AVS. Arkitektúr verktækni skipulag - 01.09.2004, Page 46

the tax of William Penn Junior was a
tax on daylight. One must not forget
that the road construction tax is not
a tax but a charge for service. This
means that the tax is intended for
the expenditure of the city in “con-
structing roads with the necessary
services, surface and pavements,
traffic islands, pedestrian paths and
open areas.” Maintenance is on the
other hand paid for out of rates.
One should look closer at why the
road construction tax is collected
from new buildings instead of pay-
ing it by the rates. The main reason
is that it is better to charge for serv-
ice when it is easy to tie service to
individual consumers.
The City of Reykjavík is a large
landowner and collects site rent for
a great number of sites. Land is an
asset which is different from other
goods in many ways and this has
been discussed by economists for
centuries. Land is limited by nature
and its supply can not be increas-
ed. Because the supply of land is
limited, taxation does not influence
its supply which is usually the case
e.g. in the taxation of income. This
results also in the price of land
being totally governed by demand.
Although the supply of land is limit-
ed land is different and can be used
for different activities. The supply of
housing land depends of course on
the attitude of planning authorities
and relevant laws.
Economics deal with the lim-
ited resources of life. Its answer
is almost always that it is most
economical and partly most just
to distribute these goods through
the market forces. In distributing
housing sites to people and build-
ers, various rules have been used in
Reykjavík. These have ranged from
the “friends” of the political parties
to a point system designed to find
peoples needs or selling the sites to
the highest bidder. Similar methods
to these rules is easy to find. For
example, the national economy of
lceland was tied to a similar enclave
between 1930 and 1960 and during
that time people were first asked to
what political party they belonged
and then about their finances. One
can also mention the the handing
out of the right to utilize the fishing
grounds around lceland but they
were given according to historic
use and can since be sold. The
city government gives out sites or
makes rental agreements with the
legal entity. The legal entity builds a
house and is free to sell the house
and the rental agreement. The price
of the land depends on the price of
the building. The method of giving
out quota has been criticised by
many. Particularly have people crit-
icised that people possessing quota
have been able to sell it to the hig-
hest bidder without the state, (that
originally was in charge of fishing
on behalf of the nation), receiving
any benefit. In many ways one
can compare quota and the giving
out of sites without remuneration.
There are however two differenc-
es. To start with, the city is not the
only landowner in Reykjavík and
therefore there exists a land mark-
et. The state on the other hand has
a monopoly in giving quota to the
fishing industry. Secondly, the city
has direct income from the increase
in the value of land as properties are
revalued according to the balue of
buildings. The city receives income
both from property valuation but
also as site rent. Site rent is now
0,08% of site valuation and returnes
around 265 million kronur to the city
in income.
The new property reevaluation
which came into effect in 2001
raised the valuation of sites consid-
erable or around 56% while housing
increased some 11%. It is clear that
the price of sites has been cons-
iderably lower than the market price
for a long time. In a country as large
as lceland people have traditionally
undervalued land and one could say
that the suburbs of the city are one
of results thereof.
The policies of the city regarding
handing out sites and land can have
a crucial effect on planning and the
appearence of the built environment.
Good intentions in planning have to
be supported with a policy regard-
ing charges and taxes. ■
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