A think tank wants the government to scrap stamp duty and replace it with an annual property tax based on capital value.
Bright Blue says its tax commission - which it calls “cross party, cross sector” - recommends an annual proportionate property tax (APPT) on the current capital value of houses with a tax exemption for properties worth up to £50,000 and a 25 per cent surcharge for second home owners.
Liability to pay would be with owners, not occupants. A single low tax threshold of initially £50,000 should be introduced, set to rise with house prices over time.
It also says the APPT should be in two parts - one levied by national government and the second by local authorities.
To address other issues concerning property the APPT should include opportunities for offsets applied to improve energy efficiency, and it should have a variation applied to new builds - a development levy set at 20 per cent of the realised market price of newly constructed houses.
Former Tory MP David Gauke, a one-time Treasury minister, says: “No one could argue that our current system of property taxes is ideal and this paper makes a powerful case for fundamental reform on the grounds of economic efficiency and fairness. This is a valuable contribution to the important debate on how we should reform our property taxes.”
And current Labour MP Margaret Hodge adds: “Our existing system of property taxation in the UK is deeply flawed and highly regressive. This timely paper from Bright Blue lays out a credible proposition for how we might tackle the inequity of this system. These recommendations are worthy of serious debate in the hope that a wide consensus can be formed on how to solve the intractable problem of taxing property.”