Replace “obsolete” housing tax, urges think tank

Housing tax and stamp duty should be scrapped and replaced with something based on home values, a think tank asks.

The IPPR said the current system is based on “outdated” property valuations, which means the housing tax paid on expensive homes lags behind their rising value.

A so-called proportional property tax of around 0.5% could mean that three in four households in England pay less, according to its report.

The IPPR argued that the change would help tackle regional inequalities, with people living in areas with lower house prices likely to benefit.

Shreya Nanda, IPPR economist and author of the report, said: “The housing market has been almost entirely responsible for the growing wealth inequality since the 1970s.

“During this period, as consumer prices increased 11-fold, house prices increased 60-fold. These gains should have been shared fairly across society, but instead , they were picked up by older and wealthier homeowners and landlords.

“Those who did not own property during the long soaring house prices have been locked out, and too many of them face high rents, cramped apartments and exorbitant mortgages.

“Rather, a proportional property tax would ensure a more equitable sharing of these gains in society. “

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