Prime Minister Andy Burnham is actively considering the abolition of council tax and stamp duty, with two replacement options under review by Treasury officials, according to an exclusive report from The I Paper.
The Two Options Under Consideration
The first option is a proportional property tax, which would replace both council tax and stamp duty with a flat annual charge of 0.48% on a home's current value. This would apply uniformly across all properties, based on market valuations. The second option is a land value tax, an annual charge based solely on the value of the land a property occupies, excluding the value of any buildings on it. Both proposals aim to address what Burnham has repeatedly called a "highly regressive" council tax system.
Treasury officials are said to be examining the feasibility and revenue implications of each model. The proportional property tax would generate revenue proportionate to property values, potentially lowering bills for lower-value homes while increasing them for high-value properties. The land value tax, advocated by some economists, would encourage efficient land use and could capture unearned gains from land appreciation.
Political Reactions and Support
Jonathan Brash, the Hartlepool MP who chairs the All-Party Parliamentary Group (APPG) on council tax reform, said: "Council tax is one of the most unfair taxes in Britain, and nowhere is that injustice clearer than in towns like Hartlepool." He added: "We don't need another sticking plaster. We need wholesale reform." Jonathan Hinder, Labour MP for Pendle and Clitheroe, said that "a proportional property tax is an idea whose time has come, for a leader whose time has come." Chris Webb, Labour MP for Blackpool South, added: "We were elected on a promise of change – our broken property tax system is crying out for it."
These statements reflect a growing consensus within the Labour Party that the current property tax regime is outdated and unfair. The leaked plan is seen as a bold move by Burnham to fulfill his pledge to reform the tax system.
Background on Burnham's Stance
Burnham, the former Greater Manchester Mayor, has long advocated for property tax reform. In 2021, before succeeding Sir Keir Starmer, he said: "There is a really interesting discussion about how we reform property tax. The party can't tiptoe around it any more. Council tax is bearing too much weight." More recently, in June, he stated he was "personally keen to see reform of council tax," branding it "a highly regressive tax" and adding that he saw "a big case for land and property and business taxation to be changed."
Burnham has also been clear that he will "stick to the fiscal rules," suggesting any replacement must be revenue-neutral or better. The Treasury is reportedly modelling the financial impact of both options to ensure they meet fiscal targets.
Potential Impact on Homeowners
Under the proportional property tax, a home valued at £200,000 would incur an annual charge of £960 (0.48%), while a £500,000 home would pay £2,400. For comparison, current council tax bands in England range from approximately £1,000 to over £3,000 depending on valuation band and local authority. Stamp duty, which can add thousands to a home purchase, would be eliminated entirely. The land value tax would likely be lower per property but vary significantly based on location and land scarcity.
Critics warn that any transition could create winners and losers, particularly in areas where land values are high relative to property values. However, proponents argue that the current system is fundamentally regressive and that reform is long overdue.
Next Steps
The leaked proposals are still in the early stages, with no formal announcement expected before the next fiscal event. Burnham's team is seeking input from MPs, economists, and local authorities. The APPG on council tax reform is expected to publish a report in the coming months, which could inform the government's final decision. The Prime Minister has yet to comment publicly on the leak, but sources close to him confirm that both options are being actively considered.
