You are here: Home - News -

Scrap council tax and replace with property value tax, says think tank

by: Joanna Faith
  • 09/10/2018
  • 0
A radical proposal to scrap council tax in favour of a new levy based on the value of people’s homes has been put forward by a think tank.

Under the plan, all homeowners would pay an annual property tax proportionate to the present-day market price of their home, the Institute for Public Policy Research (IPPR) said.

If the new property tax were set at 0.5%, it would mean an annual tax bill of £1,243 for the owner of a house valued at £248,611, IPPR claimed.

It said the change would help to tackle growing inequality in wealth within the UK.

At the moment all homes are given a council tax valuation band based on the value of the property on 1 April 1991.

Carys Roberts, senior economist at IPPR and a co-author of the report said: “Council tax is a regressive tax as it falls disproportionately on those with lower incomes and wealth.

“A new property tax would be far more progressive, and effectively capture increases in house prices in a way that the current system does not.

“A tax of 0.5% could raise up to £1.6bn more than the council tax at a UK level. Yet the vast majority of households would benefit from the tax change and estimates suggest that for those in the bottom half of income distribution, disposable incomes would rise.”

The think tank proposed that the new property tax would be levied on landlords, not tenants, and a homeowner with a high-value property but low income could defer payment until their property is either sold, or left on death as part of their estate.

Since 1997, average house prices have increased four times faster than average full-time earnings. The think tank argued that a property tax would capture some of these financial gains, while also dampening future house price inflation.

There are 0 Comment(s)

You may also be interested in

Business Skills

In this section, we offer short ‘how to’ guides on harder to crack areas of business. From social media, to regulation or niche product areas, we cover it all.

Profiles

Our journalists interview key industry entrepreneurs, strategists and commentators for day-to-day market insight and a strategic view of where the industry is heading. We offer lessons for success and explore the opportunities for your business

Success in Practice

Here, we share case studies fleshing out best practice to help you decide what could work for your business. Take a look at how others approached complex tasks like launching a new mortgage lender, advising on a new product area or deciding to specialise in another. Learn from others mistakes and triumphs.

Marketwatch

Each week, we ask top mortgage and property commentators with a unique perspective to examine a key news headline, market move or regulatory or political issue.

Poll

Vote in our weekly poll here. It’s your chance to tell us what you think and be heard on the top news stories of the week. Review our archive to find out what your industry really thinks and all our coverage of the results.

Top Comments

Be part of the conversation on Mortgage Solutions. We want to hear from you. We have a tool called Disqus to tell us which stories get the most comments each week. Every Friday, the team picks the most thoughtful or opinionated contributions from our readers to enjoy again. Don’t forget to share your favourite stories from the site on social media to keep the conversation going.
Read previous post:
Pepper expects to rebrand Optimum Credit as brokers welcome second charge entry

Pepper Money is expecting to rebrand Optimum Credit once it has completed its purchase of the second charge lender.

Close