Livingstone backs windfall property tax for transport

The Mayor of London has thrown his weight behind a "windfall tax'' that could raise £1bn for transport schemes in south-east England.

Ken Livingstone said yesterday a levy on property should be imposed to make a substantial contribution to the cost of rail projects.

As revealed in The Independent on Monday the Deputy Prime Minister, John Prescott, has commissioned a study into "the land value charge'' as a means of pressing ahead with large-scale transport initiatives.

The Government is under increasing pressure to introduce the tax to rescue its 10-year plan for rail, which has soaked up £35bn of public money in two years.

Announcing a shopping list of "must-do'' rail projects in the capital, Mr Livingstone urged ministers to introduce the "claw-back'' levy and bond issues to finance projects. He said London commuters were already paying a "stealth tax'' because of increasing fares since privatisation.

"They are paying through the nose for a crappy system,'' he said. The Jubilee line extension had resulted in a "huge increase'' in property values and part of that should have been clawed back.

Mr Livingstone pointed out that the £7bn CrossRail project could eventually benefit people from Heathrow to Ebbsfleet, near Gravesend. He said the impact on property could be "enormous'' and that a substantial proportion of the increase should be recovered. He pointed out that the tax was "quite the norm'' in the United States, where the charge is understood to have helped to finance as many as a thousand projects.

Under the plan envisaged by Mr Livingstone's Greater London Authority, the levy would be imposed on businesses rather than domestic properties.

The Mayor said only 7,362 out of a possible 25,000 Londoners had applied for discount under the road traffic congestion charging scheme due to begin on 17 February. He said that unless people applied before Sunday they would not benefit immediately from the concession, which cuts the cost by 90 per cent.