This article originally appeared in Daily Telegraph on February 4th, authored by Aaron Bell, MP for Newcastle-under-Lyme.
As Rishi Sunak seeks to restore the public finances, a fairer property tax system should be part of the answer
Since the 2019 general election, the Prime Minister’s domestic agenda has necessarily been largely dominated by the twin challenges of getting Brexit done and the fight against Covid-19. Now the first item has been accomplished and, thanks to the brilliance of scientists, the vision of our Vaccine Taskforce and the hard work of our frontline NHS staff, the end is in sight on the second.
In the coming months, once the vaccination drive has had the positive impact that we all hope it will, the Government will face a third mighty challenge. As our focus turns to economic growth, and to building back better, we will need to show in no uncertain terms that the Conservative Party has delivered on the promise to level up those towns and cities previously left behind.
With the public finances stretched like never before, I – and an increasing number of Conservative MPs – believe the best way for the Government to show voters that this message has got through is by reforming our outdated property taxes. We should begin by overhauling Council Tax, which is not only based on property values that are thirty years out of date, but it is also deeply unfair – placing the heaviest burden on the young, low-earners, and those living in less prosperous parts of the country.
At the same time as killing off Council Tax, we should permanently abolish Stamp Duty. This terrible tax hinders aspiration and blocks up the property market by disincentivising homeowners of all ages from moving house. Both of these hated taxes could be replaced by a Proportional Property Tax set at a flat rate of 0.48pc of property value, creating a more modern and much fairer system of property taxation. Crucially, this would be revenue-neutral for the Treasury, while resulting in savings for the vast majority of households up and down the country.
Across England, it is estimated that 76pc households would gain under a Proportional Property Tax, with average households paying £435 less property tax a year. In my own constituency of Newcastle-under-Lyme, 97pc of households would benefit. And in some of the other “red wall” seats won from Labour at the last election, more than 99% of households would be better off.
Objections to this reform often focus on the idea of pensioners being forced to sell, however the reality would be rather different. Nobody would be taxed out of their family home. Instead, for anyone struggling to foot the bill for a house that has risen in value, we could allow deferral of property tax at low interest rates, with payment delivered at point of sale. Additionally, a cap of £100 per month on the increase in payments until the point of sale would mean limited increases for those cash rich but asset poor households who choose to stay in their home.
Abolishing Council Tax and Stamp Duty and replacing them with a fairer property tax is the right thing to do for millions of people up and down the country. It is also the right thing for the Conservative Party to do if we are serious about delivering to those who voted Tory for the first time in a generation. This policy can help us turn the Red Wall into a Blue Barricade.
Before the next general election begins to loom on the horizon, voters will be asking what the levelling up agenda has delivered. As the Chancellor seeks to restore the public finances, a fairer property tax system should be part of the answer.
Aaron Bell is the MP for Newcastle-under-Lyme