‘Property levy’ to replace stamp duty and council tax shelved over fears it could cause higher bills

Ministers have ruled out introducing a new property levy to replace stamp duty and council tax after a study found it could lead to higher bills in the South East.

MPs were told last month the idea of introducing a ‘proportional’ tax based on home values was ‘under review’.

But last night a Government spokesman said: ‘We have no plans to introduce a new form of annual property tax.’

The idea of property tax reform was sparked amid the looming end to the stamp duty holiday, due on March 31.

The Government says it has 'no plans' to introduce a new form of annual property tax

The Government says it has 'no plans' to introduce a new form of annual property tax

The Government says it has ‘no plans’ to introduce a new form of annual property tax

It is being pushed by the Fairer Share campaign, which has been in discussions with Treasury officials about the plan since before Christmas.

They said yesterday that if the proportional property tax were levied annually at 0.48 per cent of a home’s current value it would raise the same amount across the country as council tax and stamp duty.

This would reduce bills in most parts of the country, making households in England around £435 a year better off.

In so-called Blue Wall seats – traditionally Labour constituencies in the north taken by the Tories in 2019 – it would save the average householder £660 a year.

But a significant minority of households across the country – 24 per cent – would be worse off.

Households in London are most likely to see an increase in their annual bills, reflecting the extreme rise in house prices over the past 30 years.

Andrew Dixon, chairman of Fairer Share, said: ‘The UK already has one of the highest yielding property tax regimes.

‘We should not be imposing additional taxes at this challenging time for households. Instead, we should replace stamp duty – a tax imposed on property owners before they have even collected the keys to the front door.

‘And we should replace council tax which has led to low-income households paying a tax rate five to ten times higher than those fortunate enough to live in million pound properties. The wrong households are paying the wrong taxes at the wrong time.

‘Both of these unpopular taxes should be scrapped and replaced with a proportional property tax. This would be simpler, fairer and would mean more cash in most people’s pockets. Crucially, our model also ensures that nobody would have to pay out on day one if they cannot afford to.’

Fair Share said there were 78 constituencies where more than 99 per cent of households would benefit from moving to a proportional property tax.

Across all the 44 ‘blue wall’ seats, 97 per cent of households would be better off. Every single household would benefit in both the Blackpool South and Bishop Auckland constituencies that the Conservatives won in 2019, with households saving an average £750 per year in the former and £900 a year in the latter.

The property tax idea was backed by a number of Tory backbenchers in the north.

Kevin Hollinrake, Tory MP for Thirsk and Malton and chair of the Property Research Group, said: ‘The time is right to put fairness back at the heart of how we tax property.

‘Replacing stamp duty and council tax with a proportional property tax would ensure homes are taxed at their current value. It would also boost transactions throughout the market, creating huge economic output at a time when we most need it.’

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