Agenda item

The Chair invited Aivaras Statkevicius, Senior Adviser, to introduce the item. 

Aivaras gave members a summary of the joint work on fiscal devolution carried out by the Resources, People and Places and City Regions Boards.  This included the two different outsourced research projects on:

-       messaging (which included discussing with focus groups the ideas around councils having further fiscal devolution); and

-       econometric research – how devolved and newly raised taxes/levies could work in practice.  As examples, this work focused on a tourism levy and local assignment of income tax.

Aivaras then discussed the three next steps:

-       The findings from the messaging research will be linked with the LGA’s Spending Review campaign.

-       The tourism levy to be taken forwarded by the Culture, Tourism and Sport Board, as this falls directly within their remit.  Aivaras stated that this had been a long-term call made by the LGA.

-       Made reference to the recent Autumn Budget announcement on an e-commerce levy. The e-commerce levy will be taken forward by the Resources Board, subject to their approval and the appropriate resource.

-       Both Leadership and Executive Boards will consider the next steps of this work.

Following the update, members made the following comments:

-       The Chair discussed the exploration of an e-commerce levy, and stated how important it was to state to government that this needs to be a locally retained tax rather than a nationally retained tax.  The Chair highlighted the differences between such a levy and recent government Autumn Budget announcements.  Reasons behind such a levy could include the retail sector, and the different tax burdens between physical high street shops compared to online shopping.

-       Members stated that the sector needs to work quickly.  Members stated that this levy could counter-balance the cost on local government, who are expected to pick-up the burden of failing high streets and town centres.  Members agreed that this funding could regenerate town centres, and stated that residents do like to shop online but also desire a nice town centre.  Members also made reference to the popularity of shopping online but picking-up in-store.  Members also discussed the amount of work that will need to be undertaken to convince government that local authorities are the best recipients of an e-commerce levy. 

-       Members also stated that the sector needs to think carefully and agreed that this work will be challenging; ‘over shooting’ the tax burden could have a detrimental effect on e-commerce and therefore a long-term, detrimental effect on shops and highstreets. 

-       Members agreed to the research proposal laid out in paragraph 15 of the report, and made reference to the possibility of local government retaining some or all of VAT as one way this levy could work.

-       Members also agreed that new e-commerce start-ups need to be provided with support by government.

-       Members discussed the wider tax system, and how in any devolution deal, a distribution mechanism is key.  Members also discussed skills, the devolution framework and how the effect of devolution deals in some areas will impact other areas.

Actions

-       Members agreed to the research suggested in paragraph 15.

-       Members noted the update.