Nick Raynsford, the former construction minister, has warned that the design of the planning gain supplement (PGS) provides plenty of scope for tax evasion, further increasing pressure on the government to scrap the levy.
At a parliamentary debate on the PGS, Raynsford, who is now chairman of the Construction Industry Council, called on the government to ditch the levy, saying developers would employ consultants to find loopholes.
He said: “Past development taxes have failed because developers have sought to evade liability and look set to do the same with PGS.”
Mark Francois, the shadow paymaster general, highlighted that merely introducing the levy would cost £50m.
Yvette Cooper, the housing minister, and John Healey, the Treasury financial secretary, accused the Tories of using their opposition to the PGS to cloak their wider resistance to housebuilding.
The government won the vote, meaning the PGS bill has passed its first parliamentary hurdle.