Call for ‘fundamental’ property tax reforms
CHANCELLOR Rishi Sunak is being urged to use next month’s Budget to scrap council tax and stamp duty and replace them with a single new property tax.
Campaigners, backed by some Conservative MPs, say 19 million households in England – 76% – could be better off under a new proportional property tax.
According to the Fairer Share pressure group, 97% of households in all the 44 so-called “red wall” seats in England which the Tories took from Labour at the last general election would benefit, with an average saving of £660 a year.
It said that setting the rate at 0.48% of a property’s value based on current prices would bring in the same revenue as the council tax and stamp duty combined – with the tax to be apportioned between central and local government.
Overall, the group said households in England would be on average £435 per year better off under the new system. It acknowledged that basing the rate on current property prices – unlike the current council tax bands which are based on 1991 valuations – would mean households in London would pay more due to the “extreme” rises in house prices in the capital over the past 30 years, but it said that any increases should be limited to £100 a month until the property was sold.
Kevin Hollinrake, chairman of the Property Research Group of Tory MPs which campaigns for reform of the property tax system, welcomed the proposal. “The time is right to put fairness back at the heart of how we tax property. It would also boost transactions throughout the market, creating huge economic output at a time when we most need it,” he said.
Aaron Bell, who took Newcastleunder-Lyme from Labour for the Tories at the 2019 election, said: “I believe it is time for the Treasury to be bold and consider a fundamental reform to our taxation of property, such as a proportional property tax.”
A Government spokesman said: “We have no plans to make such changes. We have analysed Labour’s plans for such an annual house price tax, which would mean soaring bills for hard-working families and pensioners who have saved and improved their homes. These proposals would have the same faults.”
Government minister Jesse Norman has said that the benefits of a stamp duty holiday were precisely linked to the short period of time it was in place. His comments came as the Government faced calls from MPs to ensure that people who are in the process of buying homes do not lose out if their deals complete after the impending deadline.
The Treasury announced last year that it would temporarily raise the stamp duty threshold from £125,000 to £500,000 for property sales in England and Northern Ireland. But many people have been left scrambling to complete their transactions before the deadline of March 31, worried that, if they do not, they could be left with a £15,000 tax bill.
Responding to a petition, which has 140,000 signatures, calling for the holiday to be extended by six months, Mr Norman said: “I fully understand the frustrations of those who are in the process of purchasing a property, perhaps as part of a chain, and who may be concerned at the delays that they face.”