[if no densification]...then adding taxes isn't an incentive to better using the land. Which was the point of this tax. You seem to equate "densification" and

[if no densification]...then adding taxes isn't an incentive to better using the land. Which was the point of this tax. You seem to equate "densification" and "better using the land". That is a narrow definition of "better using the land". In strictly utilitarian terms any change that increases total utility would be "better using the land", so if a tax increase on land makes some current residents reprioritise their money and decide to move, giving space to other people who value the location more, then that is "better using the land".