How to finance public transport
Friday, November 23rd, 2007Dave Wetzel, Vice-Chair of Transport for London, writes an interesting paper focusing on the issues of transport infrastructure and increases in surrounding land values. The issue of land and its possible taxation reared its head recently here in NZ but has since had little media interest.
However, its time we really focused on land and its value within the economic system. One of the examples Dave looks at is the building of the Jubilee Line Extension back in the 1990s. It was a marvelous piece of engineering and brought new and convenient transport options to many Londoners.
It also brought wealth to people who owned land and property in and around the areas where new stations were sited. He quotes Don Riley, a London property developer, who calculated,
“..these land values alone, have increased by a staggering STG13bln when the construction of the line itself was only STG3.5bln.”
So this wealth has been gained for no effort (well there is always effort in speculation) and represents a windfall gain. So why shouldn’t some of that have been used to actually fund the line itself. Dave uses this example to develop an argument for a Land Value Tax as a way of funding public infrastructure.
We don’t need PPPs when projects can be funded out of future wealth gains. This is a subject which gets little attention but deserves much more.
