Betterment: a taxing problem

Purpose - The purpose of this paper is to review the issues involved in land value taxation and betterment and the issues involved in apportioning value between land and improvements. Design/methodology/approach - The theoretical and valuation issues in betterment are reviewed and a case study of a betterment tax introduced in the UK is used to illustrate the practical problems in implementation. Findings - The idea of land value taxation depends upon being able to apportion property values between land and improvements. This raises both theoretical and practical problems that are difficult to overcome. Practical implications - The apportionment property values between land and improvements produces results that cannot be verified by market evidence, suggesting that an alternative approach be adopted through value-based recurrent property taxes revalued at frequent intervals. Originality/value - Much of the literature has concentrated on the theoretical advantages of land value taxation rather than examining the practical problems of implementation. These suggest a different approach with less emphasis on betterment taxes and more on how recurrent property taxes can be an effective instrument for value capture.