Innovative ways of financing public transport

Income from fares is usually insufficient to pay for capital and running costs of modern mass transit system. Perceived benefits resulting from introduction of mass transit system has the effect of dramatically boosting land prices in surrounding area. This could be used by the government as an extra source of revenue for financing mass transit construction costs.axes on land should be increased by the government, instead of increasing taxes on wages, for which the wage earner would be further penalised through the detrimental effect this increase would have on the economy. Taxing land on the basis of value, however, would provide the government increased revenue to fund a mass transit project. The mass transit scheme would benefit not only its passengers, but businesses would flourish in the vicinity of its stations which would lead to an increased value in land and property values. If the government were to levy a 50% tax on land value increases and use this to finance a the mass transit scheme the landowners would retain 50% of a very large increase in land value instead of retaining 100% of a very small, or no, increase. In Denmark, Hong Kong, parts of North America, South Africa, Australia and New Zealand taxes on land wealth contribute directly to public funds. A land value tax, Location Benefit Levy, based on these factors, could be levied to produce income for public funds which would be increased as the value of the land increases. A spatial record of land values over time would serve as a useful tool to urban transport planners. The paper presents a comparison of systems of distribution of natural resources with just and unjust legal systems. Land values arise from natural advantages but also from the efforts of the whole community, investments by public and private sectors and the activities of individuals. The Location Benefit Levy is presented as offering a new way of funding public transport but also as a simple way to start addressing one of the world's greatest remaining injustices. For the covering abstract see ITRD E137145.