The government should introduce a ‘primary property gains tax,’ in order to address the housing crisis and close the gap on wealth inequality, Michael Johnson, research fellow at the Centre for Policy Studies, today told the Treasury Select Committee.
The committee of MPs, chaired by Nicky Morgan, is investigating household finances and which policies could support people in saving and sustainable debt and credit.
Mr Johnson told the committee: “We’re going to have to grasp the nettle, and ask ourselves the question about redistribution.
“There are only two areas to go to – one is pensions and the other is equity in homes.”
Replace Stamp Duty
Mr Johnson said: “We ought to scrap Stamp Duty, it’s a barrier to entry, and we are going to have to introduce a primary property gains tax.”
Mr Johnson said he had bought four-bedroom house in North London 20 years ago, which generated £3m of equity.
He added: “I believe I should be taxed on [the equity] when I sell it.”
Mr Johnson also predicted that as first-time buyers take longer to get into ownership and the decline in final salary pensions, more people will rely on the home for income in retirement in the future.
He said: “Equity release is going to have to play a much bigger role in the provision of retirement and income than it has historically.”
The ideas raise similar thoughts to those proposed by the London School of Economics (LSE), which suggested Stamp Duty needed to be overhauled along with Council Tax.