Radical proposals to scrap both council tax and stamp duty reportedly being considered by new Prime Minister Andy Burnham could see the two largely unpopular taxes replaced by a single annual property tax.
Andy Burnham has said there are “big decisions” ahead of his Government on council tax, as he criticised the unfairness of the current system for making some people pay higher rates than are levied on more expensive homes in London.
The Prime Minister acknowledged he needed to stick to the manifesto Labour was elected on in 2024 but said he understood how people felt the current system was disproportionate.
It came as Number 10 denied the Government was considering replacing council tax and stamp duty with a tax based on property or land values, but Mr Burnham has made repeated reference to reforming property taxes and this week it was reported by the i Paper that he is actively considering replacing council tax and stamp duty with a 0.48% annual charge on a home’s current value, or a land value tax.
Currently the average UK property value is £270,000 according to HM Land Registry.
Should such a change be put in place, it would mean that the average home would attract a £1,296 annual property tax, at 0.48% levied on £270,000.
The average Band D council tax bill is £2,392 a year in England, so the new tax would represent a significant saving for average households.
Stamp Duty, the tax paid on buying property valued at over £125,000, would also be removed under the reported proposals.
Speaking to Laura Kuenssberg on the BBC’s Panorama programme, Mr Burnham said: “There are people here in Greater Manchester who pay a much higher council tax than people living in much larger homes in London.
“So the Chancellor before, Rachel Reeves, was right to start to reform council tax to create some fairness there in relation to people in homes that are of much greater value, who haven’t seen their council tax go up over the years because of the failure to revalue the banding.
“So that’s an example of something that I think was right and fair.”
He added: “We need to honour the manifesto upon which Labour was elected, and if I was to bring forward any changes, obviously people would rightly say, well, is this consistent with that manifesto?
“So there are big decisions ahead, you are right about that.”
Mr Burnham has previously said he has been “persuaded” of the argument for reforming the system.
However on Sunday night, Number 10 denied reports by the i Paper he was actively considering replacing council tax and stamp duty with a 0.48% annual charge on a home’s current value, or a land value tax.
According to the Fairer Share Campaign, the flat-rate annual charge could save households in areas such as Hartlepool about £950 a year.
Stamp duty is paid on sales from £125,000 upwards, although first-time buyers benefit from not having to pay any on purchases up to £300,000. However, the relief ends at prices over £500,000.
Labour has come under pressure from its backbenches to reform council tax, including from chairman of the cross-party group of MPs on council tax reform, Jonathan Brash (Hartlepool).
The Labour MP told the i Paper “wholesale reform” was needed. He has previously pointed to band A homes in Hartlepool paying nearly 2.5 times more than in Westminster.
He said: “Council tax is one of the most unfair taxes in Britain, and nowhere is that injustice clearer than in towns like Hartlepool.”
