Those living near airports should be given tax cuts to allow them to share the benefits of extra runways, the Institute of Economic Affairs says.

The think tank found that communities near airports should become “tax havens”, the Telegraph reports.

The group made the proposal in the run up to the Government report considering the options of airport expansion in the South East.

The Institute argues that politicians should be removed from decisions on airport expansion and communities should be given the final stay.

It’s paper also suggests allowing councils near airports to keep some of the tax they pay and using the cash to lower taxes on local residents and businesses.

“The local level should have the right to keep most of the locally generated tax revenue,” the IEA said.

“But the logical correlate of that right is that areas which permit a high level of economic activity are no longer obliged to share their revenue with areas that do not.

“In a decentralised system, the vicinities of airports would become ‘tax havens’.”