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Subject: Mayor’s Response to the Planning Committee’s Report on a Land Value Tax for London Report to: Planning Committee Report of: Executive Director of Secretariat Date: 1 February 2017 This report will be considered in public 1. Summary 1.1 This report notes the response from the Mayor, to the Committee’s report, “Tax Trial – A Land Value Tax for London?” 2. Recommendation 2.1 That the Committee notes the response from the Mayor to the Committee’s report “Tax Trial – A Land Value Tax for London?” as attached at Appendix 1. 3. Background 3.1 On 22 February 2016 the Committee published “Tax Trial – A Land Value Tax for London?”1 the final report of a rapporteur investigation by Tom Copley AM on behalf of the Committee that explores the potential of a Land Value Tax for London. The report examines the role of such a tax in providing incentives to bring forward land for the development London needs to sustainably support its growth. 3.2 The report made three recommendations to the incoming Mayor: 1 1. To examine the powers that would be necessary to implement and operate an LVT to replace the three basic property taxes: council tax, business rates and stamp duty land tax. 2. To commission an economic feasibility study that would model the implementation, operation and likely yield of an LVT in a geographically defined area of London - for example in the OPDC. https://www.london.gov.uk/sites/default/files/final-draft-lvt-report_2.pdf City Hall, The Queen’s Walk, London SE1 2AA Enquiries: 020 7983 4100 minicom: 020 7983 4458 www.london.gov.uk 3. Should the economic feasibility study show an LVT would deliver positive benefits in terms of encouraging housing development and funding supporting infrastructure, the Mayor should trial an LVT in a geographically limited area of London - for example the OPDC - for a fixed period of time, to test the impact of this approach on encouraging and funding development. 4. Issues for Consideration 4.1 The Mayor has now responded to the report. The full response is attached as Appendix 1. 4.2 The Mayor’s overall position is support for the report’s recommendations, but at the moment he does not have the powers to implement them in full. Primary legislation and further devolution of fiscal powers to the Mayor may be required. 4.3 However, the Mayor has outlined a number of ways in which he is willing to take the recommendations of the report forward: The Mayor has re-established the London Finance Commission to consider the need for further devolution of fiscal powers to London. As part of its review, the Mayor has asked the Commission to consider the potential for land value taxation. In its last Budget, the Government invited Transport for London to carry out a technical study to assess the potential for land value uplift capture. The Mayor has now asked Transport for London to discuss their work with the Planning Committee as it is relevant to the Land Value Tax report and its recommendations. The Mayor believes “The idea of a land value tax pilot is a good one”, though, and the Mayor will try and take this idea further with the Treasury in the context of a number of other complex areas of tax devolution (including business rates). The Old Oak and Park Royal Development Corporation, a Mayoral Development Corporation, has indicated it would like to pilot some of the other recommendations in the Land Value Tax report, if the powers were available. 5. Legal Implications 5.1 The Committee has the power to do what is recommended in this report. 6. Financial Implications 6.1 There are no financial implications to the Greater London Authority arising from this report. List of appendices to this report: Appendix 1: Response from the Mayor of London to the the Committee’s report, “Tax Trial – A Land Value Tax for London?” Local Government (Access to Information) Act 1985 List of Background Papers: None. Contact Officer: Telephone: Paul Watling, Scrutiny Manager 020 7983 4393 E-mail: [email protected]