Council tax should be abolished and replaced with a property tax, which is proportional to the present-day value of homes, says a new think tank report. The Institute for Public Policy Research says the current council tax system in London is unfair. It claims the tax is highly regressive, economically inefficient, and represents an unduly large burden in terms of income for poorer Londoners.
The new property tax could be levied on owners, not occupiers, and IPPR analysis suggests that a rate of 0.25% would be fiscally neutral for London. In terms of distributional impacts, a fiscally neutral flat-tax rate would see around 79% of households benefit from the reform, the majority of which would be in the current bands A to C. properties in the top bands (around 21%) would pay more under this option.
*The IPPR report is ‘A Poor tax: reforming Council tax in London’.