Land tax to ‘incentivise development’
THE Welsh Government is proposing to introduce a vacant land tax aimed at kickstarting regeneration by stopping the hoarding of sites by developers.
Today Finance Secretary Mark Drakeford will put forward the idea to test new powers that came to the National Assembly following the passing of the Wales Act 2014.
Last October four possible taxes were shortlisted by the Welsh Government – the others being a social care levy, a disposable plastics tax and a tourism tax.
Explaining why the vacant land tax had been chosen, Mr Drakeford said: “Housing is a priority for the Welsh Government. A tax on vacant land could prevent the practice of land banking and land not being developed within the expected timescales.
“The Republic of Ireland vacant sites levy provides a useful starting point for how a vacant land tax could work in Wales. The existing model in the Republic of Ireland and the relatively narrow focus of the tax make this the most suitable of the four shortlisted ideas to test the Wales Act.”
A Welsh Government spokesman said: “This is the very start of the process of developing a new tax. The policy objective of a vacant land tax would be to bring idle land into productive use – this could include land which already has permissions associated with it or is within the local development plan, but is not being developed. The idea is not primarily focused on revenue raising. Rather, it would focus on incentivising more timely development by making it more expensive to hold on to vacant land, which has been identified as suitable for development.”
The Irish Government is planning to raise its vacant sites levy from 3% of the site value to 7% in 2019. Housing Minister Eoghan Murphy said recently: “We have a severe housing shortage. The 3% levy is not seen as sufficient to get that land back into use. Property interests have ample time to sell that land or bring it into productive use.”
Since announcing the shortlist of four new tax ideas last October, the Welsh Government has been examining the case for each of these and will continue to do so.
As yet no decision has been taken about how much the tax would amount to.
Before today’s announcement, Welsh Conservatives had argued strongly against a tourism tax, saying it risked seriously damaging the industry in Wales.