Land Value Taxation (LVT) is the policy of raising state revenues by charging each landholder a portion of the assessed site-only value of the unimproved land.
The tax is often said to be justified for economic reasons because if it is implemented properly, it should not distort market mechanisms or otherwise damage the economy the way most taxes do. It is also said to be justified for reasons of fairness by asserting that the tax is equivalent to a fee for protection of land ownership, which is the primary activity of any state. It is a cheap (and therefore efficient) tax to administer since much less effort is required to track land ownership than to track income or sales transactions.
As well as these pragmatic arguments LVT can be justified from the philosophical premise that the natural world was originally the common property of all persons, and therefore the LVT is not really a tax, it is simply the collection of rent on behalf or the proper owners (the community). A consequence of this argument is that land should be taxed to the maximal extent and all proceeds should be equally distributed to each citizen as a citizen's dividend. The most influential advocate of this position was the political economist and activist Henry George. Many contemporary American advocacy groups trace their heritage back to his thoughts and writings.
LVT is charged in Estonia, Taiwan, Singapore and Hong Kong and many more countries have used it in the past, particularly Denmark and Japan. It is currently being introduced in Namibia and there are campaigns for its introduction to South Korea and Scotland. Several cities around the world also use LVT, including Sydney, Canberra and Mexicali.
Some cities in the USA have recently introduced a two-rate property tax, which can been seen as a compromise mixture between pure LVT and an ordinary capital-value property tax.
There appears to be a correlation between high LVT and growing economic prosperity, as predicted by Georgist theory.