In a radical rethink of the way in which London is funded the 17 members of the London Commission are due to report this week and are likely to recommend that certain tax raising powers are devolved. It is estimated that Revenue streams of up to £12bn could be placed under local control with a pound-for-pound reduction in Treasury grants.
Taxes mooted as possible candidates for the transfer include:
- Stamp Duty Land Tax, and
- Capital Gains Tax on property disposals
These would be in addition to Business Rates and Council Tax. In addition to these taxes the London Commission report seems likely to recommend a London tourist tax. This would be used to invest in London’s tourist industry.
How these taxes would be collected is another matter. At present Capital Gains Tax in particular is assessed by HMRC from information filed via self assessment returns. Are we to expect a national and a London rate for CGT? Will London be issuing tax returns? It would seem there are a lot of practical issues to be sorted in addition to the Treasury’s attitude to devolving tax revenue streams to London.
It is also mooted that the present Treasury controls over local borrowings by the GLA (Greater London Authority) be removed in order that London can raise money to fund the promotion of growth or to reduce public expenditure.
No doubt Bristol, Birmingham, Liverpool and Manchester, and a number of the other, larger cities will be watching developments with interest. We may be moving toward a nation of city states?