A property tax based on annually uprated values would be a gamechanger
R ishi Sunak needs a gamechanger to have any hope of leading the Conservatives to victory at the next general election. Sir Keir Starmer could do with something to seal the deal with the British public.
The conventional wisdom is that there are no easy wins available to either the prime minister or the leader of the opposition in these straitened times. But the conventional wisdom is wrong. There is one policy that would be both popular and make economic sense, and that is reform of the UK’s property taxation.
It is now three decades since John Major’s government replaced the hated poll tax with the council tax, a move born out of expediency. That the poll tax was a daft idea was obvious to almost everybody apart from Margaret Thatcher. There were riots on the streets and the unpopularity of the tax was reflected in some thumping byelection defeats for the Tories. In the end, it did for Thatcher.
Abolishing the poll tax left Major with the headache of finding a replacement for it. The answer was council tax, a system based on a series of bands under which people in cheaper homes paid less than those in more expensive properties. The change was always seen as a short-term fix to give the Tories a chance of winning the 1992 election, which they succeeded in doing. Nobody thought it would still be around today in its original form.
Yet, largely owing to political cowardice the council tax is still with us. The valuations used to calculate bills date back to 1991 even though average prices have risen almost fivefold over that period, and by a lot more than that in property hotspots.
The result of 30 years of inertia has meant the UK has a property tax system that is regressive, inter-generationally unfair and accentuates the
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