Door still open for minerals exemption from planning tax

THE Quarry Products Association has reacted positively to news in the Chancellor’s Pre-Budget Report that the application of the Government’s proposed Planning Gain Supplement (PGS) to minerals is still open to review.

The QPA responded to the Government’s initial consultation on PGS in February 2006 with serious concerns about the application of the planned new tax to mineral workings. In its response, the QPA argued that the proposals did not take into account the unique changes that occur to land value during the life of mineral workings compared with other forms of development.

The ramifications of the PGS including minerals operations within its scope are potentially serious for the industry, which, says the QPA, is a particular irony considering the Government’s reliance on minerals to deliver its vision for sustainable communities. The most fundamental hurdle would be the new ‘up-front’ tax burden that would be faced by minerals operators opening new sites, which creates an un-level playing field when compared with existing operations that would avoid the tax.

Unlike most other forms of development, minerals operations are long-term in nature and so lack any ‘quick-release’ value. This fundamental difference means that the high up-front tax payments, whether faced by a small sand and gravel operator or a major multi-million-tonne rock quarry, would be unreasonable at best or completely prohibitive at worst.

However, last week’s Pre-Budget Report did offer some hope to the industry. It states that ‘the application of PGS and a revised planning obligations system…to minerals and waste consents…remains under review’. With the review process ongoing, and the minerals and waste sectors specifically mentioned, the QPA believes there is still opportunity for the Government to exempt minerals workings from the scope of the tax.

Reacting to the news, Nigel Jackson, the QPA’s environment and mineral planning chairman, said: ‘The Pre-Budget Report has offered some hope to us that the Government is still open to debate over the inclusion of minerals operations within the scope of the proposed PGS. As we stated in our response to the PGS consultation in February, the value of land during the life of minerals operations varies in a dramatically different fashion to that of most other development. The QPA will continue to vigorously argue this case for the industry.’