A spatial-temporal assessment of the Land Value Development Tax

We use information of the period 2000-2010 to assess the land market neutrality of a Land Value Development Tax (LVDT) in Bogota (Colombia). This city introduced the LVDT in 2004 and it offers an excellent vantage point for observation of its effects because of these reasons: (a) the LVDT follows a clear spatial and temporal application process; (b) the LVDT is applied over an extended metropolitan area regulated by a single master plan throughout all the years of application of the tax; (c) the city comprises a single public authority for revenue and taxation purposes; and (d) there has been no previous historical experience with the use of this type of land exaction in the city or its region. The LVDT is a one-time exaction levied where regulatory or infrastructural state interventions determine price increases, making it a difficult assessment subject when compared to the pure land tax. However, the aforementioned characteristics of our case study allow us to test its static (lowering of land prices) and dynamic (no development timing effects) neutrality in an emerging urban environment, using single and multi-equation spatial panel techniques.