Fwd: Fight tax on sustainable developments

Simon Fairlie chapter7 at tlio.org.uk
Sun Feb 18 22:22:27 GMT 2007

> Hi folks.
> Chapter 7 received this from a sympathetic local authority planner.
> I have been aware of this problem in theory, but been lazy about  
> attending to it in practice. There is just ten days of the  
> consultation process left , and it would be a very good idea to get  
> as many voices as possible urging that exemptions should be  
> available for developments where planning gain from the aquisition  
> of planning permission  is already channeled  into providing social  
> benefits such as  not-for-profit, affordable  and highly  
> sustainable housing.
> Simon
> Chapter 7
>> Dear Simon,
>> I am preparing a consultation response for my authority to the  
>> current Planning Gain Supplement (PGS) consultations http:// 
>> www.communities.gov.uk/index.asp?id=1504924
>> Are you aware of these? It strikes me that they could have very  
>> significant impacts on low impact developers.
>> In short, PGS is a new centrally administered tax on the uplift  
>> value of the grant of planning permission, which would partially  
>> replace planning obligations (s106), although these would continue  
>> to exist in a scaled-back form. It is the latest attempt at taxing  
>> betterment value. Introduction is proposed no earlier than 2009.  
>> The level of PGS is to be 'modest' and has yet to be confirmed,  
>> but figures of 10-20% are mooted. It would be payable at  
>> commencement of development.
>> I am concerned that this could have devastating effects on the  
>> viability of not-for-profit, socially beneficial and shoe-string  
>> projects including low impact developments. How could they afford  
>> a PGS payment, especially if no future property sale is envisaged  
>> to realise a financial return? The charge could be particularly  
>> high if the project involves a residential element.
>> Going ahead without paying PGS could lead to the issue of a PGS  
>> Stop Notice, making further development unlawful until the charge  
>> is paid. It is in effect introducing a parallel enforcement  
>> system, which could be a double whammy for low impact developers.  
>> Moreover a PGS Stop Notice could be issued for a commenced  
>> development whether or not it has planning permission (see Chapter  
>> 7 of the 'Paying PGS' document). While LPAs use their discretion  
>> in enforcing breaches of planning control, there is no mention of  
>> this for PGS, so it could hit every LID case and result in their  
>> development being unlawful, plus financial penalties (which would  
>> pass with the ownership of the land until paid) and ultimately  
>> prosecution.
>> The current proposals only contain the following exemptions, taken  
>> from the 'Paying PGS' document:
>> "Q. Will all developments need a PGS Start Notice?
>> A. PGS will not apply to small-scale home improvements. Such  
>> developments will
>> not therefore require a PGS Start Notice, even where planning  
>> permission is
>> necessary. This will exclude more than half of planning  
>> permissions granted.
>> Development under the General Permitted Development Order 1995  
>> that does
>> not require planning permission will not need a PGS Start Notice. The
>> Government is still considering thresholds for small-scale non- 
>> residential
>> development."
>> The House of Commons Communities and Local Government Committee  
>> recommended in Nov 06:
>> '21. We find no grounds for PGS exemptions or discounts for  
>> developments of
>> marginal viability. (Paragraph 41)'
>> To which the Government respond:
>> 'The Government welcome this recommendation. Maintaining a broad  
>> scope with a
>> wide base would enable PGS to be levied at a modest rate with a  
>> reduced risk of
>> creating economic distortions or avoidance opportunities.'
>> While betterment is a laudable principle, I think it would be  
>> worth a Chapter 7 consultation response to seek exemptions from  
>> PGS liability for low impact developments, charity projects and  
>> more generally developments of the highest sustainability  
>> standards. My work response can't cover LIDs.
>> The deadline is 28th Feb 07.

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