The City Corporation has found just one potential benefit of a development land tax – the sidelining of Ken Livingstone from planning gain supplement negotiations.
The corporation has castigated government plans for PGS, but in a draft response to the Treasury – which passed through the PGS paving bill on Tuesday – said: “PGS would set a fixed allocation of funds to the regional tier – the mayor of
This would be helpful in removing him from negotiations on how much planning benefit he should get from schemes.”
Livingstone has annoyed the corporation for demanding increasingly higher section 106 payments from developers for big-scale projects, including the Helter-skelter.
Despite this one benefit, the corporation still condemned PGS as “a tax burden on development that will make marginal schemes unviable”.
It argued that the land tax was unworkable in an urban environment and that it would distort the market and accentuate development cycle peaks and troughs.
“PGS would reduce the time period during which a scheme is viable at times of fluctuating rents,” it said.
“This means developers will have a smaller window of constructing schemes. Such feast-and-famine cycles in the property market and the development industry are inefficient and unsustainable.”
The introduction of PGS would also result in a rush of pre-PGS development followed by a lull while developers waited for its repeal, added the corporation.
The City is in favour of a tariff-based system as favoured by the British Property Federation. Final responses to PGS are due by 28 February.
