This paper investigates land taxation from a New Zealand perspective and examines the principles of economic efficiency and equity behind three common property valuation methods for taxation. The primary question is whether using land value as the base on which to assess property tax remains the most efficient and equitable tax mechanism compared to capital value tax on improvements and annual value tax on estimated income earned from the property. The paper briefly assesses the challenges confronting valuation and the impacts that may arise from a levy of property tax in jurisdictions with different features. While issues exist in the determination of any basis of value, it is asserted however, that there is a need for considering exemption provisions to implement a land value tax in New Zealand, which has a significant potential to compromise the principle of economic efficiency.