The Tories are wrong on property taxes - the next government should abolish stamp duty and reform absurd council tax
6 June 2024, 18:48 | Updated: 6 June 2024, 18:52
The Conservatives have ruled out revaluing and reforming council tax in England as part of what they term their ‘Family Home Tax Guarantee’ and have also pledged not to increase stamp duty, paid when properties change hands.
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Ruling out revaluation and reform perpetuates the increasingly absurd situation whereby the council tax that households pay is based on the value of their property on April 1st 1991 – a third of a century ago, when Mikhail Gorbachev was President of the Soviet Union and Chesney Hawkes topped the charts with The One and Only.
As readers will know, values of homes have increased by massively different amounts around the country since then, meaning that at least half are now effectively in the ‘wrong band’.
Households in the North and Midlands are often in too high a band – and pay too much – with those in London often in too low a band – and paying too little – compared to what they should.
In contrast the pledge not to increase stamp duty is sensible. It is one of the most economically damaging taxes, significantly increasing the cost of moving and gumming up the housing and labour market. It should not be increased – rather it should be reduced or, ideally, abolished.
The revenue from stamp duty would be very hard to give up though. A good package would be one that combined the abolition of stamp duty with a revaluation and reform of council tax.
By ruling out revaluation and reform of council tax, Jeremy Hunt has made it harder to deliver fairness- and growth-enhancing reforms to the tax system. Labour and other parties should not follow suit.
David Phillips is Head of Devolved and Local Government Finance at the Institute for Fiscal Studies.
