An annual proportional property tax the best system for levelling up the country, according to a new report.
The report by the think tank Bright Blue recommends replacing England’s current rates system with an annual proportional property tax (APPT) to help achieve government aims of levelling up and delivering net zero.
It recommends basing the new tax on the current capital value of houses with a tax exemption for properties worth up to £50,000 and a 25% surcharge for second home owners.
A share of the revenue of the APPT should go towards the national government and a share should go towards councils.
Local authorities should be free to set their local tax rates independently of national government and keep all of the revenue to spend on local public services, such as local refuse collection, recycling, local parking, environmental improvements, local transport infrastructure and services, maintenance of local beauty sites or parks, local libraries, and local museums.
This will generate tax incentives at the local level to permit new residential development and variety in the range of local services communities can offer, the report argues.
‘With these reforms, we have aimed to strike a balance between what is economically efficient yet also politically feasible,’ said Professor Paul Cheshire, Emeritus Professor of Economic Geography at the London School of Economics and report co-author.
‘Moving to an APPT fulfils both of these criteria, as well as having a role to play in addressing regional inequalities. With the addition of Green Offsets and a Developer Levy, these reforms will result in a system of property taxation that is fairer, greener, helps deliver more new homes and is simpler and more transparent than the one we have now.’