The Mayor of London has endorsed the findings of a major new report by the London Finance Commission that calls for further powers to be devolved to the capital in the aftermath of the decision to leave the European Union.

This includes proposals for greater control over business rates, VAT and income tax yields and the Apprenticeship Levy, which could raise interesting opportunities and threats for existing charity reliefs.

The key recommendation of the report, entitled ‘Devolution: a capital idea’ are:

• The Government should work with the Mayor, London Councils and other local authorities to consult on the potential operation of a modest tourism levy which is already operated in international cities such as New York, Paris, Berlin, Rome and Amsterdam and would be used to promote tourism in London.
• London’s government should be assigned a percentage of Londoners’ income tax yield – broadly to match its overall expenditure, as and when further devolution occurs.
• If a larger share of public expenditure is devolved to London, the possibility of assigning a proportion of London businesses’ VAT yield to London’s government should also be considered.
• The report endorses recommendations from 2013 that the full suite of property taxes should be devolved to London’s government. This includes the operation and setting of council tax and business rates and the devolution of stamp duty
• The apprenticeship levy, due to be implemented from 2017, should be devolved to London in order to fund a wide range of skills and employment initiatives in the capital, as decided by London’s government
•  A share of London’s contribution to vehicle excise duty (VED) revenue should be devolved for improvements to nationally strategic roads within the capital.
• The Government should consider devolving air passenger duty (APD) raised in London to so that the capital has the flexibility and autonomy to consider making local adjustments to the tax and to provide more diverse sources of revenue.
•  London’s share of the soft drinks industry levy should be retained within the capital, with a longer-term view to devolving it fully, including the ability to set the rate. In the longer term (post 2020), London government should also consider other health-related taxes, including a sugar sales tax and a saturated fat tax, to be devised and fully managed by London government.