‘Axe council tax for 0.5% levy on your house value’

CounCil tax should be replaced by a levy based on the value of homes that will add £58 a year to average bills, says a think-tank.

The institute for Public Policy Research, which is close to the labour Party, said homeowners should pay an annual property tax worth 0.5 per cent of the current market price of their homes.

This would mean a bill of £1,243 for the owner of a home with the uK average value of £248,611. But someone with a £ 600,000 home would pay £3,000 – much more than at present.

Carys Roberts, the iPPR’s senior economist, said a 0.5 per cent levy would raise £1.6billion more than council tax does at present.

over the 27.2million households in the uK, that would mean a bill of £58 extra on average. The think-tank said the plan was fairer – but critics will point out homeowners in the South of England would be paying more tax than those in the north.

They will also warn that the plan would lessen the authority of town halls to set their own rates, and would be devastating for those with highvalue houses but little ready cash.

The iPPR claimed housing is currently ‘undertaxed’ relative to other assets, distorting investment behaviour and adding to wealth inequality.

Miss Roberts said: ‘ Council tax falls disproportionately on those with lower incomes and wealth. it’s also outdated, based on valuations that have not been updated since 1992.’

John o’Connell of the TaxPayers’ Alliance, said: ‘ Taxpayers already paying the highest property taxes in the oECD won’t be happy being told they should pay even more.’