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Hong Kong makes 2 billion a year on public transportation. They did that by giving the land around the station to the transportation agency, so they lease it ou

Hong Kong makes 2 billion a year on public transportation. They did that by giving the land around the station to the transportation agency, so they lease it out long term, and that pays for all the trains and operations. They charge a token fee for using public transportation. I'd prefer to see real public support, rather than a business/profit justification for lower fares, but in the current greed-valued world I'll settle for a greed justified way to create a community good.

johannes1234321 8y ago
So capitalism tells them what to do: Sell that deficit train business and go fully into real estate :-)
- closeparen 8y ago
  They make a better profit than a typical landlord because train service improves the value of the real estate.
- alwayseasy 8y ago
  Capitalism helped by a government that doesn't grant land leases longer than 75 or 99 years... so it can give it to the transportation agency.
avar 8y ago
This system is just amounts to indirectly funding public transportation with taxation, just from taxing local properties via rent instead of funding it from general tax revenue. Perhaps it results in more public support for some reason, I'm unfamiliar with the politics of Hong Kong.
- rtpg 8y ago
  Usually the alternative is that the money from building rent is just going into the pocket of some real estate company. So it’s kinda like a big tax on real estate companies (which sounds like a hell of a good policy to me. Rent seekers and all that)
  - avar 8y ago
    Then just tax that. Effectively giving public transport the ability to collect taxes in small pockets of your land around public transport stations seems like an odd way to go about it. You could similarly run the police at a profit instead of being a cost center by gifting 100 hectares around every police station to the police, and have them collect rent on it. That doesn't make sense either. For one, it creates a perverse incentive where the government can't let property prices fall for the common good least their public transport (or police) services would go out of business. Hong Kong famously has a problem with this. It's a relatively low-tax regime with absurdly high housing prices, because they raise a much larger part of their revenue by taxing land than most other similarly developed areas.
    - casual_slacker 8y ago
      Taxing real estate at large causes a supply-side pressure, driving up market prices. If you only "tax" very specific land around a train station, you limit the effect on the greater market. In theory a government could pass such location-specific tax law, but I've only see that done via property taxes.
      - zozbot123 8y ago
        > Taxing real estate at large causes a supply-side pressure, driving up market prices. Not if you tax the value of ground rent only. If anything, the effect goes the other way, as owners are incented to put their underused properties on the market. (And yes, taxing ground rent only in some relative small areas e.g. around a station may introduce distortionary incentives. But in general, shifting taxation towards land improves the incentive for good government, especially provision of local amenities.)
    - lmm 8y ago
      Many economists see land value tax as a "perfect tax" that has none of the bad incentives of other tax regimes.
    - rtpg 8y ago
      The advantage is that by doing this you are only taxing people in opportunity cost and it’s only affecting a small area There is also strong synergy between the trains and the area immediately around it. Also you have to buy the land anyways for the station. Don’t think that argument holds as strongly to police statins
masonic 8y ago
makes 2 billion a year on public transportation No, they make money on real estate to offset their losses on transit.
- samatman 8y ago
  The value of that land is its adjacency to public transportation, I don’t see this statement as the slam-dunk you seem to think it is. When Google ‘loses money’ on search to make it up with ads, everyone thinks this is very clever. What Hong Kong is doing is no different.
  - masonic 8y ago
    The value of that land is its adjacency to public transportation Source? In SV, land value is generally orthogonal to nearness to public transportation (because of demographics if nothing else). And along transit lines, the only uptick is near to stations. (If you live next to rail between stations, it's a disadvantage because of noise and added travel in accessing neighborhoods on the other side of the tracks, since you are limited to established crossings.
- so33 8y ago
  Actually, no. The MTR’s farebox recovery is over 100%. They make a profit on fares and make even more money on real estate.
  - masonic 8y ago
    Okay, that wasn't stated... and that's unheard-of among US transit systems AFAIK.
  - MrTonyD 8y ago
    I remember reading that they were able to cover all the costs because of accounting categorizations that they could consider only because they had the real estate. But I don't really know - that's just what some article was saying.

johannes1234321 8y ago

So capitalism tells them what to do: Sell that deficit train business and go fully into real estate :-)

closeparen 8y ago
They make a better profit than a typical landlord because train service improves the value of the real estate.
alwayseasy 8y ago
Capitalism helped by a government that doesn't grant land leases longer than 75 or 99 years... so it can give it to the transportation agency.

avar 8y ago

This system is just amounts to indirectly funding public transportation with taxation, just from taxing local properties via rent instead of funding it from general tax revenue. Perhaps it results in more public support for some reason, I'm unfamiliar with the politics of Hong Kong.

rtpg 8y ago
Usually the alternative is that the money from building rent is just going into the pocket of some real estate company. So it’s kinda like a big tax on real estate companies (which sounds like a hell of a good policy to me. Rent seekers and all that)
- avar 8y ago
  Then just tax that. Effectively giving public transport the ability to collect taxes in small pockets of your land around public transport stations seems like an odd way to go about it. You could similarly run the police at a profit instead of being a cost center by gifting 100 hectares around every police station to the police, and have them collect rent on it. That doesn't make sense either. For one, it creates a perverse incentive where the government can't let property prices fall for the common good least their public transport (or police) services would go out of business. Hong Kong famously has a problem with this. It's a relatively low-tax regime with absurdly high housing prices, because they raise a much larger part of their revenue by taxing land than most other similarly developed areas.
  - casual_slacker 8y ago
    Taxing real estate at large causes a supply-side pressure, driving up market prices. If you only "tax" very specific land around a train station, you limit the effect on the greater market. In theory a government could pass such location-specific tax law, but I've only see that done via property taxes.
    - zozbot123 8y ago
      > Taxing real estate at large causes a supply-side pressure, driving up market prices. Not if you tax the value of ground rent only. If anything, the effect goes the other way, as owners are incented to put their underused properties on the market. (And yes, taxing ground rent only in some relative small areas e.g. around a station may introduce distortionary incentives. But in general, shifting taxation towards land improves the incentive for good government, especially provision of local amenities.)
  - lmm 8y ago
    Many economists see land value tax as a "perfect tax" that has none of the bad incentives of other tax regimes.
  - rtpg 8y ago
    The advantage is that by doing this you are only taxing people in opportunity cost and it’s only affecting a small area There is also strong synergy between the trains and the area immediately around it. Also you have to buy the land anyways for the station. Don’t think that argument holds as strongly to police statins

masonic 8y ago

makes 2 billion a year on public transportation No, they make money on real estate to offset their losses on transit.

samatman 8y ago
The value of that land is its adjacency to public transportation, I don’t see this statement as the slam-dunk you seem to think it is. When Google ‘loses money’ on search to make it up with ads, everyone thinks this is very clever. What Hong Kong is doing is no different.
- masonic 8y ago
  The value of that land is its adjacency to public transportation Source? In SV, land value is generally orthogonal to nearness to public transportation (because of demographics if nothing else). And along transit lines, the only uptick is near to stations. (If you live next to rail between stations, it's a disadvantage because of noise and added travel in accessing neighborhoods on the other side of the tracks, since you are limited to established crossings.
so33 8y ago
Actually, no. The MTR’s farebox recovery is over 100%. They make a profit on fares and make even more money on real estate.
- masonic 8y ago
  Okay, that wasn't stated... and that's unheard-of among US transit systems AFAIK.
- MrTonyD 8y ago
  I remember reading that they were able to cover all the costs because of accounting categorizations that they could consider only because they had the real estate. But I don't really know - that's just what some article was saying.