The relation of taxation to services as a technique to prevent the premature conversion of farm land
Creators: name: Hartley, James Ernest
Publisher: name: University of British Columbia
Year: 2011

description: The purpose of this thesis is two fold: first, to focus attention on the problems of urban expansion and the trend towards suburban living and secondly, to investigate a technique which could be used by semi-rural municipalities to control one of the problems of suburbanization, that of premature conversion of farm land to non-farm uses. Many techniques are presently used to control land use and urban development in municipalities in transition from a rural to an urban character, but generally, these techniques have failed to protect farm land from premature conversion to non-farm uses. The technique examined in this thesis is that of financial control as exercised through property taxation. After substantiating the increasing demand for land for urban uses, a brief examination of the forces which regulate the supply and demand of land is presented to aid the understanding of the principle of highest and best use as applied to competing land uses. This illustrates the cause for the premature conversion of farm land to non-farm uses. An examination is made of the conversion of farm land to non-farm uses with emphasis on premature conversion and the economic and social costs which arise from this conversion. In view of the increasing rate of conversion of farm land to non-farm uses and the costs which can be attributed to premature conversion of farm land, it becomes evident that a technique which will protect farm land from premature conversion should be implemented. By studying the ways and means currently available for the control of land use and land development by a public agency, it is found that the regulations do not protect farm land from premature conversion to non-farm uses. Since financial control of land use exercised through taxation is not used to any appreciable degree by municipal governments, the relationship of land use and property tax is studied. In this evaluation, particular attention is placed on the effect of property taxes on farm land. This leads to the conclusion that high property taxes can force land into a more intensive use. As a result of this conclusion, it is proposed that a reduction in farm property taxes would protect farm land from premature conversion to non-farm uses. Rather than use an arbitrary tax rate to lower farm taxes, the tax rate is related to the cost of services provided for farm property. Using 1961 data collected from The Corporation of The Township of Richmond, a 'rural-urban' municipality adjacent to the City of Vancouver in British Columbia, it is shown by apportioning the municipal revenues and expenditures to farm and non-farm property that a tax rate related to the cost of services provided for farm land would reduce the farm taxes. The reduction in taxes is then related to the farm land income, which is measured by farm land rental values, to determine the effect it would have in protecting farm land from premature conversion to non-farm uses. An analysis of the farm land income shows that the net return to farm land is comprised of tangible and intangible elements. The tangible or monetary return to the farm land is low when compared with the return available from other low risk investments. Thus, it appears that the intangible returns such as the value as a homesite, the possibility of a capital gain and the prestige of land ownership are greater than the economic returns. From this it is concluded that a reduction in farm taxes arising from relating the tax rate to the cost of services provided for farm property may, depending upon the taxation system, encourage farm land owners to keep their land in farm use, but would not protect farm land from premature conversion to non-farm uses.