Source · Select Committees · Housing, Communities and Local Government Committee
Recommendation 9
9
The Government should commission research into how income tax or other national tax revenue could...
Recommendation
The Government should commission research into how income tax or other national tax revenue could be allocated to local and combined authorities, or how a local income tax across a combined authority area could work, including details of tax setting, funding equalisation, and how HMRC can better identify where taxpayers live. The Government should consider permitting other measures, including land value capture for local authorities, to help them raise additional money. (Paragraph 72) 64 Progress on devolution in England
Government Response
Acknowledged
HM Government
Acknowledged
The Government has no plans to hypothecate revenue from national taxes to local or combined authorities. Doing so would make it harder to pool and share our resources effectively. In contrast, the existing arrangement of funding local and combined authorities through grants, council tax, and business rates allows funding priorities to be more closely aligned with need, rather than depending on where the revenue is raised. This arrangement provides for significant redistribution through the Exchequer both to less prosperous areas and through the progressivity and proportionality of most taxes and reliefs. Capturing the uplift in land value that comes with development is an important element of the planning system and helps to make sure new development brings benefits to local communities. Local planning authorities can use the Community Infrastructure Levy and Section 106 planning obligations (together called ‘developer contributions’) to capture a proportion of the increases in land value that occur as a result of planning permission being granted. These contributions help deliver affordable housing and the infrastructure that new homes and local economies require. Policies relating to developer contributions are set locally and should be reflected in the price paid for land. The government has proposed significant changes to the planning system to make it simpler, quicker and more accessible for local people to engage with, and more certain for developers. And that is why the government is exploring the introduction of a new ‘Infrastructure Levy’ to replace both Section 106 planning obligations and the Community Infrastructure Levy and be set in a way which captures at least as much value as the existing system.