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Lyons local tax proposal reignites Crossrail debate

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PROPOSALS IN a key government report published last week could see a wave of new investment in local transport infrastructure, such as Crossrail and tram projects.

Former audit commissioner Sir Michael Lyons's Inquiry into Local Government recommends that councils be given the power to charge businesses an additional rate on their premises.

Revenue raised would fund speci projects that had the support of the business community.

Backers of London's £10bn east-west Crossrail scheme said the supplementary business rate would make the project a reality. 'Crossrail should now be a 'when', not an 'if', ' said City of London policy and resources chairman Michael Snyder.

'The City of London Corporation has for many years supported the idea of a supplement on the business rate to help pay for essential transport schemes such as Crossrail.' So far the project has received support from the government and money for research and development, but a deal on the capital funding has yet to be reached.

The business tax could also see axed tram schemes being revived. 'The supplementary business rate would also allow a number of light rail schemes to come back from the dead, ' said Transport 2000 director Stephen Joseph.

Tram schemes in Leeds, Liverpool and Portsmouth all had central government funding cut off in 2005.

West Yorkshire Metro, Merseytravel and Hampshire County Council have yet to decide their of ial positions following the Lyons inquiry, but a supplementary business tax would give councils the funds to secure loans to get the projects off the ground (see table).

Only the City of London Corporation has such powers at the moment. It charges 0.4p for every £1 of business rate paid by ms to the government to cover security measures within the Square Mile.

Lyons told NCE that this measure should be coupled with councils receiving tax back on revenue generated by infrastructure to act as an incentive to invest.

In his Budget last week, Chancellor Gordon Brown agreed to carry the supplementary business rate proposal forward into this autumn's Comprehensive Spending Review.

See analysis page 15.

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