It’s hard to find anyone who really loves council tax – not the people who have to pay it, and not the people at the Treasury who decide how it works.
Introduced in 1993, the tax is still based on the value of property all the way back in 1991. Those values have unsurprisingly shifted in different ways across the UK over the past 35 years, leading to a twisted system.
For example, the housing demand in London has pushed up property prices much faster there than in the north-east of England.
That has meant people in some of the wealthiest parts of the country pay a smaller proportion in council tax than those in some of the poorest.
Speaking to the BBC, new Prime Minister Andy Burnham said the now former Chancellor Rachel Reeves was starting to reform the tax before he replaced her in the role with John Healey.
She was ‘right’ to do so, he said, to make it fairer ‘in relation to people in homes that are much greater value, who haven’t seen their council tax go up over the years because of the failure to revalue the banding’.
Make sense of the mad world of British politics
Get analysis of the latest stories – including Andy Burnham’s rise to Number 10 – direct to your inbox from Metro’s Senior Politics Reporter Craig Munro. Sign up here.
He also launched his Makerfield by-election campaign by saying: ‘I see a big case for land and business and property tax to be changed.’
Those comments have led to questions over whether he is preparing to launch a full-scale overhaul of the system, as several campaigners – and Labour MPs – have called for.
According to the i paper, Burnham’s government is looking into options for replacing council tax while also doing away with another unpopular property tax: stamp duty.
What could they be replaced with?
Fairer Share, the campaign group behind a council tax petition that gathered more than 100,000 signatures on Parliament’s website, wants the government to introduce a ‘proportional property tax’.
This would be a ‘simple flat rate of 0.48%’ on the current property value paid by the owners.
Regarding stamp duty, Burnham has a long history with proposing a land value tax (LVT) – he brought it up in his first bid for the Labour leadership in 2010.
This would be a tax paid every year on the market rental value of the land rather than the building that’s been put on top of it.
Writing in 2010, the new PM said the introduction of this tax would ‘allow for the abolition of stamp duty’, which he described as a ‘tax on the aspirations of young people’.
How would the changes affect me?
According to Fairer Share, their proposed property tax would mean over three-quarters of households would pay less under this system – but others could see a steep hike.
Since it would be paid by owners, it would also mean tenants in rental properties no longer pay any kind of property tax.
That would be a fairly radical shift from the current council tax system, as it would mean local services such as road maintenance would be partially funded by people (i.e. landlords) who do not live in the local area.
A land value tax would be no less radical, and would probably need to be heavily phased in as it would mean millions of homeowners – particularly in southern England – facing an enormous new tax bill.
There would also be questions over how it would impact people who are asset-rich but low-income, such as an elderly person who bought a large house several decades ago.
Regardless, both proposals would represent a radical upheaval of taxation in the UK, so it would take a massive amount of political effort to put either into effect.
Get in touch with our news team by emailing us at webnews@metro.co.uk.
For more stories like this, check our news page.