Abolishing Stamp Duty can help us achieve intergenerational equity

This blog first appeared on the Intergenerational Foundation website on the 19th July 2022, written by Fairer Share Founder and Chairman, Andrew Dixon.

Growing gerontocracy

The basis of our society, as well as many foundational economic models, is that people will tend to vote in the best interests of themselves and their descendants. However, declining birth rates and an older population has led to an increased distribution of resources towards the elderly at the expense of the younger, working population of the United Kingdom. This has created what many have described as a gerontocracy – a society run by the elderly.

This can most obviously be seen with the housing crisis. Since the real price of housing has soared over the last three decades it has become increasingly challenging for young people to get on the housing ladder. Accordingly, the age at which people can afford their first home has increased over time.

This contributes to high levels of housing insecurity for young people and greater levels of intergenerational inequality. Thirty years of declining interest rates, rising immigration and tight planning regulations has led to homeowners becoming wealthier relative to the general population. Given housing is effectively distributed based on generational lines this has contributed to increasing levels of intergenerational inequality. Whilst the planning system is the chief offender for this, stamp duty has exacerbated the problem.

Where Stamp Duty comes in

At its heart stamp duty is a transaction tax, in that it is levied when one makes a transaction to purchase a new home. Therefore, it is only natural that a tax on transactions will do the same thing as a tax on anything else – discourage it.

This is problematic, because where people are discouraged from buying a new home then they will be stuck in one less appropriate for their needs. On the one hand, this prevents starter homes becoming available, because those in them will have more difficulty moving up to larger ones, and on the other, it means the larger homes do not free up as downsizing becomes less beneficial.

The effects this has on wider housing markets is astronomical. Indeed, one paper in the Journal of Urban Economics by Christian Hilber and Teemu Lyytikainen found that a two per cent increase in stamp duty will reduce household mobility by as much as 40 per cent. WPI Economics agree – they found that given there are as many as 8.1 million underutilised homes in England, then up to 315,000 new homes will be released just through increased market activity.

It’s no wonder Sam Dumitriu, formerly of the Adam Smith Institute, famously estimated in 2017 that abolishing stamp duty would increase GDP by £10 billion. Today, it would be even more!

Abolished and replaced

Despite its problems stamp duty is a significant money raiser for the Treasury, and simple abolition would inevitably contribute to the national debt and only worsen outcomes for young people in the long run. Therefore, it is important that stamp duty is not just abolished but replaced. Moving to a proportional property tax would help resolve these numerous challenges.

Created by the team at Fairer Share, a proportional property tax would replace both stamp duty and council tax with a single 0.48% levied on property value. It would immediately result in tax cuts for 77% of households, with a particular benefit for those in areas the Government is seeking to level up. Indeed, research from Landman Economics found that 98% of households in the North East would benefit from this move with an average annual saving of over £550. This would contribute to a 0.8% fall in poverty nationwide.

Despite the regional benefits of this change, the effects on intergenerational inequality are profound. The victims of overcrowding are overwhelmingly the young – indeed more than 20% of 16-24 year olds live in overcrowded conditions – in London it’s 46%. Consequently, it is them who will benefit most by having new starter homes freed up. WPI Economics estimate that as many as 600,000 new homes would be freed up overall, ensuring that a fairer future can be provided to them.

Time has come

The fine work of the Intergenerational Foundation has demonstrated time and time again that the contract between generations is broken. By moving to a proportional property tax, a reform which the Intergenerational Foundation wholeheartedly supports, we can help restore it, and help to provide better housing outcomes for people across the country and across the generations.

It’s time the Government listened to the voters, MPs, think tanks and economists who are calling for the introduction of a proportional property tax.

 

Andrew Dixon

Founder and Chairman

Fairer Share


Grahame Morris MP | Fairer Share’s plan sets out how we can reform our punitive council tax system

This article first appeared in Labour List on the 22nd June 2022, written by Grahame Morris, Member of Parliament for Easington.

Council tax is broken. Local authorities, MPs, think tanks, economists and households understand this. It is fundamentally a regressive tax based on inaccurate valuations conducted more than 30 years ago, which distorts housing markets and drives millions into poverty annually. The government knows this. Indeed, the Chancellor recognised it when he looked to alleviate our present cost-of-living crisis by providing modest council tax relief back in February. However, successive governments have been pussyfooting around the problem for decades.

The latest example of this is the recent consultation conducted by the levelling up, housing and communities committee into council tax collection. The issue here is a tough one. If councils collect the tax they are owed, people will be forced into poverty. If they do not enforce collection, councils will be unable to provide the services that they are obliged to provide. This has been worsened in the past ten years by government intervention and the decision to replace the council tax benefit (CTB) with local council tax support, which resulted in councils now only receiving 90% of their previously forecast CTB budgets. This amounts to a £15bn cut in government support to councils between 2010 and 2019.

Compounding the issue, many individuals are not even aware of the reliefs that might be available, and councils across the country do not always have the resources and inclination to help households, simply rushing to enforcement when payment is not made. Indeed, a survey conducted by the Money and Mental Health Policy Institute revealed that 34% of individuals who are eligible for discounts on their council tax bill are not aware of them and 82% were not provided this information by the council in their standard communications.

To make matters worse, economising will not be sufficient. Citizens Advice has recently revealed that 53% of the people that they help with their council tax bills have a deficit budget. This means that their income is not sufficient to meet the basic costs of living.

These problems are very real and should be taken seriously. However, all of them could also be addressed by reforming the root of the problem – council tax itself. As Dukes Bailiffs admitted in their submission to the committee, council tax is regressive. Households are not taxed based on their ability to pay, but on the 1991 value of their home and on the area in which they live. This means that local authorities need to impose tax levels on their residents to cover important services, such as adult social care, regardless of the wealth within those communities. For this reason, an £8m townhouse in Westminster ends up paying less council tax each year than a £150,000 home in my constituency of Easington in County Durham. Inevitably, this results in many struggling to pay their bills. This is part of the reason why council tax arrears grew by 51% (more than £1.2bn) between April 2013 and March 2020 in England alone.

Maintaining this heinous system is particularly frustrating given that solutions are being offered that are fully costed, hold bipartisan support and would provide massive relief for the vast majority of individuals across the country. One such policy that meets these requirements is the proportional property tax designed by Fairer Share. Rather than relying on local discretion based on outdated property values, this would tax all households a flat 0.48% rate on up-to-date values. 77% of households across the country would enjoy an average annual tax cut of £556.

However, it is particularly beneficial for those suffering most. Research by Landman Economics found that the vast majority of the least well-off in every region of England would benefit from this reform. Consequently, they estimate that this reform alone would immediately lower poverty by 0.8% across the United Kingdom.

Of course, with any reform there are winners and losers, but Fairer Share’s plan does a good job of ensuring that the impact on those who may pay more is minimised. Any increase is capped at £1,200 a year – a manageable £100 a month – and households are allowed to defer payment until they are in a position to pay or have sold their house.

Moreover, it is much fairer than the current system that mandates that anyone in arrears must pay the entirety of their debts or face potential prison sentences. Indeed, in 2017-18, more than 300 people were imprisoned for non-payment of council taxes, with another 6,278 receiving suspended sentences. It is widely believed that the days of debtors’ prisons are gone, but that is far from the case.

Whilst it is encouraging that collection reform is being considered by the levelling up committee, this simply is not enough. Council tax is a fundamentally punitive tax that hurts families across the country for no good reason. It is essential that the government stops tweaking and looks at fundamental reform. Fairer Share’s plan would be a great place to start.


WATCH | Widespread Support For A Proportional Property Tax at Bright Blue Event

At a panel event hosted by Bright Blue, there was widespread support for replacing Council Tax with a Proportional Property Tax. Dame Margaret Hodge (MP for Barking), Arun Advani (Assistant Professor of Economics) and Sam Robinson (Senior Researcher, Bright Blue) all spoke in support of the Fairer Share campaign. Scroll down to watch the full event.

Sam Robinson - "Moving to a Proportional Property Tax would just make so much more sense. It also makes the tax easier to get behind, understand and explain. And it makes sure we are taxing housing wealth better and more progressively."

Arun Advani - "It would make much more sense to have a Proportional Property Tax. it benefits most people in the country - it's just a much more rationale system."

Margaret Hodge MP - "If we really want to tax wealth, you need to tax the asset most people have [a home] in a much more equitable and fairer way, so the people of Halifax aren't paying much much more than those in nKensington and Chelsea. Our inability to tackle that is outrageous."

Watch the full event below:


Council Tax in Your Area | 2022/2023

You can check the Band D Council Tax in your area and the yearly increase via our interactive map below (search option included):

 

 


Andrew Dixon | Replacing Council Tax could be a political goldmine for Johnson – or Starmer.

This article first appeared in Conservative Home on the 29th March 2022, written by Andrew Dixon, Chairman and Founder, Fairer Share.

Despite Council Tax being highly unpopular, successive governments have put reform in the ‘too difficult to touch’ box. There has been some tinkering: talk of adding new bands to reflect the significant increase in house prices since the current Council Tax system was introduced in 1991, and recently announced rebates to households in bands A to D.

Both highlighted the crucial link between the cost-of-living crisis and the regressive nature of Council Tax. However, the Government is still uninterested in meaningful reform to our outdated and unfair way of taxing peoples’ homes.

With inflation predicted to reach 8 per cent this year and with energy, fuel and food bills on the rise, now is the time for politicians to tackle Council Tax. Doing so would help reduce costs for the vast majority of households across the country. It could also provide major electoral benefits to whichever of the major parties is willing to grasp it.

Extensive polling by JL Partners indicates that voters throughout the UK believe that it is time to replace Council Tax and Stamp Duty with a simpler and fairer Proportional Property Tax, based on current property values rather than values from over 30 years ago. The findings show that, were the Conservatives to back the proposal, they could gain as many as 60 seats and retain the majority of ‘Red Wall’ seats they won in 2019. On the other hand, were Labour to back the policy, it could help the party gain as many as 52 seats including 43 in the ‘Red Wall’, as well as winning back essential seats in Scotland.

The policy has more supporters than opponents in every single parliamentary constituency. Support for the policy is highest among people living in lower value homes in the North and the Midlands as they would benefit the most from significantly lower bills. Across England, households would pay an average £556 less property tax a year, with this annual saving rising to £750 in Blackpool South and as much as £950 in Hartlepool.

The tipping point at which someone is likely to oppose the policy is when they live in a home worth £500,000 or more – in other words, well above the UK average of £260,000. Importantly, the minority who oppose a proportional property tax also say it would not be an issue that would make them vote for an alternative party. So, given the clear electoral benefits, why aren’t our political parties fighting each other to back the policy?

When asked about a Proportional Property Tax, the Government responds by saying the tax would mean “soaring bills for many hard-working families and pensioners who have saved and improved their homes”. This shows a complete lack of understanding of the policy, which has significant safeguards in place to protect those who live in valuable homes but have limited income – the so-called “asset rich, cash poor”.

For those who wish to stay in their high value homes, losses would be capped so that, at the point of transition, no-one would pay more than £1,200 more a year than they currently do. For anyone unable to pay this, there would also be the ability to defer payment until the property was sold.

Although the Government has missed the point about the Proportional Property Tax, the Labour leadership has also displayed a deafening silence on this issue. This reflects that the Opposition has a large number of seats in and around London, where house prices have sky-rocketed in recent years. But the latest polling makes it clear that Labour’s concerns about how these voters would respond to a proportional property tax are misguided.

Meanwhile, a surcharge for foreign-owned, empty, and second homes would ensure that international buyers in London pay amounts in property taxes closer to what they might expect in New York or Paris. This would limit the scope for property being used to facilitate economic crime and act as a much-needed control on skyrocketing house prices. The surcharge generates £4.5 billion in tax revenue, which can be used to lower local tax bills for households up and down the country.

Importantly, the policy would generate a surplus of £5.6 billion for the Treasury. Such proceeds could be used to help fund adult social care or limit the recently announced increase in National Insurance. Doing so would be an eye-catching manifesto pledge.

What other tax reform helps to ease the cost-of-living crisis for hard-working families, boosts the public finances to the tune of £5.6 billion, and wins seats at the next election? The Proportional Property Tax would tick all three boxes. If a different yet beneficial reform exists, neither party has yet shared it with the electorate. This reform could be a game changer for the Prime Minister. As the cost of living rises and Sue Gray looms, it is one he should reach for immediately.


New Polling | Scrapping Council Tax key to winning ‘Red Wall’ seats

Extensive new polling of constituencies up and down the UK indicates that overhauling how our homes are taxed “holds the key” to the Conservatives or Labour winning over ‘Red Wall’ seats at the next election.

A poll of 4,000 people conducted by JL Partners for the Fairer Share campaign group reveals widespread support for replacing Council Tax and Stamp Duty with a Proportional Property Tax (PPT) which would be levied on the current value of properties rather than on 1991 levels. Such a move could lead to bills falling for 77% of the country, with the average household likely to be £556 a year better off.  

The polling, which included MRP modelling, looked at the impact the policy could have on vote share in every single constituency in the UK. The results show how, with all things being equal, a Proportional Property Tax could be a ‘game changer’ at the next election.

Key findings include:

  • Were Labour to introduce a PPT, the policy could help the party gain as many as 52 seats including 43 in the so called ‘Red Wall’. They could also make gains in Scotland and would see their vote share increase among swing voters by net 15%.
  • Were the Conservatives to back the policy, their share of swing voters would increase markedly with 41% of undecideds more likely to lend their support to the party. Replacing Council Tax could see them gain as many as 60 seats in the next general election compared to their current position and hold on to the majority of Red Wall seats they won in 2019.

 

Blue = Conservative Red = Labour Orange = Liberal Democrat Yellow = SNP

 

With Council Tax bills expected to rise across the country for many households from April, the research also highlights how reform of the way property is taxed is supported by every single constituency in England:

  • Nationally, voters back the policy by over 3:1 (52% versus 17%). It is even more popular with voters in the North who support it by 9:1 (61% versus 7%).
  • Support is highest among people living in lower value homes in the North and the Midlands who would benefit the most from significantly lower bills.
  • The tipping point at which someone is likely to oppose the policy is when they live in a home worth £500,000 or more. Given the average house in the country costs £269,000 the policy is clearly popular across the board.
  • Support falls to 41% in areas such as Islington where the average price of a home is £839,000. However, there is still net support for the introduction of a Proportional Property Tax.

 

 

Blue = Support Red = Oppose

 

Fairer Share argues that a Proportional Property Tax introduced at a flat rate of 0.48% on the value of a property would raise a surplus of £5.6billion for HM Treasury and is a way for the Government to overhaul a deeply regressive and unfair system. The policy also includes a surcharge for second homeowners and foreign owners of UK property, proceeds of which (£4.5 billion) have been used to lower bills for low and middle-income households up and down the country. 

Findings from the polling add to the growing pressure for change with leading politicians from across the political spectrum publicly supporting calls for change including a number of MPs in Red Wall seats.

What has been said about the research?

 

Andrew Dixon, Chairman of Fairer Share, said:

“People up and down the UK are sick to the back teeth of council tax. They overwhelmingly want a fairer system in its place that reflects the true value of their homes. Our polling shows just how strong that feeling is and how reforming our property taxes holds the key to success at the next general election.

Were Labour to replace council tax they could gain millions of votes and potentially win over significant numbers of swing seats, most notably in Scotland and across the Red Wall. The Conservatives love to say they reflect the ‘will of the people’. Yet they appear to be tone deaf to the economic and political benefits of a proportional property tax. 

“The reality is that it is time to bring our property taxes into the 21st century and backing a system of proportional property tax should be a no brainer for both Boris Johnson and Keir Starmer. 

My question to both leaders is what other tax reform eases the cost-of-living crisis for hard-working families, provides a £5.6 billion surplus for HM Treasury and delivers countless key seats for Labour or the Conservatives at the next general election?”

James Johnson, founder of JL Partners and former head of polling at Downing Street said:

“Both parties currently sit in a quagmire. The Conservatives are falling behind Labour in the polls, while Labour is still not trusted enough to win convincingly. This research shows that a proportional property tax could well be the way for either party to convince the electorate they are the party for them.

Rarely do individual policies move the dial as much as this one does: it is highly popular with swing voters, and our modelling shows that it can bolster Conservative and Labour support – depending on who backed it – in the North and the Midlands but also across the country.”

John Stevenson, Deputy Chairman of the Northern Research Group and MP for Carlisle:

“If the Conservative Party wants to deliver for voters and retain the ‘red wall’ seats that we won at the last general election then making our property taxes fairer is one of the ways to do it.

We can now see clearly that voters in many marginal constituencies and others are overwhelmingly in favour of scrapping Council Tax. In its place they want a system of proportional property tax that would mean lower bills for the majority of households up and down the country.

Aaron Bell, MP for Newcastle-under-Lyme:

This polling confirms something that I have long suspected. 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. And, with voters across the UK backing a proportional property tax by over three to one, I believe it is also the right thing for the Conservative Party, helping secure for the long-term the support of those voters who switched to us in 2019.

Simon Fell, MP for Barrow and Furness:

“Now we know that the majority of people in constituencies up and down the UK want a simpler and fairer property tax system, there is no excuse for politicians not to deliver. Rather than sticking with an unjust and outdated council tax system, my party should go into the next general election promising voters a modern and progressive proportional property tax.

This much-needed reform would lift a disproportionate burden from young people while delivering lower bills for millions of hard-pressed households across the country.

Dame Margaret Hodge, MP for Barking:

“Our existing system of property taxation in the UK is deeply flawed and highly regressive. Now we can see that voters overwhelmingly want a fairer system, we urgently need to have serious debate about delivering exactly that. 

As the Government preside over a cost-of-living crisis and we head into a spring of tax hikes and soaring prices, there is a stronger case than ever for looking closely at a proportional property tax which would result in permanently lower bills for most households with no cost to taxpayers."

Dan Carden, MP for Liverpool Walton:

“Standing by an outdated and unfair system of property taxation is a betrayal to millions of households across the country. Regressive Council Tax hikes alongside a brutal cost of living crisis mean many across the country, especially the poorest households and people in the North, will suffer and struggle to make ends meet.

Not only would replacing Council Tax and Stamp Duty with a more progressive system help struggling families in communities like mine, but it has the support of voters across the country who want to see change.

Grahame Morris, MP for Easington:

“The Government must stop talking about levelling up and start acting. Council Tax is a grossly unfair and disproportionate tax holding back our regions. Proportional Property Tax is a simple, efficient, and effective means of generating revenues, supporting families, and easing the cost of living.

A Proportional Property Tax would help level up the UK and reduce the economic divide that has persisted in our country for generations. The policy has widespread public support and growing political support; it is time for change.

 


How killing off council tax would deliver for voters in the West Midlands and beyond

This article was published by the Centre for the New Midlands on the 7th March 2022, written by our Founder, Andrew Dixon.

 

It is no secret that our council tax system is broken. The Institute for Fiscal Studies has described council tax as “highly regressive” with respect to property value and “increasingly arbitrary and unfair”. The absurd nature of the current system is underlined by the fact that households in Birmingham must pay out 0.75% of their property value in tax whereas the average household in Battersea pays just 0.11%.

 

What is less well-known is that we could easily replace council tax with a system that would not cost the Exchequer a penny and would lead to lower bills for the majority of households in the UK, with some of the biggest savings going to people in the West Midlands.

 

The Fairer Share campaign that I chair is calling for council tax and stamp duty to be replaced with a simple proportional property tax set at a flat rate of 0.48% of a property’s value. Since we kicked off our campaign in 2020, we have seen growing signs of support in the House of Commons with MPs from both parties now backing the plan. Among those in favour of a proportional property tax are Aaron Bell, Conservative MP for Newcastle-under-Lyme. “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,” he has stated.

 

In March last year, Boris Johnson was asked at Prime Minister’s Questions to get behind a proportional property tax which “would create a transparent property taxation system, generate revenues that local government needs and ease the tax burden on hard-pressed families across the country”. We are still working on the Prime Minister but earlier this year the Government did make what looked like a small step in the right direction with council tax rebates given to households in bands A to D. However, the reality is that the one-off payment does not go anywhere near far enough and in many cases is misdirected, often towards people on high incomes living in Band D properties in trendy neighbourhoods where houses sell for millions of pounds.

 

At best the recent changes to council tax are merely tinkering around the edges of an unfair system that hits young people and households in the Midlands and north of England the hardest. To really deliver for voters in the red wall and beyond, the Prime Minister should act now to kill off council tax and stamp duty and bring in a proportional property tax that would mean lower bills for around 76% of households across England. Overall, £6.5 billion per year would be saved by council tax payers outside central London, representing a huge boost to countless communities and their local economies.

 

Admittedly, not everyone would be quids in. Some homeowners in London may see a small increase in their annual bills, reflecting the extreme rise in house prices over the past 30 years. But across the country renters would pay nothing and to ensure there are no ‘losers’ on day one of the policy being implemented our campaign is proposing a cap on the increase in tax of £100 per month, not far off the price of a daily cup of coffee.

 

Households in the West Midlands would be among the biggest winners under a proportional property tax. For example, in Bell’s Newcastle-under-Lyme constituency, 97% of households would be better off with average savings of £600. In Birmingham Ladywood 98% of households would benefit with an average saving of £600. And in Walsall North 100% of households would reap the rewards with an average saving of £800.

 

Additional research has shown that replacing council tax and stamp duty with a proportional property tax could free up almost 600,000 homes within 5 years, with more than 50,000 of these in the West Midlands. The research by WPI Economics found that of a total of the 595,000 homes, 315,000 would be transactions for better space allocation and 135,000 would be second homes released as primary residences. The rest would be vacant homes released as primary residences and homes built due to previously uninitiated planning permission. This reform therefore, not only addresses the cost of living crisis but also addresses the challenges posed by the affordability and accessibility of housing.

 

This year we have also commissioned in-depth national polling to establish what voters make of proportional property tax. The findings, which will be published shortly, should make all MPs sit up and take note. In short, we found that voters in constituencies up and down the country have an appetite for a proportional property tax that could well translate into votes for whichever party takes action.

 

With council tax due to rise yet again in April and the cost-of-living crisis set to deepen, our message to the Government is clear. If they are serious about levelling up and delivering for voters who are struggling with their bills then a proportional property tax has to be part of the package. It is time for ministers to recognise that council tax is an outdated and unjust system that is hurting many middle and low incomes households in modest homes. In its place we should have a modern, simple, proportional property tax that would put more money in the pockets of people across the West Midlands, and up and down the country.

 

Andrew Dixon

Chairman & Founder

Fairer Share


Jill Mortimer MP | The red wall deserves a fairer council tax system

This article irst appeared in The Times on the 10th February 2022, written by Jill Mortimer, Member of Parliament for Hartlepool.

 

The Government’s Levelling Up White Paper is a far-reaching plan to unlock the potential of people and places in every part of the country in the years ahead. But as the cost of living crisis bites, it’s clear that the levelling up agenda needs to work for people in the weeks and months ahead. Alongside long-term plans and medium-term missions, we need short-term solutions to put more money in peoples’ pockets.

I know that the Government gets this. The white paper recognises that certain communities and people need greater support in the more immediate term. The policies set out by the Secretary of State for Levelling Up will begin to have visible effects, on high streets and in local communities, in the next few years.

More immediately, action is being taken to limit the impact of soaring energy prices on poorer households. Under plans announced by the Chancellor last week, millions of people in council tax bands A to D will be given rebates on their bills worth hundreds of pounds. This will be a vital financial lifeline for many of my own constituents, who do not live in expensive homes yet have been facing council tax bills of more than £2,000 a year.

By focusing on these council tax bands, the Government is ensuring that a broad range of households in modest homes are supported, including the very poorest and thousands of middle-income families. By and large, this is a demographic that deserves to reap the biggest benefits from levelling up. But why stop at a one-off payment?

The Government could and should still go further to fix one of the most outdated and unjust of all the taxes we currently have in the UK and put more money in peoples’ pockets. The absurdity of the council tax system is such that households in my own constituency currently pay out an average 1.31 per cent of their property’s value every year, while for residents of Westminster the council tax burden stands at just 0.09 per cent. In other words, council tax rates in Hartlepool are higher than they are for comparative bands in many other, and often much more affluent, areas of the country.

Even with the rebates, council tax will still be a system that favours millionaires rather than the millions. By taking bolder action to minimise the pain caused by council tax, the Chancellor would be steering the levelling up agenda towards a place where it can make a real difference to voters’ wallets today rather than in a decade’s time.

To deliver for voters in the red wall and beyond, the Government could revisit the outdated council tax banding system, which is based on 1991 prices and favours taxpayers in those areas where house prices have surged the most. This would be a much-needed step in the right direction. We should look closely at killing off council tax and replacing it with a fairer system that works for Hartlepool and the majority of the country.

In April, households are expected to see gas and electricity bills rise by 50%. This comes to about £600 for an average bill and, just like with council tax, Britain’s poorest households are set to be hardest hit. According to the Resolution Foundation, the poorest will see their energy spend rise from 8.5% to 12% of their total household budget. This is three times the proportion for the richest.

It is essential therefore that action to put more money in peoples’ pockets is at the heart of the levelling up agenda. In constituencies such as mine, many voters cannot wait until 2030 to find out how they may be better off. They are looking for answers today and the levelling up agenda needs to urgently provide them.


Responding to the Government's flagship Levelling Up White Paper, Fairer Share's Founder and Chairman, Andrew Dixon said:

“With the publication of the Levelling Up White Paper, Boris Johnson is promising jam tomorrow while refusing to lower bills today. If he was serious about levelling up, the Prime Minister would act now to bring in a tax policy that is pro-red wall and pro-working people. That means listening to many of his red wall MPs and backing a Proportional Property Tax. Doing so would make 76% of households better off to the tune of £435 a year, while sticking with the current system only means ever higher bills for already-stretched households. The reality is that the levelling up white paper is a dead duck and levelling up will never take off as long as the Government refuses to kill off our unjust and outdated council tax regime.”

New Report | Reforms to Council Tax could raise £4.5 billion each year from foreign buyers

Replacing Council Tax and Stamp Duty with a Proportional Property Tax would raise as much as £4.5 billion from foreign homeowners, empty homes and second homes.

This was the finding from our new report released this week, assessing the impact of international investors on the UK property market, and how property tax reform could help our economy in the future.

Introducing such a Proportional Property Tax, levied on the existing value of peoples’ homes rather than 1991 values (as is the current practice), would lead to 76% of households being better off, with an average saving of £435 per year. 

Currently, foreign buyers in Westminster, for example, only pay a maximum of £1,655 a year. The much-needed reform of property taxes would see a surcharge of 0.96% levied on all foreign owned, second and empty homes. This would mean that an international buyer purchasing a £6.2m house in Westminster would pay £59,520 each year in local tax.

Council Tax is deeply regressive with those in low value homes paying more in proportion to the price of their home than those in high value homes. For example, in the Durham constituency of Easington, a family living in a home worth £100,000, presently pays over 1.4% of their home’s value in Council Tax every year. This rate is 52 times higher than the 0.03% rate which the £6.2m home mentioned above in Westminster would pay.

Whilst London remains the prime market for foreign investors, recent data shows that since 2010, overseas ownership has tripled to 250,000 homes across England and Wales, pricing out local households out of the market. 

The report reveals that the policy’s surcharge would bring in as much as £4.5 billion in tax revenue, reduce bills for 76% of households and would also free up as many as 600,000 homes over 5 years, including a quarter of a million homes for 1st time buyers

Calls for replacing Council Tax are set to grow louder this year as the cost of living crisis intensifies. Our polling carried out last year highlighted how Council Tax was the most disliked tax in the country with over 50% saying it was worse than Income Tax, Inheritance Tax and Capital Gains Tax. 

The latest findings put further pressure on ministers to bring in a Proportional Property Tax, which has the support of a number of Labour and Conservative MPs, think tanks and the CLG Select Committee. 

  • John Stevenson MP for Carlisle, stated, "If we are to fix the housing market so that more young people can have a home of their own, then ministers should give serious consideration to taxing the high numbers of foreign investors in the UK. The best way of achieving this could be through a Proportional Property Tax, freeing up homes up and down the country.
  • Lord David Willetts a former Conservative Minister, has previously said, “We've got to help young people get started on the housing ladder, and [a Proportional Property Tax] would bring more houses onto the market and would mean that people in low-value houses will not be paying so much tax”.
  • Andy Burnham, the Mayor of Greater Manchester, also argued for replacing Council Tax with a new levy based on the value of your property, stating “The party can't tiptoe around it anymore”. 
  • The CLG select committee published a report in July last year recommending the introduction of a PPT, stating, “Council Tax is also an increasingly regressive tax that again penalises those in more deprived areas. A revaluation is long overdue”.

 

Reflecting on the report, our Founder, Andrew Dixon said:

“The Government is under increasing pressure to get to grips with the housing crisis and ensure foreign homeowners pay their fair share of property tax. Adopting a Proportional Property Tax would mean lower bills for the majority of households in the UK while the surcharge on these purchases would lead to hundreds of thousands of homes coming onto the market for UK residents.”