Its a mismatch of terminology to say land is scarce. Generally its about the utility of land. Rents are the difference between the least-productive land and any

Its a mismatch of terminology to say land is scarce. Generally its about the utility of land. Rents are the difference between the least-productive land and any other (Ricardo). City land is useful not only because people congregate, but also particularly because taxes provide services. When the taxes are levied not on the land, it makes the land more valuable (as it receives benefits it doesnt pay for) and thus creates rents.