torsdag 4 januari 2007

Planning charge cockup in the making

Following several rounds of consultation, the Treasury has come up with its proposals for collecting the increase in land value arising from planning permission in a document called Valuing Planning Gain.

The idea is to charge a levy on the increase in the value of sites that occurs when planning consent is given. This is meant to be used to pay for infrastructure.

The proposal is a re-run of similar legislation which was introduced in 1947 repealed in 1951, introduced again in 1967, repealed in 1970, introduced again in 1975/6 and repealed in 1980.

It was complex and yielded little revenue. It also caused a shortage of land as owners of potential development sites kept them off the market, pending repeal of the legislation. The proposal has been opposed from various positions within both the develoment industry and amongst professionals. Almost nobody is in favour. The Royal Town Planning Institute (RTPI) has condemned the proposal in a press release.

Nothing could demonstrate the complexity and difficulties involved in the proposal Planning Gain Supplement better than the government's own consultation paper. Indeed, the civil servants responsible deserve to be congratulated on showing this, more effectively, indeed, than any opponents of the idea could have done. Two valuations are required - before and after the planning consent has been given. But "before" values inevitably already have included in them the "hope value" in expectation of the planning consent, so that the real increases in value resulting from the change in use will not be captured.

The proposal is a recipe for bureaucracy and expensive disputes between the authorities and the owners of development land, and their highly paid professional advsors. And for what?

There is a simple and straightforward tax reform which collects development value as a matter of course, land value taxation.

Unfortunately, the government has allowed itself to be blinded by the fog of fear, uncertainty and doubt which are used by those with a vested interest in opposing land value taxation, and so we are being offered this pig's ear of a piece of legislation, which is identical in concept to that which has failed three times before.

The worrying thing is that this has been the subject of "consultation", demonstrating yet again the consultation in Britain is a sham. But why does the British government act so persistently against the interests of the people it is pretending to serve, in this case ingoring the broadly-based opposition?

There is a conference being organised by the RTPI next month.

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