Investment in infrastructure three pillars of city resilience

Value Capture Component
As this is the first pilot project, the city plans to cover about 70% of the total investment cost from its budget in order to reduce land contribution from the land users and gain support from the community. The remaining 30% of the total cost will be covered by sale of surplus land.
Land Pooling/Readjustment Pilot, Tra Vinh, Vietnam
For agriculture land, each land user will contribute 33% of their land area into the project, and for residential land each land user will contribute 13%. Preliminary land value assessment shows that land price on average is estimated to increase by 3.5 to 5 times after the pilot project.
With World Bank support, a new decree that includes LP/R provisions was approved in January 2017, which became the first legal framework for LP/R in Vietnam.
The city expects that future revenue from land in the project area, such as land transaction tax, land use conversion fee (from agricultural to residential), and land tax, will also increase substantially as a result of the pilot project.
Land Value Tax: Overview
INVESTMENT IN INFRASTRUCTURE
DESCRIPTION

• Tax instrument that assesses value of land “as unimproved”, opposite to conventional property tax that focuses on taxing factual value of land with improvements.
• Aims to differentiate tax burden to land owners based on “windfall” benefits of unimproved land – location, physical characteristics and neighboring uses
• Directed at incentivizing improvement of underused urban sites by making land idling and holding prime lands for speculation a burdensome option for landowners

KEY REQUIREMENTS / IMPLEMENTATION FACTORS

• Robust land cadaster, land assessment and regular re-assessment practice
• Effective tax administration capacity at the local level
• Strong local real estate market that naturally differentiates values of land in unimproved condition based purely on location quality and preeminent development potential
• Fiscal decentralization