Regional mayors to retain business rates and gain income tax share
The Government says regional mayors will gain new ways to raise and retain revenue, including a share of income tax and more business rates. It presents the changes as a way to fund local infrastructure and give local leaders greater control over investment.
Mayors are due to retain 20 per cent of business rates next year, rising to 100 per cent by the end of the decade; the Treasury says this will replace central government grants. From 2028-29 they will receive a share of income tax and may impose an uncapped overnight visitor levy from 2028. The Government also announced £285 million for 2027-28 for areas moving towards devolution deals, while the Conservatives criticised the plans as a route to higher taxes and UKinbound said the visitor levy timetable was too tight.
In short
- Mayors are set to retain more business rates and receive income tax revenue.
- An uncapped visitor levy could begin in 2028.
- The Government says devolution deals will cover over 90% of England.
Steelman: both sides, in good faith
The strongest fair case each way — we don't pick a winner.
The case for
Giving mayors a larger share of locally raised revenue could help them fund transport and other infrastructure in response to local needs, while making decisions more accountable to residents and businesses. Replacing grants with retained business rates and adding an income tax share could give areas more predictable resources and a stronger incentive to support local growth; a visitor levy could also ask tourists to contribute to services they use.
The case against
Shifting revenue from central grants to local taxes could leave areas with unequal tax bases less able to fund services, while giving mayors more taxing powers may raise costs for residents, employers and visitors. Critics can also argue that an uncapped visitor levy risks deterring tourism, and that introducing it on a tight timetable could burden businesses before they can adapt.
Explained simply
Regional mayors are elected leaders responsible for transport, planning and economic development across a wider area than one council. Devolution deals transfer some decisions and funding from central government to these local leaders, though the powers and responsibilities vary by area.
Business rates are taxes paid by many businesses on their premises, while income tax is paid by people on their earnings. The Treasury, which manages the Government’s finances, currently provides grants to local areas; changing how much tax revenue they keep affects both local budgets and the money distributed from the centre.
The plans also include a possible charge on visitors staying overnight, known as a visitor levy. How these funding changes affect local services, businesses and residents will depend on how the arrangements are put into practice and how different areas use the money.
Read the full article at the source →
Originally published by Daily Mail as “No 10 hands mayors more cash in business rates and income tax take”.