If you were facing this man's tax bill, you'd be glum, too

But it is not developers who will make or break the policy; the burden of the new tax will ultimately be passed down to landowners. The previous two attempts to introduce a land tax resulted in landowners refusing to sell.

So what do landowners think of the latest tax? Well, they can be notoriously publicity shy, but Josephine Smit tracked down a handful and got their responses.

Peter Nelson managing director of land and property at Cofton

Last year Cofton cleaned up nearly 40 hectares of land across the country, including quarries, coalfields and some industrial land. At the 81 ha former Fernhill Colliery in Treherbert, South Wales, it will spend £12m recontouring the site, making it fit for development and installing infrastructure - and that does not include the cost of the section 106 agreement.

As a specialist in buying and cleaning up contaminated sites, and then often selling them on to housebuilders, Cofton could be hard hit by a planning gain supplement. "It starts from a sound moral principle, of rationalising and streamlining section 106 because the developer needs to pay for infrastructure. A low-level tax could be acceptable, but it depends on how it is calculated and what other costs are taken into consideration.

"We would favour a ‘roof tax' [a localy raised flat-rate tax to fund lcoal infrastructure], as is being implemented in Milton Keynes. That is a lot more sensible, but even that depends on the clean-up cost for the land and the value of the property. It may work for Milton Keynes, but it wouldn't work for Corby, because the value of the properties there is that much lower.

"At the moment we are paying section 106 money to local authorities and from there through to local communities. In the past, if an area needed a by-pass, the developer would be in control of the delivery. How can delivery of infrastructure be guaranteed if payment will be to the Treasury? It would need a robust mechanism for delivery from central government.

"Overall, the government's proposals raise more questions than they answer. There is a lot more work to be done in taking on contaminated sites. We would like to think that clean-up costs would be discounted from a tax - the proposal for a lower rate of tax for brownfield sites would not go far enough. There has to be an incentive to develop brownfield."

Alan Monckton, owner, Stretton Hall, Staffordshire

Stretton Hall is one of England's traditional country estates, and has been in the hands of the Monckton family since the 17th century. As well as owning the estate, Alan Monckton runs two property companies, one of which, Penk, deals with development land.

Monckton raises several concerns about the tax. He says that if a tax is to be levied, it should not be payable on the granting of planning consent, because at that point the owner will not have the money to pay it. "The owner only gets his money on completion of a sale to a developer. This is a powerful disincentive to owners of such land to seek planning consent," Monckton says.

If the Treasury did take more than its promised share, there would be no legal redress

Alan Monckton

"The cost of s106 also needs to be factored in. In many cases they can represent about 10% extra cost to the vendor. The lessons of previous attempts to increase tax on such land have not been learned. I remember well how the supply of land dried up due to the heavy tax burden. Owners do not have to apply for consent, it is voluntary, and if the stick is worse than the carrot, they often prefer to do nothing."

Finally, Monckton says that landowners are already paying a substantial sum. The normal overheads for the sale of building land include legal and surveyor's costs, stamp duty and capital gains tax at 40% of site value, and these add up to well over 50% of its value. "If an extra tax is added, one question needs clarifying: is it tax deductible before capital gains tax is applied? If the answer is no, then the tax burden on the sale price increases to about two-thirds. Many owners would rather await a fairer tax regime in the future, and therefore not seek planning consent, rather than pay more than 66% in costs and tax."

Monckton gives an example: "One of our companies owns a nice house with a large garden. The garden might be acceptable for the development of about four smart detached houses for commuters from nearby towns. But that would devalue the existing house. The question is whether it is worthwhile seeking to develop that land if the tax rate is 66% on it."

"However much the government may promise to give a fixed proportion of such development land tax to ‘local communities', their lack of probity to date means nobody would trust them. And if the Treasury did take more than its promised share, there would be no legal redress. Such promises are no more than political spin."

David Joy planning director, London and Continental Railways

London and Continental Railways has strategic sites along the route of the Channel Tunnel Rail Link through the heart of the Thames Gateway, an area that, irrespective of the presence of the CTRL, is hungry for major infrastructure investment. The prospect of paying for all that infrastructure through a new tax is not justifiable, says Joy: "A lot of that infrastructure is needed to meet general growth in demand, so there should be public investment."

Joy continues: "We're creating development sites from areas with long histories of industrial use, where a lot of remediation is required to get the value you need to bring land forward for development. You are never going to get a site that is unaffected by planning gain.

"If a tax is directly related to the development to mitigate the effects of that development, then it's fine. It's when it moves away from the relationship to the development itself that there is a problem, and then it can have an adverse impact on regeneration. I am sceptical that [if the planning gain supplement is introduced] there will still be local authorities asking for section 106 agreements, and we could be in danger of having two tax systems. There is a need to be very clear of who is paying for what.

"When Development Land Tax hit 90% it was hardly surprising that it stymied development. The level of tax that is acceptable varies so much on the individual site. It has to be related to the individual circumstances and viability of a site. To have one system for all is neither fair nor reasonable.

"The Milton Keynes roof tax is interesting. It is saying that the public sector will provide infrastructure in a set timescale rather than tax disappearing into the Treasury and problems at a local level remaining."

William Moen landowner, Newhall, Harlow, Essex

There’s so much detail that is not there that you feel naturally nervous about this

Phil Kirby

William Moen and his brother Jon are the figureheads in New Hall Projects, the consortium of landowners that is steering the development of about 2800 homes on 80 ha of Essex farmland. The Moens have taken on an unusual role at Newhall; they have not sold land off to housebuilders in the conventional way, but are maintaining control of the site to realise their vision of high architectural quality. To do this, they have created a rigorous design code with Roger Evans Associates, have released sites through design competitions and are working in joint ventures with housebuilders. As a result, the 200 homes built so far have won a string of awards, and been visited and praised by government ministers, including deputy prime minister John Prescott. Some 200 more homes are to be built in the next 18 months.

The planning gain supplement could alter New Hall Projects' big ambitions, admits William Moen. "It could throw the whole principle of what we are doing into question. It could hugely affect our efforts to create high architectural quality, because anything we do here we do voluntarily and it doesn't count towards the S106."

Yet in principle, Moen is in favour of a tax. "As an alternative to negotiation it sounds sensible. We'd like to know where we stand instead of playing a game of poker with local authorities. But the thing that we are frightened of is the prospect of having to pay money to both the Treasury and to the local authorities.

"The logic is that it should tidy up S106, but if it disappears into the Treasury, that won't happen. It has echoes of the selling off of council housing, where the money raised has gone into the Treasury and simply disappeared. We'd prefer an approach where we knew our costs from the start - that would speed things up for us. But any extra costs would hurt production."

Phil Kirby managing director, National Grid property

Every year Phil Kirby spends some £40m cleaning up the utilities giant's former sites and sells up to £150m worth of land. If the planning gain supplement remains in its current form those figures may dip. "I have sites that have car parks on them at the moment that are making a reasonable return. If the tax is set at a level that will risk the returns from the site, then I won't sell," he says.

Kirby highlights some of the many questions that the consultation document leaves unanswered. "What happens on large multi-phase schemes - will the land valuation be based on the original value of the land or will land be revalued at each phase? There is talk of the tax being set at 20%, but 20% of what? What guarantees are there that the money returned to local authorities will be used for the right purpose? If a site crosses local authority boundaries how do we know money returned won't go into other local authority pet projects?"

Then there is the issue of trusting the Treasury to redistribute the tax wisely, and as Kirby points out, the government's track record doesn't inspire confidence: "Look at what happened to the Lottery fund and how that has been dissipated into general government funding.

"There's so much detail that is not there that you feel naturally nervous about this. I'm half taken by the fact that not all of it goes to local authorities and that the rest goes to wider regeneration. It could be a valuable source of income for deprived areas, but I want to see how that would work."

But as a company that handles brownfield land, this is Kirby's biggest concern. "It is anti-brownfield. Local authorities will want to make the most money out of it, and as the value hike in brownfield sites is less than with greenfield, they will re-allocate greenfield sites. I'm arguing strongly for brownfield exemption."

As a member of Lord Rogers' urban taskforce, Kirby has looked at the alternative of planning tariffs and would prefer this kind of charge. "The planning gain supplement is not thought through at all," he says.