A NEW push for a windfall tax to recover some of the profits generated from the sale of land rezoned for development has been launched by a backbench politician.
Reform Jersey Deputy Raluca Kovacs said it was ‘time for action’, following years of political debate about whether to tax the vast profits when a field goes from being worth tens of thousands to several million pounds.
While Environment Minister Jonathan Renouf and Housing Minister David Warr have both backed the concept of a windfall tax ‘in principle’, they argued that more time was needed to consider how it could be applied.
Deputy Kovacs’s proposition asks the Assembly to agree that a land development tax ‘or an equivalent charging mechanism’ should be introduced to raise revenue for the States from any significant uplift in the value of land, from when it is rezoned or planning permission has been granted.
It also requests that Treasury Minister Ian Gorst bring forward the necessary legislation for approval ‘to give effect to the decision’ by 31 March 2024.
Land owners can generate millions of pounds from the rezoning process, which last year saw a field in St John sold for about 50 times its original value.
Under Deputy Kovacs’s proposed new regime, half of the profit would go to the Treasury – potentially to be invested back into shared-purchase schemes.
Last year, Field J1109, next to the former Sion Chapel, was rezoned for affordable housing in the Bridging Island Plan.
Before rezoning, the estimate on the 6.71-vergée site was around £70,000. After it was designated an affordable-homes site, suitable for around 42 properties, the field was sold for £3.55m.
The sale prompted Deputy Renouf to promise to bring forward proposals for a windfall levy, potentially through a ‘Sustainable Communities Fund’, the establishment of which was approved as part of the Bridging Island Plan.
At the time, Deputy Renouf said it was ‘a source of great regret’ that the Bridging Island Plan did not include a mechanism to capture the increase of land-value uplift that came with rezoning, which he described as a ‘colossal unearned gain’ for the owners.
Deputy Kovacs said she started to research the potential tax after the sale of Field J1109 was reported.
‘It [a windfall tax] is something that has been discussed before. It has been in review; it has been mentioned in the Island Plan. It is time for action,’ she said.
‘I really hope there is support for it. We know that if we don’t do anything, then all of this windfall profit is being created, purely through rezoning.’
Deputy Renouf said he was still looking to bring forward proposals and that he was willing to discuss them with Deputy Kovacs.
‘I absolutely stand by the principle that we need to capture some of the land-value uplift from when a field is rezoned for development,’ he added.
However, he claimed Deputy Kovacs was pushing for an ‘unrealistic timeline’, given that such a scheme would be ‘incredibly complex’.
‘We also wouldn’t usually be rezoning fields outside the creation of an Island Plan and, as such, there is plenty of time to carefully examine what mechanism could be used to capture the uplift – and not rush forward a proposal when it isn’t necessary,’ he said.
Deputy Warr also said he supported the concept ‘in principle’, but noted that it was something the Environment Minister was already looking at.
‘Raluca has something there but I think it needs to be examined very carefully, as it is extremely nuanced and needs to be bottomed out before we start putting things into law. One of the issues around it is how much is charged – depending on the type of development, the degree of uplift in land value, how it is applied and the level it is applied at,’ he added.
