Progressive property tax ‘would cut bills for most homes’

The study for the York-based Joseph Rowntree Foundation (JRF) suggests that median bills would fall by £279 a year from around £1,400 under council tax, the poorest 10 per cent would save £202 but the wealthiest 10 per cent of households would see an increase of £184.

Gross bills would fall by more than 10 per cent for nearly two-thirds of households, according to the study by researchers at Heriot-Watt University in Edinburgh, but 22 per cent would see a hike in their rates.

But the report said that a pure property tax would not be fair, and any replacement for the council tax system would need to be related to income.

“At first glance there is a strong case for embedding such a mechanism within the structure of the tax itself, so that it became a hybrid income and property tax,” it said.

The report said any reform would need to be phased in carefully over time and London would need to be treated as a special case because of its very high property prices.

Kathleen Kelly, policy and research manager at JRF, said: “Politicians need to start planning for the long-term replacement of council tax. Council tax was a hasty replacement for the hated poll tax 25 years ago.

“It was never designed to last and has not been revalued for over 20 years: without reform, it will wither and die.

“Freezing bills is a treatment but a long-term cure is needed. This is a difficult reform to carry out, and one which requires courage from all the main political parties. But the problem will not go away and failing to plan for alternatives is storing up trouble for the future.”

Prof Chris Leishman, one of the report’s authors, said: “Property values have risen substantially since they were last assessed in 1991, but they have grown at different rates between different parts of the country, and even within the same areas.

“The design of the council tax means it taxes a higher proportion from cheaper properties than expensive ones, so is regarded as being both unfair and inconsistent, and certainly in need of long-term reform.”