Below is an open letter to the Chancellor of the Exchequer published on 14th March 2021, featuring in The Observer

Dear Chancellor, 

We are writing to ask you to consider announcing a root and branch review into the way residential property is taxed in the UK. 

As the Government begins to plot its way out of the coronavirus pandemic, which has accentuated the inequalities in our society, fairness should be at the heart of the Government’s policy agenda. This must mean looking at the options for reforming our residential property taxes so that they are based on today’s property values and homeowners’ ability to pay, while encouraging efficient use of our housing stock and generating incentives for local communities to accommodate development. 

Any such review should begin by focusing on Council Tax, which is poorly designed, out of date, and unpopular. This tax is based, in England and Scotland, on property valuations that are now almost 30 years old and therefore bear no resemblance to the realities of current house prices. 

It would appear that Council Tax is a material wealth tax for those in modest houses but is a modest service charge for those in wealthier areas. This places the heaviest burden on the young, low-earners, and those living in less prosperous parts of the country, who typically reside in modest properties.

We have known for many years that Council Tax is not fit for purpose but the situation is now critical. Council Tax is increasingly putting lower-income families into debt and Covid-19 has only exacerbated the situation, with an extra £700 million added in outstanding Council Tax debt from over 800,000 UK households between March and September alone. 

A review of property taxes should also consider whether there is a place for Stamp Duty in a modern system of property taxation. By taxing property transactions, Stamp Duty discourages homeowners from moving and blocks up the property market, hindering older people from downsizing and limiting young families’ ability to move up the property ladder. This has wider dynamic economic implications as we have seen from the Stamp Duty holiday.

Households are already paying comparable property taxes relative to other developed nations – the problem is that the wrong households are paying the wrong taxes at the wrong times. The current unfairness exists within individual constituencies, between regions, and between the generations.

We urge you to use the so-called “Tax Day” on 23 March, when the Treasury will publish a range of consultations and calls for evidence into tax policy, to begin this review process. We are ready and willing to support the Government with its efforts to introduce a fairer and more efficient system of property taxation that is fit for the modern age. We recommend the Government examines this issue through the lens of fairness, economic activity, social mobility, housing stock efficiency, the Government’s levelling up agenda and the impact of the pandemic on household and local government finances. 

We look forward to your response and to the upcoming consultation announcements.  

Kind regards, 

Alicia Kennedy, Director, Generation Rent

Andrew Dixon, Chairman, Fairer Share

Anya Martin, Director, Priced Out

Ben Rich, CEO, Radix

Carys Roberts, Executive Director, IPPR

Charlotte Alldritt, Director, Centre for Progressive Policy

Dr Gavin Kerr, author of “The Property-Owning Democracy: Freedom & Capitalism in the 21st Century”

Dr Justin Thacker, Director, Church Action for Tax Justice

James Kirkup, Director, Social Markets Foundation

John Muellbauer, Institute for New Economic Thinking, Oxford Martin School

John Myers, Founder, London YIMBY

Liz Emerson, Co-founder, Intergenerational Foundation

Neal Lawson, Director, Compass

Polly Mackenzie, Chief Executive, Demos

Professor Philip Booth, Director of the Vinson Centre for the Public Understanding of Economics and Entrepreneurship, University of Buckingham

Robert Colvile, Director, Centre for Policy Studies

Robert Palmer, Executive Director, Tax Justice UK

Robin McAlpine, Director, Common Weal

Ryan Shorthouse, Chief Executive, Bright Blue

Sam Dumitriu, Research Director, The Entrepreneurs Network

Torrin Wilkins, Director, Centre Think Tank