Labour think-tank calls for END of council tax in favour of new mansion levy


The think-tank has suggested that homeowners should be expected to pay an annual levy worth 0.5 per cent of their home value, rather than the council tax. The Institute for Public Policy Research has put forward the idea of a “proportional property tax”, in an attempt to tackle regional inequality.

The Institute believes that people who have benefited from the rising house prices over the past year are unfairly paying so little in comparison to the value of their homes.

In this new system, someone living in a £1million house would have to pay £5,000, due to the value of their home.

This format is what has caused the newly suggested system to be labelled the ‘mansion tax’.

In addition to replacing the council tax, there have also been suggestions that stamp duty, which is currently in place when an individual moves home, would be replaced by the new levy.

It is estimated that this new form of taxation would see house prices in areas like London falling by around three percent.

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According to Rightmove, the similarities in prices between houses and flats is shown through the certain areas which people live in.

For a one-bedroom flat in an area like Brentwood in Essex, the price is around £200,000.

If you were to spend that same amount of money on a house in Grimsby, Lincs, the individual would be able to acquire themselves a four-bed detached house.

Shreya Nanda, IPPR economist, has said: ‘The housing market has been almost entirely responsible for growing wealth inequality since the Seventies.

It has been said by the IPPR that council tax has become outdated, meaning that the taxes being paid on the most expensive homes in the countries are severely behind the soaring values of homes.

With this new rate, it is estimated that three quarters of homes in England would be paying less than what they are paying now.

The IPPR have said that the new system would make the housing market and taxation fairer – due to the lowest earning households paying around twice as much as the highest earning households, based on the proportion of their income.

However, the IPPR have identified that there could be practical issues which arise from these changes, including a new way of redistributing the higher revenue which comes in, so that it is split proportionally fair.

A source from the Treasury has confirmed that there are no plans in place for any such form of taxation to be introduced.



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