Fiscal principles for self-organizing cities

August, 2019

In ‘Self-organizing’ cities, decisions are based on the unhampered, peaceful, and honest choices of individuals, and governance, aside from penalizing coercive harm, is based on voluntary agreements. Self-organization has become an increasingly important topic in planning theory, as such processes enable urban systems to more effectively adapt to various stimuli and contextual needs over time. Self-organization may lead to emergent spatial configurations that are more in tune with individuals’ values and preferences than the prevailing top-down approaches. The purpose of this article is to analyse how current tax systems impede emergent spatial configurations and, additionally, to explore what kind of fiscal rules and instruments are more supportive of creative (i.e. dynamically productive) processes of self-organization. The main finding is that the use of behavioural rules (such as contractual covenants and easements) and principles of taxation that do not distort the decentralized creation of value, such as user fees, congestion charges, and repayment of rental value received such as land value taxation, are superior to currently dominant approaches.