[diggers350] Fwd: Fight tax on sustainable developments

Jock Coats jock.coats at oxfordshirecommunitylandtrusts.org.uk
Mon Feb 19 09:19:15 GMT 2007

Yeah - Oxford City Council noticed this as well and are discussing  
their response today I believe.

However, much as I hate the idea of this four times tried and failed  
tax (Land Value Tax being by far the superior vehicle to use), and  
worry about whether it will mean that Community Land Trusts might as  
well pack up and go home (if we had one to go to), I think there is a  
way round it.

Our way of working involves capturing and "sterilizing" the value of  
land by putting it in a perpetual trust and not crystalizing out its  
value with every subsequent transaction.  So we could potentially  
legitimately claim that the planning consent has not added any value  
if it is given for such a vehicle!

In fact a little devil on my shoulder suggests that it could even  
reduce the price we have to pay for land in the near-term if for- 
profit developers try to claw back the tax by paying landowners less,  
or, as happened before, don't come into the market with new  
applications while the tax is in force....:)


On 18 Feb 2007, at 22:22, Simon Fairlie wrote:

>> 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.

Jock Coats - Chair, Oxfordshire Community Land Trusts
c/o Warden's Flat 1e, J Block Morrell Hall, OXFORD, OX3 0FF
w: +44 (0)1865 483353 h: +44 (0)1865 485019
m: +44 (0)7769 695767 e: jock.coats at oclt.org.uk
www: http://www.oclt.org.uk/ - http://jockcoats.blogspot.com/

More information about the Diggers350 mailing list