Debate: Proportional Property Tax
A proportional property tax would help families to address the cost of living crisis. It would also support the Government’s levelling up agenda and protect those on low incomes who may be disadvantaged by the reforms.
77% of households—more than 18 million—would benefit through a proportional property tax, with the average household saving £556 every year. A proportional property tax would replace council tax, bedroom tax and stamp duty. Outside London, regional economies would benefit from an overall reduction in property taxes of £6.5 billion, which would be a substantial stimulus for communities in need of levelling up and support those communities most in need. For example, under a proportional property tax my constituents would gain, on average, £900 a year compared with council tax.
Most people would benefit from the policy of moving from council tax to a proportional property tax. It is certainly true that there will be a small minority of cases where people on a low income but living in a high-value property could struggle, but that is perfectly possible to mitigate at the point of transition. Those struggling to pay the increase could have any rise capped at £100 a month. For those still unable to pay, options could be made available to defer payment until they can afford to pay or until the property is sold.
Council tax is unfair and the inequalities are stark. A £3 million property in Wandsworth pays less than 0.1% of its property value in council tax. We can contrast that with my constituency, where the average household pays more than 2% of the property value in council tax.
A simple system would also reduce admin costs by up to £400 million a year. The tax levied would reflect current property values, instead of the values as they were in 1991. Councils would no longer be forced to chase down council tax debts from people who were unable to pay, as payment can be deferred under a proportional property tax until the sale of the property.
Council tax is one of the most unfair and regressive taxes, taking a disproportionate amount from communities and individuals that can ill afford to pay but that often have a much higher demand for council services. I think there will be substantial electoral dividends for the political party or parties willing to pick up the baton of a proportional property tax to replace council tax and include it in their manifesto at the next election.
Find out more about the Fairer Share campaign here.