Smart Growth and Intelligent Local Finance

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Launching a new TCPA paper at a national conference in Oxford on development and land values, Dr Nicholas Falk, the economist, urbanist and strategic planner, argued for new local taxes to drive development in areas that need regeneration and to reconnect business communities with local government. The latest publication in the TCPA's Tomorrow Series argues that: Developing sustainable communities depends above all on providing the right financial climate. The current local taxation system is too centralised, and insufficiently joined-up. The paper draws on a wealth of foreign experience and previous research to suggest a range of practical solutions. It tries to be comprehensive, dealing in turn with upgrading the public realm, encouraging business growth, building sustainable communities, financing infrastructure, and securing a step change. In short it shows how intelligent local finance could help promote smart growth.The discussion paper follows up the Barker Review of Housing Supply in arguing the case for a more intelligent system of local finance that reinforces rather than displaces private investment, that makes the most of existing infrastructure, and can support growth in areas where demand is strongest, thereby responding to market signals.It argues that intelligent taxation should not just be about raising public finance efficiently, but should also be about minimising waste, contributing to social justice, and producing a more sustainable environment, or Smart Growth.It argues for tapping land values in financing infrastructure investment through modest measures, such as taxing parking spaces in out of town shopping and business centres. It also considers the potential for introducing charges on development, and on unused land with development potential in designated growth areas that local authorities can then use to increase the capacity of local services.The author believes that creating sustainable communities depends on securing more joined up investment at local level. He suggests splitting the Business Rate into two parts:- a commercial property tax, which goes to central government; and- a local element, which would be retained locally. The rate could be varied, while rates on small firms in Enterprise Areas could be removed.He argues that this will not only liberate local authorities, who currently get 75% of their funding from central government, but also encourage a shift in investment towards existing urban areas, in ways that will help overcome current spatial inequalities, which are among the worst in Europe.

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