British members of parliament are supporting government plans to introduce a new development tax but surveyors, developers, businessmen and property agents are lining up against it.
The Parliamentary Communities and Local Government Committee published a report earlier this month supporting government plans to tax increases in land values that result from planning consent being awarded for development.
The MPs said revenue raised by the Planning Gain Supplement could encourage the building of thousands of homes by raising funds for infrastructure.
Critics say the levy could have the opposite effect, because developers would be taxed twice. Developers already contribute to local government reserves when they receive planning permission, through a system known as Section 106 agreements.
Under the government's proposals, these agreements would be scaled back but critics say this is not enough because many local authorities would want to extract as much as possible from developers.
'The proposed Planning Gain Supplement is nothing more than a double tax on developers who already pay out huge amounts for infrastructure and community facilities through the existing Section 106 agreements with local councils,' said Philip Davies, the chief executive of developer Linden Homes.
'The Planning Gain Supplement will not replace this arrangement but instead exist alongside it, meaning housebuilders may often pay twice, as local authorities will believe that Treasury-collected supplements will be allocated to growth areas and not to the area where the new development is taking place.'
Research carried out by property consultancy Knight Frank on behalf of the British Property Federation, Confederation of British Industry (CBI), Home Builders Federation and Royal Institution of Chartered Surveyors attacks the proposals.
The tax may not raise as much money as hoped for new local infrastructure, could render some smaller developments financially unviable and result in planning delays because of disputes about the amount of supplement and Section 106 agreement money payable by developers at individual projects, the report says.
'The more these proposals are examined, the more pitfalls become exposed. Planning Gain Supplement could hinder development of all kinds, including commercial and industrial expansion and could have a real impact on the attractiveness of the UK as a place to do business,' said Michael Roberts, the director of business environment at the CBI.
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