Despite its widespread unpopularity, successive governments have avoided tackling Council Tax reform, deeming it too challenging to address. While there has been occasional talk of adjustments, such as adding new bands to account for rising house prices since 1991, substantive reform remains elusive.
Although there is a clear connection between the cost-of-living crisis and the regressive nature of Council Tax, the government shows little interest in implementing meaningful changes to this outdated and unfair system of taxing people’s homes.
With the cost-of-living crisis still hitting hard and essential expenses like energy, fuel, and food bills remaining high, now is the time for politicians to confront Council Tax. Reforming it would alleviate financial burdens for the vast majority of households across the country and potentially yield significant electoral advantages for whichever major party is willing to take the lead.
Extensive polling by JL Partners indicates that voters throughout the UK believe it is time to replace Council Tax and Stamp Duty with a simpler and fairer Proportional Property Tax, based on current property values. The findings suggest substantial electoral gains for either Conservatives or Labour if they were to endorse this policy. This is further supported by More in Common’s report, which highlighted that a pledge to reform Council Tax is at the top of everyone’s manifesto wish list. In fact, according to James Johnson of JL Partners, “there is a huge electoral gift here for either party if they want to take it on”. So why are we not hearing more about it from party leaders?
Support for the Proportional Property Tax is highest among residents in lower-value homes in the North and the Midlands, who would benefit the most from significantly lower bills. Across England, households could see an average annual property tax saving of £556, with even larger savings in towns such as Blackpool South and Hartlepool. With Council Tax rises of up to 10% in some areas, the financial strains on households who are already grappling with rising living costs, are exacerbated.
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”.
Regarding the Proportional Property Tax, Fairer Share’s founder, Andrew Dixon, says “Our fully funded solution presents a real opportunity for meaningful tax reform that addresses the cost-of-living crisis, bolsters public finances, and secures electoral advantages. The party that embraces this reform will create positive change, benefiting both the public and the country as a whole by addressing the unfairness of the current system and providing much-needed relief to households facing financial strain”.
The lack of meaningful Council Tax reform raises questions about whether it has been a blind spot for Sunak’s administration. Despite the clear need for change highlighted by numerous MPs, think tanks, campaigners and economists, and the clear benefits of solutions like the Proportional Property Tax, the government’s reluctance to address this issue raises concerns over its commitment to addressing the cost-of-living crisis and ensuring fairness within the tax system. Maybe Starmer will grasp the nettle? He has, after all, committed to “level up” regions more effectively than the Conservatives.