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TAX BREAKS FOR CITIES SET TO BE REJECTED BY CHANCELLOR

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The chancellor, Gordon Brown, is set to reject proposals by Lord (Richard) Rogers' urban taskforce for a package of...
The chancellor, Gordon Brown, is set to reject proposals by Lord (Richard) Rogers' urban taskforce for a package of tax breaks and capital allowances to revive English cities, according to The Financial Times (p1).

Instead, he is expected to announce a set of public spending proposals aimed at stimulating enterprise and job creation in his pre-Budget report, due in November.

He will also describe cash for regional development agencies, inner-city schools, transport and the police, to be announced in the comprehensive spending review next month, as contributing to an 'urban renaissance'.

At present VAT is payable at 17.5% on refurbishments, while new homes are rated zero. Lord Rogers called for the rates to be harmonised at zero, if European Union rules allow, or otherwise at 5%, to remove the incentive for housebuilding on greenfield sites. But the chancellor has so far rejected this.

He is also expected to reject the case for complex tax reliefs in urban priority areas. These could include a special council tax rate, tax relief on home contents and car insurance and business rate relief.

But the Treasury views this proposal as too much like the previous government's enterprise zones, which it believes were unsuccessful.

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