The easier it is for business to succeed, the more competition there will be, which increases quality and lowers price. Business failure may, indeed, have consolation prizes for society, but these are not as beneficial as a higher level of business success. As to the public sector, land value taxation does not give greater control over land use choices to the government, it gives more people in the private sector a chance to access land. The public collection of land's rental value is simply the tapping of a revenue stream. Well, my inability to explain my points does not make them invalid.
Land prices act as an allocative device.
You've left something out of the equation, though. As long as it is profitable to own land one is not using, high land prices will not necessarily result in more intensive land use. Shifting taxes from capital investments to land value ownership would result in greater capital improvement on land parcels, not less. I'm sure you can see, now, that the social benefit you thought was coming from pro-land speculation tax policy is paltry compared to its consequent social detriment. In any event, land value taxation does not lower land prices . . .