Greater Manchester Mayor Andy Burnham is being urged to scrap council tax in favour of a new 'Proportional Property Tax', which would see homes charged between 0.48 per cent and 0.96 per cent of their value annually. The proposal comes from the Compass think tank's Better! report, led by Neal Lawson, which calls on the Labour Party government to act on what it describes as one of the most regressive and outdated taxes in the UK.
Council tax 'based on 1991 values'
The report argues that council tax bands in England and Scotland are still based on 1991 property values, making the system fundamentally unfair. According to the authors, "There is widespread agreement among politicians and the public that council tax is one of the most regressive, outdated and unfair taxes across the UK today, with bands in England and Scotland still based on 1991 property values."
Property, the report notes, is one of the biggest sources of wealth in the UK, and reforming how it is taxed would be a major step towards taxing wealth fairly. The wealth generated from property, it adds, comes at the expense of ordinary renters, aspiring home-owners and small businesses.
Proportional property tax model
The think tank, backed by Tax Justice, proposes replacing the current system with a proportional property tax based on periodically reviewed valuations. This would ensure that those with the broadest shoulders pay more, addressing the anomaly where a mansion in London pays the same rate of tax as a house in the North East.
One concrete example, put forward by the Fairer Share campaign, would replace both council tax and stamp duty with an annual single flat rate of 0.48% of a property's value, plus an additional surcharge of 0.96% on empty, second and non-resident owned homes. This model would result in a tax cut for 19 million people, representing 77% of homes in the UK.
Broader vision for change
The Better! report is not limited to tax reform. Its authors state: "Better! aims to remove the grip on power, wealth and information by the few - and return it to the many. We believe that this is essential if we are to deliver a better future for all." The report calls for a shared national story based on changing the operating system of British politics, including the honesty of media, fairness of taxes and the value of votes.
"If we change these three things, we can change everything - for the Better!" the report concludes. The proposal now puts pressure on Andy Burnham and other Labour leaders to consider a fundamental overhaul of local taxation, a move that could have significant implications for homeowners and renters across the region.
