A major think-tank has called for stamp duty and council tax to be scrapped and replaced by a levy based on a property’s current market value.
In its Prosperity and Justice Report, the Institute for Public Policy Research calls for a fairer taxation system among other measures to rebalance the UK economy.
Suggesting that land and property are currently an under-taxed resource, its report says the combination of council tax, business rates and stamp duty all cause “serious distortions and unfairness”.
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Younger people priced out of home ownership
Instead, the IPPR calls for a new levy that’s based on how much a property is worth in the current market. Setting the levy at 0.5 percent would cost the owner of a property valued at an average £248,000 would pay around £1,240 a year, which is around the same as council tax.
However, the levy would have to be higher to replace the £13 billion per year that Stamp Duty Land Tax currently raises for the Treasury.
According to the report, because of the huge growth in property values in the UK that means many young people have been priced out of owning their own home, younger people are set to be poorer than their parents.
Redressing that wealth inequality between homeowners and those who are part of Generation Rent is among the focus of the recommendations in the report.
Regressive and outdated
Carys Roberts, senior economist at the IPPR, said: “Council tax is a regressive tax as it falls disproportionately on those with lower incomes and wealth. It’s also outdated, as it’s based on valuations that have not been updated since 1992.
“A new property tax would be far more progressive and would effectively capture increases in house prices in a way the current system does not.”
Among its other recommendations to help younger people access property wealth, the report suggests new guidelines in England to increase the proportion of genuinely affordable homes to buy and rent; and ending the sale of public land to the private sector for residential development.