Property taxes need reformingSeptember 19, 2014
David Lutton, director of tax policy at London First, had a letter published in the Evening Standard this week in response average London house prices going part the £500,000 mark.
Following on from his analysis of property taxes, Unmansionable, David argued for a reform of the property tax system through the creation of new bands at the top of the council tax structure and reform of stamp duty.
The full letter is below:
The fact thousands of Londoners face a huge hike in stamp duty as average property prices pass £500,000 shows we need to think about radical reform of the property tax system.
The way we pay these taxes at the moment is upside down: it’s relatively cheap to own a property but very expensive indeed to buy one.
Stamp duty has been a hugely successful stealth tax for the government as more and more properties fall into higher brackets.
There is no mercy either: an increase of just £1 in sale value can take you into a new band, meaning the tax bill rockets.
Meanwhile, recurring charges paid by occupiers are seriously outdated; property valuations on which Council Tax is levied are based on 1991 house values.
Our recent report, Unmansionable, concluded we need a full revaluation of properties so that taxes set by councils reflect today’s market.
This would be offset by a reform of punitive up-front stamp duty taxes that stop so many people from owning a home.
There is also a good case for the introduction of new bands at the very top of the council tax structure to improve equality – as long as the revenue is retained by London government.
What we must not do is resort to is a Mansion Tax. This ill-conceived and counterproductive policy would basically be a tax on London (71% of homes in the UK worth more than £2million are in the capital).
It would also look suspiciously like a wealth tax, damaging London’s attractiveness as a global talent hub.
Contact: David Lutton, email@example.com