This article first appeared in The Times on June 28th 2021, written by the Conservative MP for Carlisle, John Stevenson.

 

The Chesham & Amersham by-election result has prompted understandable concern in some quarters of the Conservative party. But while the result was a disappointment, I would caution colleagues against leaping to the wrong conclusion. Namely the idea that a focus on red wall seats has to come at the expense of those in the south.

The real story is that if the government wants to deliver on our manifesto pledge of levelling up the country, then something has to be done about property taxes. Our system is broken. Council tax hurts the poorest in society all across the country. Simultaneously stamp duty puts a brake on economic growth by
hindering transactions in the housing market, leading to an inefficient housing stock.

There is no doubt that constituents like mine in Carlisle would benefit from a fairer system. In fact, near enough 100 per cent of my constituents would benefit to the tune of £700 if the government was to scrap council tax and stamp duty and bring in a simple proportional property tax, as proposed by the Fairer Share campaign.

But seats like mine are only part of the picture. The reality of proportional property tax would be lower bills for 76 per cent of households across England,
with beneficiaries in the north and south.

Take North West Cambridgeshire where 91 per cent of households would benefit from a proportional property tax, or Bedford, the commuter town, where 89 per cent would benefit, or the cathedral city Salisbury, where 83 per cent of households would benefit. Even the inner London borough of Barking would see nearly two thirds of its residents directly benefiting from the change.

It is of course true that some wealthy parts of the south of England would see their bills rise under proportional property tax. But many southerners would see
lower bills and those who will have to pay more are predominantly the richest homeowners in the most affluent and valuable areas of the country.

Furthermore, a cap on any increase at the point of implementation of £100 per month and the option to defer payments at notional interest rates until point of sale surely insulates these homeowners from any material concerns and means that everyone who wants to will be able to remain in their present home.

What’s clear is that the current system is not working. For example, my residents who can only afford houses in the lowest band pay 1.3 per cent of their property value in council tax per year. At the same time, the wealthiest band property owners in Brighton pay just 0.1 per cent of their property value per year. This is patently unfair.

A proportional property tax would address this inbuilt unfairness without hiking up bills across the south of England. At the same time, the removal of
stamp duty and the introduction of a proportional property tax would correct broken incentives in the market — encouraging transactions and helping people to move into homes that are most suitable for their needs.

Stamp duty is a poorly-designed tax because it hinders people moving. At the top of the market in particular it is prohibitively expensive, often a cash
payment of 5 per cent to 10 per cent of the value of the property is required.

These payments stop families moving up the market as they need space for their children and disincentivises others from downsizing when their own children
move out to homes of their own or the rental market.

Across the country fewer barriers to downsizing could lead to hundreds of thousands of additional homes being freed up, helping to mitigate some of the
housing supply shortage particularly where there is greater demand, in London and the South East. And it would help young people get on to the housing ladder where it is too expensive for all but a few.

Ultimately, levelling up for one part of the country does not need to come at the expense of another and a proportional property tax would not just be of
enormous benefit to my constituents. It would also mean the end of stamp duty for everyone and lower bills for households across England, from Carlisle to
Cambridgeshire.

John Stevenson is the Member of Parliament for Carlisle.