Modernising property taxes – including by abolishing Council Tax and Stamp Duty and replacing them with a Proportional Property Tax (PPT) – will be key to meeting the UK’s debts post-Covid and should be announced in next month’s budget.
These are amongst the core proposals in a cross-party submission to the Chancellor, entitled Modernising Property Taxes, produced in partnership with leading law firm Shoosmiths LLP. “Out of date, regressive and unfair” are amongst the ways that the series of essays by senior politicians, businesspeople and academics describe both Council Tax and Stamp Duty, while accusing politicians of previously being “too scared” to modernise them.
“That should all change, however,” argues Radix Chief, Ben Rich, pointing out that “Sooner or later, we are going to have to address the debts incurred during the pandemic. The question is against what tax base? Property is hard to hide, so it is an excellent source of income for governments, so long as it is taxed fairly and transparently.
“That’s why Radix and many of the contributors to this paper welcome the recommendation in his essay by Andrew Dixon (Founder of the Fairer Share Campaign) for a Proportional Property Tax to replace Council Tax.
“It is also why we support the recommendation of Michael Johnson (policy adviser on pensions and taxation) to scrap Principal Private Residence relief and make Property Capital Gains Tax payable on all residential property sales, using the new revenue to abolish Inheritance Tax on main properties and Stamp Duty on the purchase of a main home.
“And it is why we welcome the analysis by businessman and academic, Andrew Purves, of taxation in Singapore and Hong Kong, which argues that fairer property taxes could replace a substantial part of the income from direct taxation in the UK.”
In his essay entitled “The Case for Reform”, Conservative MP and Housing Select Committee Member, Kevin Hollinrake, argues in favour of PPT, while the author of Labour’s Land for the Many Report, Beth Stratford, uses hers to call for a series of measures, including a 15% tax on the price of land or property purchased by companies owned in secret jurisdictions.
Rachel Kelly, Assistant Director at the British Property Federation, proposes to bring VAT on repairs to existing residential properties into line with that on new homes. Investor Hugh McNeill suggests that property taxes be redesigned to take into account that property income streams will already be claimed by other parties.
Vaqas Farooq, a leading Real Estate and Regeneration lawyer at Shoosmiths LLP calls for a broad coalition of housebuilders and institutional investors, as well as activists, charities, media and local governments, to press the Government to seize this opportunity for reform.
Catherine Williams, the Head of Living Sector at Shoosmiths LLP, says:
“Covid-19 has hit our communities hard, making the case for property tax reform stronger than ever. The SDLT holiday has been a welcome boost to the housing industry, but the resulting uptick in purchases, and expected drop off when the holiday ends, is a stark reminder of just how much of an inhibitor Stamp Duty is to people moving home.
“A ‘root and branch’ review of property taxes could tip the scales of supply and demand and make homes more affordable for more people, driving government revenues in other ways. This debate is well overdue and urgent in the shadow of the deepest recession in living memory. Shoosmiths is pleased to have partnered with Radix to encourage discussion and to help us all find a better, fairer way forward.”
Radix is calling on Chancellor, Rishi Sunak, to signal his intention in next month’s budget to modernise property taxes as the basis of his proclaimed strategy to build back better.