Victoria's Site-Value vs Net-Annual-Value Rating: A 1966–78 Natural Experiment

Overview

Between 1966 and 1978, local government areas in the Australian state of Victoria used one of two property-rating bases: site value rating (SVR), which taxes land only, or net annual value (NAV), which taxes land plus buildings. Fred Harrison's The Power in the Land (1983) reports that 27 SVR municipalities recorded average dwelling growth of 12.9% over the period, compared with 2.8% in 15 NAV municipalities, and that building permits in 1975–78 ran at 39.9% of their 1966–69 level in SVR areas versus just 9.5% in NAV areas (Ch. 15).[1] Harrison treats the cross-municipality split as a natural experiment because both groups of councils operated within the same state economy and legal system over the same period, differing mainly in rating base.[1]

A methodologically independent, more recent study lends indirect support to the same general finding. Cameron Murray and Jesse Hermans (2019), using historical Victorian council data in a difference-in-differences design, find that municipalities switching from capital-improved-value (CIV) rating (land plus buildings, a close cousin of NAV) to site-value rating saw a 20% increase in the value of new residential construction.[2] The comparison base (CIV vs. NAV), period, and method differ from Harrison's, so this should be read as corroborating the general direction of the effect rather than replicating his specific 12.9%/2.8% figures. Together the two sources feed the wiki's broader claim that split-rate taxation increases urban construction.

See Also

• The Power in the Land (Fred Harrison, 1983) — the primary source for the 1966–78 Victorian SVR/NAV comparison (Ch. 15)
• Split-rate taxation increases urban construction — the broader outcome claim this evidence supports
• Land Value Tax
• Site Value
• Fred Harrison

Sources

1. Fred Harrison, The Power in the Land: An Inquiry into Unemployment, the Profits Crisis and Land Speculation (New York: Universe Books; London: Shepheard-Walwyn, 1983), Ch. 15 — used for the 27-vs-15-municipality Victorian SVR/NAV dwelling-growth and building-permit figures. Wiki summary
2. Cameron K. Murray & Jesse Benjamin Hermans (2019), "Land value is a progressive and efficient property tax base: Evidence from Victoria," OSF Preprints — used for the independent, modern difference-in-differences finding that switching from capital-improved-value to site-value rating is associated with a 20% increase in the value of new residential construction. Free PDF — IDEAS/RePEc record