International Journal of Economics and Finance; Vol. 9, No. 10; 2017 ISSN 1916-971X E-ISSN 1916-9728 Published by Canadian Center of Science and Education 86 Land Tax, Justice, and the Unaffordability of Housing: Australian Experience Viral U. Pandya 1 & John Tippett 1 1 Asia Pacific International College, Melbourne, Australia Correspondence: Dr. Viral U. Pandya, Asia Pacific International College, 399 Lonsdale Street, Melbourne 3000, Australia. Tel: 61-9603-5323. E-mail: viralpandya2@gmail.com Received: August 2, 2017 Accepted: August 23, 2017 Online Published: September 5, 2017 doi:10.5539/ijef.v9n10p86 URL: https://doi.org/10.5539/ijef.v9n10p86 Abstract Taxation and tax „reform‟ particularly, appears to be a perennial topic, in the major economies of the western world at least. Recently, in Australia there was the “Henry Review” of 2010 – a major review of Australia‟s tax system including substantial recommendations for tax reform; and observation shows that both sides of politics in Australia spent most of 2016 and part of 2015 talking about tax „reform‟. A key aspect of the Henry Review (2010) is the strong recommendation for a land tax. Advocacy for land tax has a long and powerful history. Prominent economists lauding the land tax include David Ricardo, Adam Smith, Henry George, Milton Friedman, and Mason Gaffney. The Henry George land tax has been recommended for a very long time, the latest mainstream recommendation for its implementation coming via the above-mentioned Henry Review of Taxation in Australia (2010). The purpose of this paper is to address the question: is there something special about the natural resource, land, that makes it the subject of so many recommendations for a tax? That is to say, is there anything special about the tax base in the case of a land tax? This paper argues that the land tax is not just another tax – for the reason that the nature of the base of the tax – land – is special. Further, because a land tax would lower the price of land, implementation of a land tax would help solve the housing crisis (the unaffordability of housing). The research findings are different from previous studies because previous studies all focus on the efficiency aspect of taxes, not on any special nature of the tax base. Keywords: land tax, housing affordability, equity, justice 1. Introduction With regard to housing affordability, Australia, especially its five major metropolitan areas, remains “severely unaffordable” in 2015. Among the nine developed nations covered by the 12th Annual Demographia International Housing Affordability Survey, Australia was ranked third-most unaffordable major housing market in 2015. With regard to the special nature of land, land value taxation (also known as site value taxation) has been known and recommended for a very long time – since the eighteenth century (and probably earlier), particularly for its economic efficiency – and continues to be recommended to this day. Many economists since Smith and Ricardo have advocated a land tax, though it is best known through its advocacy by the nineteenth-century philosopher and economist Henry George (1879). The land tax as originally proposed by George (1879), was proposed not as a tax but rather as the public collection of the periodic economic rental value of land, which rental value – both current and expected – gives land its market price. Market price of land is the capitalised value of expected future rents accruing to the titleholder, and because these rents arise due to the existence of a community and its concomitant economic activity on that land, George argued that these rents belong to that community, the very source of those rents. In the presence of a „community‟ of population only one person, land would have no rental value – again indicating that it is the presence of community that is the source of land rents. The value of land (as distinct from the value of improvements to and upon it) owes nothing to the landowner and everything to its surroundings. Thus, the Henry George argument is that land rents belong to the community because they represent community-created value, and should, therefore, be collected publicly. Land tax is currently levied by