30 July 2010
Wheels of Fortune
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It is often assumed that government intervention is required to bring to fruition large scale infrastructure projects because the large initial capital outlays such projects require must be funded from the public purse. In Wheels of Fortune, Fred Harrison shows that large scale infrastructure projects can be made self-funding and hence completed without direct government involvement.
Infrastructure projects almost always bring about a large increase in the value of adjoining land. For example, it is estimated that the Jubilee Line extension increased adjoining land values by close to £3 billion. When such infrastructure projects are funded by government they therefore involve a substantial transfer of wealth from a large number of taxpayers to a small number of property owners.
Harrison argues that a fairer and more efficient means to fund infrastructure projects is to capture and use the increases in land values that they bring.
This monograph sets out a free market case for a land tax or some form of levy on land as a means of achieving the goal of self-funding infrastructure and ensuring that those who receive the benefits of such projects meet the costs. It will be essential reading for those concerned with how large scale infrastructure projects can efficiently be completed and those interested in fairer and more efficient tax regimes.
For more on self-funding infrastructure, you may wish to read the special edition of Economic Affairs edited by Fred Harrison that deals with these matters.
See also The Railways, the Market and the Government by John Hibbs et al.
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