Officials have been told to study how a “proportional” property tax could work, according to The Guardian, as Rachel Reeves prepares to raise taxes in the autumn Budget.
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Treasury officials will also look at how a local property tax could replace council tax, the report claims.
“Values of different properties have changed very differently since council tax was introduced – on average increasing more than twice as much in London as in the North East, for example – yet the tax has not changed to reflect that,” explained the Institute of Fiscal Studies in a 2020 paper on reform to council tax.
Though it said an overhaul of council tax could take to beyond 2029, when Labour’s first term in office is over.
It proposes scrapping council tax entirely, along with other property taxes, and switching it for a 0.48 per cent flat tax on the current value of your property.
The think tank proposed a national and local “proportional property tax” on property, based on its value.
Leunig wrote: “These proposals would make it easier and cheaper to move house, for a better job, or to be near family, as well as being fairer. It should not be the case that a terrace house in Burnley pays more than a mansion in Kensington – and it wouldn’t be under these proposals.”
Without finding extra cash, almost all forecasters predict that the Chancellor will miss hitting the financial rules that govern her tax and spending decisions.
Property taxes could be considered by some to be similar to a wealth tax.
“We are committed to keeping taxes for working people as low as possible, which is why at last Autumn’s Budget, we protected working people’s payslips and kept our promise not to raise the basic, higher or additional rates of Income Tax, employee National Insurance, or VAT.”
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