Boris Johnson, London Mayor has today announced an increase in business taxes for all London businesses with revenues in excess of £55,000. The charge will apply from April 2010 across all thirty three London Boroughs. This increase represents the full two pence in the pound increase on business rates he is allowed to levy. The fee, will contribute £4.1 billion towards the £15.9 billion Crossrail commuter line. The levy is scheduled to apply for thirty one years. It will be paid by 46,500 medium and large firms but eighty per cent of London firms will not be charged.
I welcome the empowerment of local politicians to make decisions about the appropriate level of taxation in their area. However, as a London voter I do question the value of a tax hike on London business in a time of economic recession. This increase comes on top of the fare increases the mayor has already announced in the cost of bus and tube travel in London this year.
I accept that the Mayor faced a deficit in Transport for London (TFL) finances inherited from the last administration. A deficit he attributes to the decision of the former Mayor Ken Livingstone to hold down tube fares in the year before the 2008 Mayoral election (a decision which Boris Johnson describes as ‘cynical’). However, there are better ways of reducing the deficit and funding necessary capital expenditure than increasing taxes.
In 2010/11 the London Mayor has discretion over a £126.1 million budget and oversight over a budget of £3.25 billion. The savings Boris Johnson identified in 2009 were welcome but they amount to less than ten per cent of his budget (£7.5 million per annum). Instead of increasing taxes on business and charges on commuters perhaps the Mayor could consider the following:
- Further cutting the costs of running City Hall.
- Funding Crossrail through private investment and having it run as a private enterprise.
- Identifying assets which could be privatised to raise the necessary funds.
In the interests of fairness Harry Phibbs at ConservativeHome has listed 100 achievements of Boris Johnson since the latter became Mayor which readers may be interested in.
The views expressed above are my own and do not reflect the corporate policy of the LGiU or its component members.