Source · Select Committees · Housing, Communities and Local Government Committee
Recommendation 8
8
Paragraph: 71
Financial devolution is necessary to ensure the success of devolution through giving devolved authorities greater...
Recommendation
Financial devolution is necessary to ensure the success of devolution through giving devolved authorities greater freedom from central government, enabling them to take longer-term decisions reflective of their strategic purpose, and enhancing their direct accountability to their electorates. It must be accompanied by redistributive measures to ensure areas with lower revenue raising potential do not lose out. We therefore recommend that the Government should: • explore alternative ways in which revenue can be raised, which could reduce reliance on council tax and business rates. • consider offering devolution of a tourism tax, possibly to combined authorities where the revenue can be redistributed as well as meet the costs incurred by tourists. • follow our previous recommendation to explore how to level the playing field between bricks and mortar retailers and online retailers. Further financial devolution could follow these measures if they prove to be a success.
Paragraph Reference:
71
Government Response
Acknowledged
HM Government
Acknowledged
As the Committee is aware, local authorities are funded through a combination of central government grants and local taxes and charges. Council Tax and Business Rates are the primary sources of tax revenue for local government. The GLA and most existing mayoral combined authorities have fiscal powers including the power to charge a mayoral council tax supplement and they and local authorities can levy a business rates supplement. The Levelling Up White Paper commits to explore with Combined Authorities further flexibilities to enable them to raise their own funding through the business rates system to fund local economic development. The Government will continue to explore the arguments for and against an Online Sales Tax as a way of rebalancing the tax burden between in-store and online retail. The revenue from an Online Sales Tax would be used to reduce Business Rates for retailers in England. A policy consultation on an Online Sales Tax will be published shortly. The Government’s Levelling Up White Paper outlines plans to allow councils to charge up to double the standard council tax rate on any home left empty for longer than a year, rather than two. This will empower local leaders to encourage more empty homes back into productive use, while raising additional revenue to invest back into local communities. The Chancellor keeps the tax system, including the local tax system in England, under review and welcomes suggestions for improving it.