[eru]

> But with an LVT they have a big incentive to either develop it immediately or sell to someone else who will.

An LVT gives no such incentives. LVT is explicitly agnostic about how the land is being used. You pay the same, no matter how the land is being used. That's why it's economically efficient.

However, a conventional property tax (and also income tax and capital gains tax etc) disincentivise developing. An LVT can help raise enough revenue to be able to lower or eliminate those other taxes, and thus indirectly help remove disincentives to developing.

[lbarrow]

I think you might be missing the context. The scenario we're discussing is a parking lot surrounded by skyscrapers in the middle of a major city. Under a property tax regime, the owner pays little taxes because the structures on the lot are not valuable. Under an LVT, the owner pays the same (high) taxes as the skyscrapers next to it, which would be obvious uneconomical.

So under property taxes, the parking lot owner can afford to wait and have the lot sit empty; under an LVT, they have an incentive to develop.

[eru]

Yes, a property tax system disincentivises developing compared to not having a property tax.

The LVT has no influence on building.

If you draw a two-by-two matrix where the columns are property tax yes/no and the rows are LVT yes/no, you will find that the rows have no influence at all, and it's all about which column you are in.