Land taxation frequently has been presented as a panacea for certain problems of agricultural development. More specifically, the land tax has been seen by many as a quick and easy substitute for land reform, especially in Latin America.1 This type of thinking, unfortunately, can cloud the real and important contribution that land taxation can make to the development process. Because of its ability to be relatively neutral in its economic effects on agriculture, land taxation is almost unique among the many ways available to convert surplus agricultural output into development capital.2 It is, however, no substitute for a direct land reform program; it merely complements a nation's direct efforts to improve the agricultural sector while it goes about its principal task of raising new public investment capital for the economy.3 This paper uses both theoretical and empirical analysis to examine the effectiveness of a land tax as a regulatory tool. We are particularly interested in evaluating land taxation as a device to induce an increase in agricultural output and productivity and a more equitable and economic distribution of