Articles in the transport press point to the problems caused because there is no proper system of land value taxation in place. This is disussed in relation to Crossrail, which received Royal Assent in July. Who will pay
for the £16 billion scheme?
Costs are to be shared between the
government, London businesses and revenue from fares. It is a bad
general principle that capital costs should come from fares, which
should be set to cover running costs. But it is the amount of the
business contribution that is proving contentious, and rightly so. Some
of the big businesses that stand to benefit have already agreed to
contribute, and there was a proposal for a supplement to the business
rate. The arguments begin when trying to decide how much should be
paid, for how long, and who should pay it. Business are reluctant to
pay if they do not receive a commensurate benefit, and there will be
free-loaders who will receive more than they will pay for.
This is not the way to pay for major infrastructure projects. With an LVTsystem in place, enhancements in land value due to the construction of new
infrastructure are automatically collected without the need for
further ad hoc arrangements. It is also the case that the land value
information obtained after the LVT system has been operating for a
while will provide transport planners with guidance about the external
benefits of projects. Whether Crossrail in its present form is good value for money is questionable. Its primary
function is to relieve pressure on the Central Line tube. It may be one of those projects that has grown out of hand, and that what is really needed is another tube line, at a fraction of the
cost. With an LVT system in place, the transport planners would have an indication about how much it was worth spending.
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