UK Property

Council tax should be replaced with new property levy, Burnham told


Andy Burnham is “absolutely persuadable” that council tax reform can be outlined in this year’s Budget, Labour MPs believe.

MPs in Burnham’s power base in the north of England are putting pressure on the Prime Minister and Chancellor, John Healey, to overhaul a system which they say unfairly penalises working-class people in their constituencies.

It comes as a new survey revealed almost two-thirds of voters say council tax is unfair and more than half are worried about how they can afford this year’s bill.

Shorts

While Burnham has previously said he would not be abolishing council tax “at this moment in time”, Labour MPs who support reform think there is an opportunity to set out a roadmap for replacing it with a property tax at the Budget on 28 October.

The current council tax system in England still rests on valuations from 1991, meaning in some cases families in semi-detached homes in northern towns can end up paying more than the owners of multimillion-pound properties in London and the south.

Labour backbenchers have formed a group – Labour MPs for Fairer Council Tax – aimed at convincing Burnham and Healey to replace council tax and stamp duty with an annual proportional property tax – a single flat-rate levy based on the value of a home.

Survey shows discontent with council tax

A survey carried out by JL Partners and commissioned by Fairer Share – which campaigns for such a levy – shows significant discontent with council tax, with 63 per cent viewing it as unfair, and 52 per cent worrying about affording next year’s bills.

https://datawrapper.dwcdn.net/mHjMC/2/ (e

https://datawrapper.dwcdn.net/mHjMC/2/ (e

The poll, shared with The i Paper, found that replacing council tax and stamp duty – a tax on the purchase of homes – with a proportional property tax has three times more support (47 per cent) than opposition (13 per cent).

Fairer Share claims that about three-quarters of households would be better off by an average of around £550 a year under their plan, with a quarter paying more. It has proposed capping any tax increase at £1,200.

Labour MPs back change

Afzal Khan, the Labour MP for Manchester Rusholme and a close ally of the Prime Minister, said: “Replacing council tax with a progressive property tax like the one proposed by Fairer Share would make a huge difference to the amount of money the vast majority of my constituents would have in their pockets.

“In my constituency, over 90 per cent of households would save an average of £500 every year, with only the broadest shoulders expected to pay that bit more.”

He added: “It is exactly what a government focused on the cost of living should consider.”

Jonathan Brash, the Labour MP for Hartlepool, said: “Council tax is one of the most regressive taxes in Britain. It hits hardest constituencies like mine, where people pay more despite often having less.”

Before becoming Prime Minister, Burnham was highly critical of council tax and backed reforming it.

In a previous interview, he said: “I’m personally keen to see reform of council tax. It’s a highly regressive tax. I see a big case for land and property and business taxation to be changed.”

However, after The i Paper reported last month that he was looking at replacing council tax and stamp duty, he said he was not “bringing forward plans on that scale at this moment in time”.

Some MPs and economists believe he made the statement because speculation about changes to stamp duty can end up freezing the housing market.

Current system is ‘a mess’

One Labour MP supportive of reform told The i Paper that Burnham and Healey were “absolutely persuadable”.

“They got a bit spooked when the stories appeared to start impacting the housing market. My view is they want to do it.”

A spokesperson for Fairer Share said: “Andy Burnham’s very carefully chosen words to date signal he’s certainly still open to reform.”

Many eminent economists back reform of council tax and stamp duty. Paul Johnson, former director of the Institute for Fiscal Studies and now provost of Oxford University’s Queen’s College, told The i Paper that the current system is a “mess”.

“What I think we should have is a tax which is a fixed proportion of the value of the property, and an up-to-date value of the property,” he said.

“[Council tax] is the only tax we have which is deliberately regressive. So the less valuable your house, the higher the fraction of that value you pay in tax.”

However, Johnson said that replacing council tax with a proportional property tax remained politically difficult. “In any rational world, you move in that direction,” he said. “That would make a lot of people a little bit better off, and a small number of people an awful lot worse off. And that’s always particularly challenging.”

A Treasury spokesman said: “The Chancellor is fully focused on his priorities, which will boost business, help with the cost of living and support people in every postcode.

“As has always been the case, decisions on tax are a matter for the Chancellor to set out at fiscal events, rather than routinely commenting on rumour, speculation or proposals.”

JL Partners surveyed 2,048 adults in Britain over the age of 18 at the start of August





Source link

Leave a Response