Council tax should be replaced with annual payment, think-tank says

Could 0.5% levy replace council tax? Bill should be replaced with annual payment worth a percentage of homeowner’s property, think-tank says

  • Labour-leaning think-tank suggests council tax should be replaced by annual levy
  • The Institute for Public Policy Research called for a ‘proportional property tax’
  • Under their system, someone living in a house worth £1million would pay £5,000

Homeowners should pay an annual levy worth 0.5 per cent of the value of their home instead of council tax, a Labour-leaning think-tank has suggested.

The Institute for Public Policy Research called for a ‘proportional property tax’ to tackle regional inequality – saying it was unfair those who have benefited from soaring house prices should pay so little compared with the value of their homes.

Under their system, someone living in a house worth £1million would pay £5,000. 

Homeowners should pay an annual levy worth 0.5 per cent of the value of their home instead of council tax, a Labour-leaning think-tank has suggested (stock image)

As well as replacing council tax, the new levy would also replace the stamp duty which people pay when they move house.

The think-tank said the move would lead to a fall in house prices of 3 per cent in London and other well-off places in the South. 

While the most affected areas, primarily in the North East and North West, could see rises of up to 11 to 15 per cent.

Shreya Nanda, IPPR economist, said: ‘Those who did not own property during the long house price boom have been locked out, and too many face steep rents, cramped flats and eye-watering mortgages. 

The Institute for Public Policy Research called for a ‘proportional property tax’ to tackle regional inequality – saying it was unfair those who have benefited from soaring house prices should pay so little compared with the value of their homes (stock image)

‘A proportional property tax would instead ensure that these gains were shared more fairly across society.’

A property tax of 0.5 per cent could mean three quarters of households in England paying less than what they do now.

Last night, a Treasury source said there were no plan to introduce such a property tax.

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