London Mayor to retain portion of income tax and business rates

The Mayor of London is set to receive a portion of the income tax and business rates collected within the capital, the Prime Minister confirmed. This decision forms part of a wider devolution strategy intended to shift authority away from Westminster and towards regional leaders across England.

Fiscal shifts and autumn budget

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Specific details regarding the new fiscal arrangements are expected to be released when Chancellor John Healey presents his first budget in the autumn. While the Mayor will gain access to more local tax revenue, the Government stated that income tax rates will not change as a direct result of these reforms. The Chancellor noted that mayors will benefit from a share of income tax so that local communities see direct benefits when their economies grow, according to reports by The Standard.

Maintaining regional balance

To prevent widening economic gaps, ministers intend to retain an equalisation system. This mechanism will ensure that areas collecting less tax continue to receive financial support. The policy aims to provide local leaders with the resources required to manage public transport, housing, and job creation, as reported by The Standard.

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Under our plans, more of the taxes raised in a community will stay in that community.

Andy Burnham, Prime Minister

Political reaction

The Conservative Party expressed doubt that the tax reforms would assist regional prosperity. Shadow Chancellor Mel Stride suggested the announcement lacked detail and warned that if growing areas receive more funding, areas with weaker economies might lose out, according to The Standard.

The next stage for the policy depends on the upcoming autumn budget, where the Chancellor will outline the specific mechanics of the tax redistribution.