How Stamp Duty and Council Tax reform can provide windfall for North
This article is by Fairer Share founder, Andrew Dixon, and was first published in the Yorkshire Post on 10/07/2020. The original article can be read here.
THE Chancellor’s solution to provide a temporary ‘stamp duty holiday’ on the first £500,000 of all properties sold until March of next year is a welcome one and may help to stimulate the housing market.
Will this policy have the desired effect? Potentially. However, many households will choose to stay put because they have lost their jobs, or are rightly concerned about the outlook for the economy or the industry in which they work. The stamp duty cut may bring forward purchases but it might not stimulate a flurry of activity.
This begs the question – why is it not permanent? As the Institute of Economic Affairs explained: “Making it permanent would get the property market moving and encourage those who want to downsize as well as those looking for family houses, freeing up homes for first-time buyers.”
It is important to note that the cut in stamp duty majoritively benefits existing home owners as the saving is likely to be capitalised into house prices.
We should also remember that it is renters who have been at the sharp end of the effects of Covid-19 – this policy does very little to help the many renters who are struggling to get by.
The biggest savings will be received by those who own the more valuable properties, and given regional disparities in house prices, much of the benefit will accrue to those in London and the South East.
If the Government is serious about levelling up the country, then they need to build this short-term fix into a long-term solution.
To compound matters, modest properties and areas of the country with less property wealth are already being hit with higher council tax bills as a percentage of their property value.
This unfairness has been exacerbated by a lack of property revaluations since 1991. The effective tax rate on residential property is just 0.2 per cent in London, compared to 0.63 per cent in Yorkshire and the Humber.
Indeed, our country’s two primary property taxes, council tax and stamp duty, have evolved into taxes that are neither reasonable nor right.
Meanwhile, across the country, we are seeing rising levels of inequality – both regional and intergenerational. These divides have been exacerbated by the financial crisis of 2008 and there are further challenges ahead as the Chancellor addresses the costs and the implications of the current Covid-19 pandemic.
The International Monetary Fund (IMF) highlights that economies with more equal distributions of income and wealth tend to have stronger and more stable paths of economic growth than those with greater inequality. A fairer economy will lead to a stronger economy for our country.
The philosopher Sir Roger Scruton noted: “A conscious effort to direct resources northwards, and to provide for the people of the northern cities the education and career opportunities that currently exist to the south of them, would begin to heal one of the most painful divisions in our country.”
For the Government to truly “level up” the country, as they promised during the 2019 General Election, the Autumn Budget must include the fundamental reform of property taxes, to put money into people’s pockets, stimulating the housing market and the wider economy.
Fairer Share, a campaign I helped to found, proposes to scrap both council tax and stamp duty, replacing them with the ‘proportional property tax’ – a simple flat rate of 0.48 per cent on the value of property.
Central redistribution from London and the South East would maintain local council budgets, sustaining tax revenues while reducing property tax bills for 75 per cent of households across the regions.
If Fairer Share were to be adopted, Yorkshire and the Humber would receive an average saving per household of £615 per year, bringing an overall annual tax saving of £971m to the region. This would represent a huge boost to countless communities and their local economies.
Renters have thus far been ignored as part of the Chancellor’s generosity. I believe the tax should be collected not from tenants, but directly from owners who are in a better position to pay.
If this were the case 8.7 million households would be removed from property tax altogether. This would be in line with international practice and would save local councils £400m in administrative costs. These savings could then be applied to more productive use – funding vital local services whose budgets have been stretched as a consequence of the current crisis.
On balance, the Chancellor’s stamp duty holiday is welcome. But we need to go much further if we are to rebalance the economy. It’s time we ensure that changes to how we tax property benefit those in key regions like Yorkshire, and those who rent as well as own property.
Andrew Dixon is the founder of Fairer Share – a new campaign to replace council tax and stamp duty with a fairer system.
National campaign launched to reduce Doncaster Council Tax bills by an average of £377 each year
This article originally appeared in the Doncaster Echo on 03/07/2020. The article can be read here.
Fairer Share has launched a new campaign to reform Council Tax, saving 98%+ of households in Doncaster on their current tax bills. The plan, named The Proportional Property Tax, proposes a flat rate of 0.48% on the value of property, providing significant financial benefits for the 75% (18 million) of households in England that will save. In Doncaster, the average household would save £377 each year if the plan was introduced by the government.
Fairer Share launched the campaign to address the increasingly unfair characteristics of Council Tax and the impact it has had across the UK. Research found that many expensive properties in London and the South East were paying less in Council Tax than smaller properties in other parts of England.
In addition to replacing Council Tax, the plan calls for the abolition of Stamp Duty and the controversial “Bedroom Tax”. Exemptions for foreign owners and those with second homes will also be removed. Under the plan, The Proportional Property Tax is revenue neutral and would be collected by central government and redistributed to local councils accordingly, meaning local budgets would remain unchanged.
In the three weeks since the campaign launched, over 15,000 people have signed the petition calling for The Proportional Property Tax. Fairer Share is now looking to gain the support of parliamentarians to increase momentum behind this much-needed reform, including Don Valley MP Nick Fletcher.
“As we have seen from the impact of Covid-19, it is clear that the deck is stacked in favour of the rich”, said Fairer Share founder, Andrew Dixon. “In many cases, the wealthiest are paying a lower effective rate of Council Tax than those who are merely well off, not to mention those who are financially struggling. Outdated property valuations combined with local authorities setting the rate of tax has led to an incredibly regressive system that charges a family in Doncaster more than a multi-millionaire in Westminster.”
Research by the Money Advice Trust shows that Council Tax arrears account for 60% of cases sent to bailiffs by local authorities, while recent research from Citizens Advice suggests 1.3 million households are currently in Council Tax arrears. Fairer Share’s plan includes a deferral mechanism that allows those who can’t pay to wait until a change in their financial situation, or the sale of their house.
For more information, please visit fairershare.org.uk/proportional-property-tax/
A Letter From Our Founder
Hello,
Thank you for visiting Fairer Share.
A sense of fair play is an important part of our national identity. We can reflect on this with great pride. We are bound together by ties of mutual responsibility, social trust and most importantly a sense of fairness.
Fairness has long underpinned trust in our society. From the signing of the Magna Carta and the creation of the NHS, to defining the rules of many of the world’s major sports, British society is founded on principles that seek to uphold fairness and equal opportunities for all in education, work, health, justice, security and living standards.
This sense of fairness should not be confused with equality nor sainthood. It is about being reasonable and doing the right thing.
However, the well-respected IPPR points out that this sense of fairness is interpreted too narrowly – as in the fair application of rules. Yes, this is important when playing football matches or board games. We believe that this sense of fairness should be expanded to include a sense of economic justice – “the fairness with which the economy generates prosperity and distributes its rewards”.
Our country’s two primary property taxes, Council Tax and Stamp Duty, have evolved into something neither reasonable nor right. The deck is stacked in favour of the rich. In many cases today, the wealthiest are paying a lower effective rate of Council Tax than those who are merely well off, not to mention those who are struggling. Such outcomes go against our sense of fairness.
Meanwhile, across the country we are seeing rising levels of inequality – both regional and intergenerational. These divides have been exacerbated by the financial crisis of 2008 and there are further challenges ahead as we come to address the costs and the implications of the current Covid-19 pandemic.
The EU Referendum exposed these vast divides, particularly within England. The philosopher Sir Roger Scruton noted, “A conscious effort to direct resources northwards, and to provide for the people of the northern cities the education and career opportunities that currently exist to the south of them, would begin to heal one of the most painful divisions in our country”.
The IMF highlights that economies with more equal distributions of income and wealth tend to have stronger and more stable paths of economic growth than those with greater inequality. A fairer economy will lead to a stronger economy for our great country.
In the run up to the 2019 General Election, the Conservative Party embraced this way of thinking and promised to “level up” the country. They won a clear mandate to do just that. Let’s help them deliver on their promise by presenting them with our vision for a fairer property tax.
We are fortunate to live in a liberal democracy, but that freedom comes with responsibility. Let’s use this responsibility. Let’s demand a fairer share for all.
I encourage you to watch our explanatory video, sign the petition and share this vision with your friends and family. Let’s do the right thing.
Thank you,
Andrew Dixon
Founder, Fairer Share Campaign
Our Thinking Behind the Fairer Share Campaign Video
In early 2020, and well before the world went into lockdown, the Fairer Share team decided we need a fun, punchy campaign video to kick start our journey to create change. We brainstormed some ideas, brushed off our cameras and spent a week travelling up and down the country to see if people knew how unfair Council Tax really is. Spoiler alert - they didn’t know how unfair Council Tax really is and they’re not happy...
The Road Trip
The only ingredient that was missing, was a great host and presenter to give our video the punch it needed. We had a think, and decided to work with the wonderful Judie McCourt (who tends to grace our screens on behalf of the Postcode Lottery!) who is no stranger to the communities we were filming within. We had a sit down over a coffee, decided what we wanted to ask people together, and had a few practice runs. Admittedly, we did look rather silly wearing the inflatable crown and waving gigantic cards around in an independent coffee shop, but the practice paid off in the end!
So, with cameras packed, crew accounted for and Judie on driving duty - we undertook our journey to create the video - spending most of our time filming in Middlesbrough and Sheffield. Both towns are some of the most disproportionately affected from the current Council Tax system and believe it or not, a £150,000 property in Middlesbrough pays MORE Council Tax than an apartment in the City of London (with a private swimming pool) that costs £5,750,000. Sound unfair? That’s because it is.
The People
With all that said, we thought communities across the country deserved to know just how unfair the current state of affairs really is. We made it our mission to work with members of the public to highlight the stark inequality of Council Tax whilst letting them know that we’re embarking on a campaign to instigate real change that will make a real difference. Luckily, our interviewees were big fans of the campaign so we even gained a few supporters along the way (and we’d love for you to join us too).
What immediately became clear from our time chatting to members of the public is that the VAST majority of people we spoke to had no idea just how tough Council Tax is for households across the country. As the famous line goes in our video, “we’re gettin’ screwed!”. Council Tax in the north ends up costing hard working people far more than those within London, and that’s just not fair, is it? You wouldn’t charge more VAT for a Nissan than on a Ferrari, so why are mansions in London paying less council tax than family homes in other parts of the country?
Once we said our goodbyes and came home to edit the video, we found that our biggest challenge on this campaign was yet to come… We interviewed dozens of people, from all walks of life, and the common thread that tied them together was a frustration at just how unfair the system currently is. Speaking of unfairness, we then had the challenge to boil down dozens of equally powerful reactions into a 2 minute video, which ironically, didn’t seem very fair! We might have to steadily release snippets from our “extended cut” to give the people the stage they deserve, and to allow their voices to be heard!
We can only create change together
We didn’t pay anybody to take part in our video, nothing was scripted, and the reactions were 100% real. Our video, much like our entire campaign, is led by the people and is made special by the general public. We will make your voice heard, but we need you to help. We’re taking on an entire system here where the most well off will be forced to start paying their fairer share - and they won’t be happy with us one bit! Together, by signing a petition, speaking in the thousands, and by joining forces to demand change - we can really make a difference here.
Please, sign the petition here and help us ensure everybody pays a fairer share.
Thanks for looking through this article on www.fairershare.org.uk! Watch this space for more articles as the campaign goes on and sign up to our newsletter here.
Less Than 3 out of 10 People Believe Council Tax is Fair
In January this year, we wanted to have a better understanding of how Council Tax is perceived by the British public. To find out, we polled over 1,500 fine people up and down the country to see what they thought.
Given the lack of conversation around the issue within the national media, we expected a large percentage of respondents to have little or no knowledge of how Council Tax works. We had suspected that at least a small percentage would view their bills and the system to be unfair.
The findings were even more shocking than we had imagined. Less than three out of every ten Brits (29%) believe the Council Tax system is fair, whilst over half the public (52%) said they have no understanding of how the system works. This is particularly startling given that Council Tax is payable on almost all domestic properties, whether they are rented or owned.
Respondents might not know that Council Tax is calculated based on the value of property from thirty years ago, or that each local council sets their own tax rate. They might not know that, compared to how much their property is worth, London’s tax rate is under half that of the North East. Perhaps if we all had a better understanding of these features, an even higher percentage would deem the system to be unfair.
While many may not know how Council Tax works, they do know that their bills are rising. With Council Tax bills increasing by at least 4% in each of the last four years, over half of those surveyed (54%) believe their Council Tax bill to be too high. With inequality rising over the last decade and all of us really feeling the squeeze, a hefty Council Tax bill really sticks out as we manage our monthly finances.
For Fairer Share, this information is invaluable. These findings suggest there is a lack of information on how Council Tax is calculated, how much we pay relative to other parts of the country, and how this money is reinvested in our communities. We know we are paying too much, but we don’t know why or how to change it.
That is where we come in...
At Fairer Share, we want to balance the scales. We want to kickstart the conversation, explaining why those in the Midlands and the North are paying more than those in London, and galvanise support by showing that a fairer alternative is possible. We want to direct this support towards the decision makers who have the power to end this unfair and unjust Council Tax system.
If you would like to join our campaign, please sign our petition calling for the government to replace Council Tax and Stamp Duty with our alternative: The Proportional Property Tax. To find out more about the Proportional Property Tax, please read our policy outline here.
Thanks for looking through this article on www.fairershare.org.uk! Watch this space for more articles as the campaign goes on and sign up to our newsletter here.