GLOBAL
LAND TOOL NETWORK

FOR
PRO POOR LAND TOOL DEVELOPMENT

TERMS
OF REFERENCE

FOR
THE

DEVELOPMENT
OF GLTN TOOL ON

LAND
VALUE TAXATION

ACTIVITIES
1 JANUARY 2007 – 31 AUGUST 2007

1. BACKGROUND

1.1 Background to
GLTN

1.2 Background to
land value taxation and capture (LVT/C)

2. DEVELOPMENT GOALS

2.1 Specific
development goals

3. PROJECT GOALS

3.1 Specific
project goals

4. ACTIVITIES

4.1 Specific
project activities

5. METHODOLOGY

6. OUTPUTS

6.1 Specific
project outputs

7. MONITORING AND EVALUATION

8. RISKS

Nairobi, 1
November 2006

1. BACKGROUND

1.1 Background to GLTN

There are few more contentious and complex problems in
the world than those dealing with land and secure tenure. Many religions have
firm rules on land and inheritance, most communities have deeply ingrained
cultural traditions, and every government faces the challenge of land
differently with its own vast array of laws and with varying degrees of
political will. In many countries the rules work against women owning land for
a range of reasons from poverty to custom. In wealthy countries land records
cover most of the territory and are generally well kept. However, few
developing countries have more than 30 per cent of their land accounted for by
land records. Land records are also often linked to the middle and commercial
classes. In many countries, there is large-scale corruption associated with
land. In post conflict societies, land is a key issue as it is often closely
associated with the conflict. Sound land governance approaches are therefore
primary in building peace.

GLTN aims to establish a continuum of land rights,
rather than just focus on individual land titling; improve and develop pro poor
land management as well as land tenure tools; unblock existing initiatives;
assist in strengthening existing land networks; improve global coordination on
land; assist in the development of gendered tools which are affordable and
useful to the grassroots; and improve the general dissemination of knowledge
about how to implement security of tenure.

The themes within GLTN are the following. 1. Land
rights, records and registration; 2. Land use planning; 3. Land Management,
Administration and Information; 4. Land law and enforcement; 5. Land Value
Taxation and; 6. Cross cutting issues.

1.2 Background to land
value taxation and capture (LVT/C)

Looking first at the instrumental justifications,
paying this fee encourages a landowner to develop vacant and under-utilized
land to the full extent that its value warrants, or to make way for others who
will. Sites are consequently used more efficiently, dilapidated inner-city
areas are returned to good use, which reduces urban sprawl. LVT deters
speculative land holding and enables a society to provide sustainable and wider
access to the use of land. This allows women and men, poor and affluent,
uneducated or well educated, all to gain access to land in more affordable
manner. It enables secure land tenure by owners willing to pay for the land
advantages they find important. This approach to revenue production stimulates
new business and new employment, reducing the need for government assistance.

Economically LVT makes sense because, it does not
distort market mechanisms or otherwise burden the economy the way most other
taxes do. It is a cheap and efficient levy to administer because much less
effort is required to track land ownership and value than to track income or
sales transactions. Tax evasion on land is much more difficult than on
financial wealth because land cannot be hidden, removed to a tax haven, or
concealed in an electronic data system. Even in the poorest of communities the
tools are readily available to implement this policy.

There are also compelling moral reasons for LVT.  Land (unlike goods and services) has no
cost of production. If an ample supply of land of equal desirability were
available everywhere, there would be nothing to pay for its use. In reality
land acquires a scarcity value owing to the competing needs of community
members for living, working and leisure space. Thus land value owes nothing to
individual effort and everything to the community at large. It belongs justly
and uniquely to the community. Conversely, the reward for individual effort
rightfully belongs to the one who earns it. Because of differences in location,
fertility or natural resources, some places are more advantageous than others.
Only demand for access to these advantages gives land its value.

Land values are created mainly by factors that are not
the result of the landowner's own effort; for example, the creation of new
infrastructure, new public transportation, or re-zoning.  All can radically change the value of a piece
of land. LVT provides a method of recouping windfall changes to land value that
occur as a result of investment by the community, placing less of the burden on
taxpayers who don't directly benefit. This allows reductions in existing taxes
on labor (wages) and enterprise (sales). The LVT is progressive because the
land tax cannot be passed on to a tenant; competitive markets, and not landlord
overheads set rental prices.

The natural world is rightfully the common property of
all persons, and therefore the LVT is not really a tax, but simply the
collection of rent (a user fee) on behalf of the community. For eight thousand
years worldwide, LVT has been the primary basis for producing public revenue
and is easy for people to understand.
LVT is the appropriate instrument for the urgent fight against global
inequity and poverty.

2.
DEVELOPMENT
GOALS

To facilitate the attainment of the Millennium
Declaration and the MDGs through improved land management and tenure tools for
poverty alleviation.

For MDG Goal 7, Target 11 and the Global Campaign for
Secure Tenure objectives to be achieved, it is crucial that concrete tools
related to urban land and secure tenure can be provided to all stakeholders. In
addition MDG 3 on empowerment of women which has been expanded to include
women’s property rights as one of the indicators requires the gendering
of tools. Specifically, the mandate related to the Global Campaign for Secure
Tenure is directly inspired from the Habitat Agenda and the Istanbul
Declaration in terms of which Governments made a number of commitments.

Also, in December 2004 the General Assembly passed a
resolution which ‘Encourages Governments to support the
UN-HABITAT’s Global Campaign for Secure Tenure and Global Campaign for
Urban Governance as important tools for, inter alia, promoting administration
of land and property rights, in accordance with national circumstances, and
enhancing access to affordable credit by the urban poor.’ (Resolution
A/59/484, ‘Implementation of the outcome of the United Nations Conference
on Human Settlements (Habitat II) and of the twenty-fifth special session of
the General Assembly.’).

2.1 Specific development
goals

Land value taxation and capture is the practice of
creating local and/or state revenue by charging each title holder (or
equivalent according to the continuum of land rights) to land a portion (%) of
the value of the site but not for buildings. LVT/C can be used to produce
revenue for public purposes and for fostering more efficient use of land,
including natural resources. The poor would benefits from LVT via i.e. cross
subsidies regarding infrastructure etc.

Without land tax there is vast amount of speculation
in land which is pushing the price of land sky high and making it unaffordable
for the poor in cities. This is especially important for regions where
political patronage is linked to land.

The HABITAT II Agenda Section B.55 states that:
“Access to land and legal security of tenure are strategic prerequisites
for the provision of adequate shelter for all and for the development of
sustainable human settlements affecting both urban and rural areas. It is also
one way of breaking the vicious circle of poverty. Every Government must show a
commitment to promoting the provision of an adequate supply of land in the
context of sustainable land-use policies. While recognizing the existence of
different national laws and/or systems of land tenure, Governments at the
appropriate levels, including local authorities, should nevertheless strive to
remove all possible obstacles that may hamper equitable access to land and
ensure that equal rights of women and men related to land and property are
protected under the law. The failure to adopt, at all levels, appropriate rural
and urban land policies and land management practices remains a primary cause
of inequity and poverty. It is also the cause of increased living costs, the
occupation of hazard-prone land, environmental degradation and the increased
vulnerability of urban and rural habitats, affecting all people, especially
disadvantaged and vulnerable groups, people living in poverty and low-income
people.”

Section B.56, recommends 14 actions that can be taken
to “ensure an adequate supply of serviceable land” including the
following inter alia: Decentralize land management responsibilities and provide
local capacity-building programmes; Apply transparent, comprehensive and
equitable fiscal incentive mechanisms, as appropriate, to stimulate the
efficient, accessible and environmentally sound use of land, and utilize
land-based and other forms of taxation in mobilizing financial resources for
service provision by local authorities; Consider fiscal and other measures, as
appropriate, to promote the efficient functioning of the market for vacant
land, ensuring the supply of housing and land for shelter development; Develop
and implement land information systems and practices for managing land,
including land value assessment, and seek to ensure that such information is
readily available; Make full use of existing infrastructure in urban areas,
encouraging optimal density of the occupation of available serviced land in
accordance with its carrying capacity; Consider the adoption of innovative
instruments that capture gains in land value and recover public investments;
Develop appropriate cadastral systems and streamline land registration
procedures in order to facilitate the regularization of informal settlements,
where appropriate, and simplify land transactions; Mobilize local and regional
expertise to promote research, the transfer of technology and education
programmes to support land administration systems…”

Sound LVT/C policies create incentives for substantial
improvement in the housing stock, provides the basis for self-financing cities,
enables the benefits of the market system, and secures a fair distribution of
wealth.

3.
PROJECT
GOALS

The Global Land Tool Network will focus on the
development of pro poor gendered large scale land tools which currently do not
exist at country and global level and which will unblock the delivery of the
MDGs, especially Goal 7, target 11. The focus is on affordable land record,
land tax, land information, land administration and management and land
planning systems, within a governance framework. Specific goals include:-

1.     The development of pro poor gendered land tools

2.     Unblocking potential innovations and adding value

3.     Research, documentation, dissemination of knowledge

4.     Strengthening global comprehensiveness (Paris declaration on HAC)

5.     Improving the security of tenure of the poor

6.     MDG goals - indicators/benchmarks

7.     Cross cutting issues include developing world, post
conflict, environment and rural and urban.

3.1 Specific project
goals

The LVT/C capacity building program seeks to enable implementation
of the UN-HABITAT 1996 Action Agenda recommendations for land value capture and
land based tax policy. The training material will be available via Internet to
public officials, NGO and grassroots leaders, and others who are committed to
ensuring access to land for affordable shelter for all.

The training will focus in particular on the capture
of land value for public revenue and the land tools that are crucial to the
successful implementation of this policy, such as land assessments, cadastral
systems, and land registration. High-quality and affordable information
reliable, timely, and user-friendly will be presented to help prepare
governments for implementing these fiscal approaches, which, among other
benefits, can create incentives for improvement in the housing stock.

4.
ACTIVITIES

Some examples of the overall GLTN activities would
include:-

1.     Development of normative approaches for the purpose of
increasing security of tenure for the urban poor in Member States.

2.     Advocacy – presentation of findings in range of
forums.

3.     Expert Group Meetings (EGMs) and Regional workshops
for the transfer of knowledge.

4.     Commissioning of key research and tool development.

5.     Interactive conferences via Internet and ongoing
website development.

6.     Publications – recurrent and non recurrent.

7.     Management of knowledge (dissemination, data base
development of contacts, filing, library etc).

8.     Building partnerships and research associates,
including with grassroots organisations (NGOs, CBOs).

9.     Improvement of implementation methodologies especially
in regard to grassroots and gender.

Specific GLTN activities will include:-

1.
Administrative
and institutional up-scaling, also through an administrative counterpart.

2.
Tool development
activities, including specifically a training and capacity building component,
gender mechanism, Islamic component, the development of a grassroots mechanism,
a post conflict component, land administration and information component, the
development of an environmental framework and the up-scaling of existing tool
work.

3.
Moving towards
harmonisation of global partners.

Some of the specific tools, which will cover both
developing countries and post crisis areas, would include:-

1.     Land administration and governance tools (e.g. guidelines
for the transformation of a land agency and the decentralisation of functions).

2.     Guidelines for land administration in post conflict
societies.

3.     Pro poor regulatory frameworks (e.g. user fees).

4.     Appropriate spatial units for planning slums (e.g. as core
data which can take the place of cadastral data).

5.     Robust enumerations for slums.

6.     Measuring tenure security for the MDGs.

7.     Continuum of land rights beyond land titling.

8.     Key characteristics of a gendered land tool.

Some work on these tools has already been started, but
this needs to be upscaled, piloted, documented and generally made more robust
and comprehensive.

4.1 Specific project
activities

The specific project activities will be twofold:

1.
To document
existing best practices and lessons learned on LVT/C.

2.
To disseminate
existing best practices and lessons learned on LVT/C.

3.
To develop a
curriculum for a short Internet based course on LVT/C.

The following components will be applicable:

1.
a)  Develop explanatory documents on LVC/T
(global coverage)

b)
Develop SWOT analysis on LVC/T
(financial/social/environmental with global coverage)

2.
a)  Examples of existing LVC/T initiatives
(global coverage, country specific examples)

b)  Specific SWOT on existing examples of
LVC/T (global as well as country specific)

c)  Statements by key
individuals/institutions on LVC/T (global coverage)

3.
a)  Develop a curriculum for and the design
of a short online course on LVC/T (approximately 8h Internet time and 16h
offline time)

b)
Develop an online LVC/T calculator/simulator where a council/country can enter
their own data and then elaborate different LVC/T solutions seeing the results
in the LVC/T calculator/simulator. Calculator ought to be available on
www.gltn.net.

4.
a) Develop brief
brochure on LVC/T. (Edit/design and production by external partners, not in
this contract).

The above is
to be disseminated and available via the GLTN website at www.gltn.net (see also
5 below).

5. METHODOLOGY

The consultants will collect and edit relevant
information (see 4.1) and upload the documents to the GLTN website. The GLTN
administrative counterpart will assist in developing the GLTN website to also
adequately include LVT/C issues in accordance to this project proposal.

6.
OUTPUTS

1.     The management of knowledge is carried out in such a
way that it leads to improved tenure security for the citizens of Member
States, particularly for women.

2.     More appropriate regulatory/legal frameworks in
countries for the urban poor.

3.     Pro-poor tools that can be used by countries and their
professionals and legal aid networks.

4.     Contribution to the development of PRSPs, as well as
to Harmonisation and Alignment in the land sector.

5.     Continuous update of Global Trends in terms of land.

6.     Best Practices to assist countries implement the MDGs.

7.     Knowledge transferred to policy makers, consultants,
partners and associates.

6.1 Specific project
outputs

The outputs are further described in 4.1 above. The
information to be captured and presented ought to give answer to the following
questions:

1.     Where has LVT been implemented so far and what are the
results?

2.     How does a council with limited resources assess land
values?

3.     How would LVT be implemented in a small community with
limited resources and what are the barriers?

4.     How is it best managed to tax existing landowners who
have not been taxed in the past?

5.     Given that land tax can be imposed on poor, how is
that best managed without causing market evictions?

6.     What is the way forward if there is no valuation
profession in place in the country?

In regard to monitoring, the following requests are
valid:

1.     An inception report should be delivered by 1st
February 2007 to assess whether the consultants have understood the terms of
reference/project proposal.

2.     A mid term interim report should be delivered by 1st May
2007 to ensure proper dialogue with the consultants.

3.     A final report to describe the achievements together
with a financial report.

7. MONITORING AND EVALUATION

Monitoring and evaluation of the counterpart will
include specific monitoring and evaluation steps such as:-

·       Financial reporting.

·       Gender relations.

·       Quality of developed information on Internet.

·       Quality of publications.

·       Quality of online course.

8. RISKS

There is a
risk at the stage of LVT/C implementation that local partners would be forced to
drop out if the political winds were to change to dislike public recovery of
land rent. The consultant will seek to minimize this risk by carefully bringing
in a number of stakeholders, including landowners, at an early stage of policy
implementation.

There is some
risk that the LVT/C data might be lacking or unreliable, but with extant
mathematical formulas data can be extrapolated to provide reasonable
approximations. Methods ought to be developed to secure the needed data.