The Missing Public Interest in Land：Auctions of Public Land in Taipei City

One of the fundamental services a modern government shall furnish is affordable housing. The ratio of the housing price to household income in Taipei has in recent years reached an astonishing figure of 15. Taipei has long suffered from a lack of readily available sites for residential development. In addition to monetary and iscal policies, a supply-oriented and location-specific measure is therefore called for. In this vein, the supply of public land in the market has become a promising policy alternative In spite of that, public land is an asset that belongs to all citizens. Therefore, sales of public land shall meet three conditions so as not to violate the requirement of the public interest. First of all, the price of land sold to private developers shall reflect the reasonable price that the parcel expects to fetch in the market. Secondly, ihe land sold to the developers shall be quickly developed in accordance with its highest and best use and not instead remain idle. Finally, no excessive profits shall be obtained from the land by the developers when the land is later developed and houses are sold. Our empirical evidence on auctions of public land in Taipei between 2006 and 2014 provides some disappointing findings. On average, public land is worth 1.37 times more than its auctioned price. In addition, nearly 90%of undeveloped public land has been idle for more than three years after being auctioned. Besides, the effective rates of land value tax and land value incremeni tax are on average 0.255%and 1.01%, respectively. We therefore conclude that the auctioning o public land in Taipei has operated against the public interest. We suggest that the government in future consider both fiscal and physical measures to improve the uses of public land. However, taxation shall remain the cornerstone ofthe policy package.