QPA attacks development tax proposals

RESPONDING to the Government’s consultation on a proposed Planning Gain Supplement (PGS), the Quarry Products Association has raised serious concerns about the application of the planned new tax to mineral workings.

The consultation arose out of proposals set out in the Barker Review of Housing Supply of spring 2004, which could see the Government tax increases in land values following the award of planning permissions.

The QPA argues that the proposals do not take into account the unique changes that occur to land value during the life of mineral workings and could unfairly link such operations with residentially developed land.

Although there is an initial uplift in land values when planning permissions are granted for mineral extraction, the Association says this is far less than the consultation identifies for other forms of development. And unlike residential development, the financial yield from mineral extraction is spread over the life of the working, which may be 20 or more years. Moreover, as minerals are extracted the value of the land declines, often back to agricultural value.

In its response to the consultation, the QPA has identified the following factors that differentiate mineral workings from the other identified land uses: mineral working is a temporary form of development, unlike built development; minerals workings are restored to beneficial after uses following extraction; the financial yield from a mineral permission will be realized over several years and thus a tax payable in full at the start of development would be inequitable; minerals developments, unlike other forms of development, do not create significant and long-term demands on local infrastructure and services; minerals operators already contribute to local communities through site-specific Section 106 agreements made with local authorities.

With these factors in mind, the QPA says mineral extraction should not be within the scope of the PGS and is calling for mineral workings to be exempted.

The QPA’s director of planning, Duncan Pollock, commented: ‘Kate Barker’s recommendation to levy for a proportion of land value uplift through the planning process clearly has residential development very much in mind. With the exceptional and unique circumstances that characterize land used for mineral workings, it seems completely unjustified to subject such temporary development to the same kind of taxation.’