A group of 18 MPs are advocating a new alternative form of property tax known as Proportional Property Tax (PPT) championed by Fairer Share.
The tax would replace Council Tax, Stamp Duty and Bedroom Tax with a “simple flat rate of 0.48% on the current value of your property”. The current Council Tax rates are based on the valuations of property on 1st April 1991. Other features of PPT include:
- The tax would only be paid by property owners, not tenants. This would remove 8.7 million renting households from property tax.
- Payment of the tax could be deferred for those owners unable to pay.
- Exemptions on second homes and undeveloped plots would be scrapped.
- Annual and automated valuations for all properties.
Of the 18 MPs backing PPT, nine are Conservative and nine are Labour. One such MP is former shadow chancellor John McDonnell. There is also support from members of the House of Lords and from Andy Burnham, Mayor of Greater Manchester.
Fairer Share say 77% of households (18 million) would pay less, with an average saving of £556. Any increase on what homeowners are currently paying would be capped at £1,200. The tax may also lend itself to the levelling up of regions outside London: Fairer Share say such communities would benefit from an overall £6.5 billion reduction in property taxes, representing a huge boost to local economies.
Fairer Share also claim that removing SDLT and facilitating more property sales, as well as putting more money in the pockets of low- and middle-income households, could increase GDP by over £3 billion per year. They said:
“[PPT would] remove a barrier to homeownership for millions of young families and make it easier for older households to downsize. Our proposed PPT would instead spread the burden of stamp duty across 23m homes, which would mean that, instead of one large tax bill each time someone buys a home, the tax is spread across the period of property ownership.”
Hartlepool Conservative Jill Mortimer, a supporter of PPT, said:
“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.”
