The most recent discussion about the taxation of land speculation demanded by the new SPD chairman, Norbert Walter-Borjans, was lively right at the beginning of the year – and there was also a lot of confusion: land value growth tax, planning value adjustment, property tax C, 10-year tax privilege. Everything was lumped together.
And some have consciously scared the homeowner that he will soon have to pay new taxes if his property gains in value. But of course it’s not about this property used as living space.
Then what is it about? For 50 years, the SPD politician Hans-Jochen Vogel – who is certainly not suspected of socialism – has not tired of saying: Land is not a commodity and cannot be reproduced at will. It ensures human existence. Therefore, it must not be left to the speculative forces of the market.
And precisely where it is scarce, it must not be left unused as a speculative object. There are several ways to do this, one is the land appreciation tax.
It is in the interest of the common good to tax profits from rising prices of unused building land. Because these are only achieved without performance because the city invests in infrastructure or creates building rights.
The tax exemption on profits on sale after ten years is therefore not understandable. This is about a social democratic principle of justice: capital gains must not be better taxed than work.
A further instrument for mobilizing building land can be property tax C on unused ground. The federal government has already granted this to the federal states as part of the property tax reform – however, it must come quickly and not until 2025.
This additional tax revenue can benefit municipal land funds. In Berlin we are already using a three-digit million amount in the household to specifically acquire new land for housing, social infrastructure or commercial settlement. The federal government should also support federal states and municipalities with earmarked funds.
Compensation for increased planning value
And of course the participation of investors in the infrastructure costs of their projects, which has been practiced in cities like Berlin, Hamburg and Munich for years, remains important. In Berlin we negotiated a “cooperative development of building land” with the real estate industry. We apply these together when we as a city change the planning law in such a way that, to put it bluntly, more can be built and thus more profit can be achieved. To compensate for this increased planning value, the city receives private housing, day care and school places from private individuals.
Such a modern and social land policy, consisting of several instruments, must supplement the social tenancy law in order to ensure affordable housing. Because only the rapid construction of new apartments can permanently relax the housing market.
For me, this necessary new building is at the top of the political agenda. I no longer want to talk about whether we build, but how we build. To do this, investors must submit to the interests of the common good just as much as those who call “not in my backyard!”. Because if you want to ensure social peace, you also need affordable housing.
Anyone who speculates on building land instead of using it for affordable apartments, kindergartens and schools is acting anti-social in times of housing shortage. And if the state does not act when the market fails, our democracy will ultimately suffer as a result – it is based on the public service obligation of property enshrined in the Basic Law.
As Governing Mayor of Berlin, I want to create as much new and affordable housing as possible with our urban housing associations, cooperatives and long-term private investors.
Anyone who uses their land for this is a partner against the housing shortage. Among other things, to quickly build 1.5 million urgently needed social housing in Germany – which is also a 100 billion euro investment and economic program.
But together we should clearly show the black sheep the red card by preventing land speculation through clever taxation and through building law and making it faster building land. In the interest of everyone!
More: The volume of unused funding is greater than assumed. Nevertheless, economists are demanding that the state spend more money on infrastructure and education. A comment.