<p>The Treasury’s proposed planning gain supplement (PGS), which would tax developers’windfall profits resulting from planning consents to pay for infrastructure, will in fact be a loss-making exercise, potentially halving communities’ funds compared with the existing section 106 system. </p> <p>This is the damning verdict of a study into the likely results of the tax, carried out by estate agent Knight Frank on behalf of the Home Builders Federation, Royal Institution of Chartered Surveyors, British Property Federation and Confederation of British Industry. The study modelled the impact of a 10%, 20% and 30% levy on 18 residential and non-residential schemes, revealing that a PGS plus scaled-down s106 would raise 48% less than an estimated £375 million raised under the current system at a 10% levy, and 3% less even at its highest level. </p> <p>It concludes that PGS plans are seriously flawed and will in fact slow up the supply of sites coming forward, jeopardising the government’s own objectives for delivering regeneration projects and boosting housing supply. “The government has failed to show the results of its own modelling, so we are effectively working in the dark,” said Liz Peace, chief executive of the British Property Federation. “Comprehensive research needs to …