into the exchange process expands the measure, but with no
corresponding increase in goods and services—too much money chasing
too few goods = inflation. Over time the value of the labour products
diminishes, whereas the licence value appreciates, compounding the effect.
Collecting the "economic rent," annually (Land Value Rates or Land
Tax) or by a Development Levy, eliminates the "business cycle"
of boom and bust. The inflated/devalued currency is most rapidly reflected
in higher land price which inflates/devalues the currency which ... creates a pernicious
spiral—on which some live high, whilst others strive to survive.
Cheaper land encourages genuine developers, as distinct from speculators.
Cheap access to land stimulates employment on a 4:1 ratio. Every person
engaging in property improvement (primary industry) generates four more
jobs downstream. Expensive land has the reverse effect, and is the basic
cause of wealth disparity.
The higher level of borrowing required to fund bigger mortgages is a major
factor in our Current Account Deficit.
Any charge which stimulates employment, raises wages, lowers debt and reduces
currency inflation is a social imperative.
The Development Levy does that!