Comment 95754

By kevlahan (registered) | Posted December 09, 2013 at 16:59:31 in reply to Comment 95752

Some other places do have such a tax regime, and it would be beneficial here. However, it seems that the City does not have the power to do this on its own. The province would have to agree.

The current system, combined with relatively carrying costs downtown, encourage speculators to demolish or leave their buildings vacant because the tax on vacant lots or vacant buildings is much lower than on occupied buildings. There are incentives that phase in tax increases due to investments downtown, but this doesn't interest those who are really only interested in long-term speculation.

A more reasonable policy would be to lower property tax for vacant buildings only for a period necessary to find new tenants (say six months to a year), after which the tax goes back to the occupied rate. Similarly, owners should not get a tax reduction for demolishing a building, except possibly temporarily to allow time to quickly re-build. The tax system should not incentivize neglect and demolition, or land speculation. McLeans had an article promoting this sort of tax reform a while ago.

Another option would be a land value tax:

As a model of how Land Value Taxation affects incentives, take for example a vacant lot in the center of a vibrant and growing city. Any landowner that must pay a tax for such a lot will perceive holding it vacant as a financial liability instead of an investment that passively rises in value.

In other words, it discourages property speculation and rentier-ism.

Comment edited by kevlahan on 2013-12-09 17:02:17

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