Sustainable urban development and land value taxation: The case of Estonia

In this paper, I will give an overview of the debate on land value tax and urban planning, before I briefly analyse the dynamics of land policy that ensued from the introduction of the land value tax on urban development in the Estonian capital Tallinn since its introduction in 1993. I compare my findings with neighbouring Riga in Latvia, which has retained a building-based taxation system. I conclude that, while statistical results indeed seem to suggest an increased capital-land-ratio and slightly increasing population density in Tallinn as opposed to Riga, both regions show considerable suburbanisation and sprawl, challenging the effectiveness of the LVT implementation in Tallinn. The result also points to the importance of other influences on urban development, and the difficulties in separating the effects of LVT from them.