Report calls for new tax powers for the Mayor of London
London could soon mirror Paris when it comes to raising money for its transport and housing projects. A new study claims Sadiq Khan should be granted powers to impose a payroll tax on businesses and a levy on overnight visitors.
Paris already pulls in around €7 billion a year through a payroll tax. Employers cover up to 3% of gross wages for every worker on their books. Tourists in the French capital also pay nightly charges of up to €15. On top of that, City Hall in Paris pockets parking revenues.
London, by contrast, had to cobble together cash for the Elizabeth Line through business rates and development taxes. It was a patchwork fix, not a sustainable model.
The new paper, titled London Unchained and put together by Labour Together and the YIMBY Alliance, warns that too many London projects are stuck in limbo. Some delayed. Some scaled back. Others abandoned altogether.
“It is ridiculous that London, one of the richest economies in the world, has to come to the government with a begging bowl to fund the infrastructure it needs,” the authors say.
They argue that the capital should be allowed to tax the very businesses, households, and visitors who benefit most from London’s infrastructure. In return, the Mayor would stop turning to the Treasury for handouts.
The report’s writers insist this isn’t about choosing London over Birmingham, Manchester, or Leeds. “We need to do both,” they add. London must fund itself, they say, so government cash can flow to regions less able to stand alone.
The Bakerloo Line extension is used as Exhibit A. The scheme would stretch the Tube from Elephant & Castle to Lewisham and then Bromley. Cost? Roughly £13 billion. Even with contributions from businesses and property developers, City Hall is billions short.
With new fiscal powers, supporters claim, the Mayor could plug that gap himself.
Sources close to Sadiq Khan suggest discussions are already underway. Options include a payroll tax, a London-wide property tax, and a levy on hotel stays.
A spokesperson for the Mayor told the Local Democracy Reporting Service: “The Mayor welcomes the new era granted to London through the latest Devolution Bill, which means we can move forward with innovative new policies to boost economic growth and raise living standards in the capital as well as across the country.
More devolution would allow us to unleash London’s economy further, and compared to other global cities we remain a heavily centralised country, with too much power still in the corridors of Whitehall.
The Mayor will continue working closely with the Government to deliver more devolution for the capital as we build a fairer, safer, more prosperous London for everyone.”
