The London Finance Commission (LFC), a panel established by Mayor Boris Johnson, held its initial meeting on Tuesday, in which economists and local governmental specialists analysed the likelihood of devolving power to London over a spectrum of taxes.

The LFC was installed by Boris Johnson to investigate the ways, in which London might keep more of the revenues it currently submits to the Treasury. The LFC, chaired by Tony Travers of the LSE, is scheduled to publish a draft interim report in December and an ultimate report in Spring 2013.

Paul Johnson, director of the Institute for Fiscal Studies (IFS), remarked to the LFC on Tuesday that London is a highly magnetic city for companies seeking to invest. The director raised the issue of corporation tax as one duty that needs to be looked at. But he voiced that this would generate a ‘colossal complexity.’

Boris Johnson has written to Chancellor George Osborne that London must be permitted to keep the London-based earnings of property transaction tax. Johnson, who has assertively campaigned for stronger fiscal sovereignty for London, has highlighted the UK government’s decision to devolve responsibility for stamp duty to Scotland in 2015.

Thus, it is unambiguous that ‘stamp duty’ land tax has appeared as a likely candidate in the mayoral movement for more financial autonomy.

Jim Gallagher, the ex-Secretary of the Calman Commission on Scottish devolution, has referred to the ‘advantages’ of ‘stamp duty’ land tax over other taxes, saying that this tax means people will not be able to allege ‘distortion.’

But Paul Johnson has criticised the idea of jacking up the stamp duty, voicing that it is ineffective and harmful as it only heightens property prices, thereby making it unaffordable for people wanting to purchase them. Thus, property transactions will diminish.

Ken Livingstone, ex-London Mayor, has welcomed the notion of fiscal autonomy, uttering to the LFC that Boris Johnson has a slim chance of getting the ‘stamp duty’ control from the Government. Livingstone has voiced to the LFC that he had spent long time lobbying governmental ministers to consent to investments and infrastructural projects in London.

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