The document, published for a 12 week consultation today, says that CIL and the s106 planning obligations systems "will be reformed as a nationally set, value-based flat rate charge" to be known as the Infrastructure Levy.
Section 106 agreements are currently negotiated with developers, while CIL is a fixed charge, levied on the floorspace of new development.
The document says the proposed change, would "address issues in the current system" as it would be "charged on the final value of a development (or to an assessment of the sales value where the development is not sold, e.g. for homes built for the rental market), based on the applicable rate at the point planning permission is granted".
Payments due would also be "levied at point of occupation, with prevention of occupation being a potential sanction for non-payment".
The document says that, under the current CIL system, "payment is set at the point planning permission is granted, and payment due once development commences" making it "inflexible in the face of changing market conditions".
The document says that, "as a value-based charge across all use classes, we believe it would be both more effective at capturing increases in value and would be more sensitive to economic downturns".
The changes would see councils allowed to borrow against Infrastructure Levy revenues "so that they could forward fund infrastructure", it says.
"Enabling borrowing combined with a shift to levying developer contributions on completion, would incentivise local authorities to deliver enabling infrastructure, in turn helping to ensure development can be completed faster", the document says.
The document also proposes that local authorities would be able to use funds raised through the levy "to secure affordable housing".
Under the proposed approach, a provider of affordable housing could purchase homes from a developer at a discount from market rate, as now.
However, "rather than the discount being secured through section 106 planning obligations, it would instead be considered as in-kind delivery of the Infrastructure Levy. In effect, the difference between the price at which the unit was sold to the provider and the market price would be offset from the final cash liability to the Levy. This would create an incentive for the developer to build on-site affordable housing where appropriate", the document says.
The document says that the changes "will ensure that affordable housing provision supported through developer contributions is kept at least at current levels, and that it is still delivered on-site to ensure that new development continues to support mixed communities".
Another proposal in the consultation would see "more freedom" given to local authorities over how they spend the Infrastructure Levy.
The document says: "We could also increase local authority flexibility, allowing them to spend receipts on their policy priorities, once core infrastructure obligations have been met. In addition to the provision of local infrastructure, including parks, open spaces, street trees and delivery or enhancement of community facilities, this could include improving services or reducing council tax".
Elsewhere, the document proposes that the scope of the Infrastructure Levy "could be extended to capture changes of use through permitted development rights".
This would include "some permitted development rights including office to residential conversions and new demolition and rebuild permitted development rights".
The document says that the approach "would increase the levy base, and would allow these developments to better contribute to infrastructure delivery and making development acceptable to the community".