To think an annual property tax is incredibly unfair?

[Itchthescratch]

I come from an area with low house prices. It is great! My friends can generally afford houses even with lower salaries as the earnings:house prices ratio is better. Rents are also lower so they have proportionately more disposable income.

I have moved to a more expensive area where house prices are higher and people have really had to push themselves to buy a property. Salaries are higher but not high enough to make up the difference. They have had to pay more stamp duty , pay more interest and have less disposable income each month.

I am really struggling to understand why my friends in the South should also automatically be paying more property tax under the new proposals being suggested by Burnham supporters? What is the justification? They would love to buy a large detached house for £300k like my friends from home but this isn't possible. It feels like they are being double penalised.

Just to add house prices haven't risen in real terms in the area in live in now for 20 years so the value of my friend's houses is simply money they have paid in.

I worked out that in addition to the £2000 council tax I pay, I would also pay a further approx £1,800. to live in my 1 bedroom flat.

Westminster is an interesting area. It is doing what Andy Burnham seems to love which is generating a lot of local revenue through business rates and parking. This is exactly what he wants to encourage and he wants local areas to keep the proceeds. It also has a smaller adult care bill and benefits from efficiencies in delivering local services like refuse collections.

Why should people in Westminster pay more Council Tax when they don't need to pay more to afford their local services? They will already pay a disproportionate amount of national taxes so it's not like they aren't paying their share in other ways.

It should be a fairer system, however they do it, perhaps it should be a set price per square foot of property you own? I have a 4 bed house that costs less than a 3 bed house in the same area because mine is over 3 floors so we have less living space than a traditional 4 bed.

I tried calculating what I would pay under this new scheme based on the 0.48% quoted earlier. Based on the sale of a flat in my block nearly two years ago I would be paying much less than I currently do even taking into account the single person discount that I currently get.

Surely the government wouldn’t want this, depending how many others are in a similar situation the council would be losing so much money. I don’t know maybe my maths is wrong.

I based this on the assumption it was a replacement tax if it’s additional that makes more sense from the council money making point of view.

OP there’s only so much income can be taxed. It is progressive. Those with more valuable assets pay more. I agree that is right and fairer.

Those who will pay less will have more disposable income.

I think the only way it makes sense is if it became a national tax that was redistributed to local councils. Obviously this is literally the opposite of the devolution he seems obsessed with so I'm not sure how he will square that circle. If you do make council tax a debfacto national tax then councils will have even less incentive to control the huge overspend we are seeing already.

I think part of the proposal is that renters won't have to pay, but the freeholder/landlord pays in respect of any rented properties they own. It's the same in some other countries that have a land/property tax.

However, given that without a doubt landlords will add the land tax onto the rent, in effect the renters will pay anyway!

Maybe there should be a cap on rent increases as a result of the land tax or something to prevent gouging by landlords. I haven't thought this through so cut me some slack here!

I agree. I detest the current council tax system. It doesn’t take into account ability to pay, or the number of occupants in a property.

Poll tax was deeply unpopular, but only (I think) with people who were never previously required to contribute. We all use the services, so why shouldn’t the tax be per capita?

A neighbouring bungalow now has 4 bedrooms, 3 bathrooms, 2 kitchens and is occupied by 3 wage earners and a pensioner. It was previously down banded to C from D for a disabled person. It hasn’t been re-banded since being extended under new ownership. My bungalow has 3 bedrooms, 2 bathrooms, 1 kitchen and is band E. I am on my own now and mid-70’s. My CT is much higher despite the 25% reduction for single occupancy.

The LA is not interested in checking these anomalies.

The definition of a progressive tax is usually linked to income i.e. One's ability to pay. This isn't a wealth tax as it doesn't target those with the most equity in their homes but those with the highest house value even if they only defacto only a very small percentage of the asset.

Basically it's not progressive under any definition.

Your last sentence is odd. We know those with lower house values will pay less for their mortgage and often therefore have more disposable income to fund a tax like this. Do you propose they pay more?

Why shouldn't renters effectively pay for the local services they use?

Apologies if someone else has mentioned this already: lots of currently untaxed land, such as the large amount of undeveloped land builders are sitting on, would also be subject to LVT. The figure of 0.48% was chosen to be revenue neutral or slightly positive as against CT and stamp duty.

Yes I think the poll tax would be fairer. Everyone should contribute

Local income tax, and for business a local tax based on turnover, would be the fairest I think. However I can imagine a whinging about the marginal rate of income tax it would bring.

Council tax is simple and one of the cheapest to collect. I think there should be higher bands introduced.

I assumed it was an additional tax to Council Tax as it has not been possible to update the latter as intended..

No, I think it is intended to replace both council tax and stamp duty.

My issue isn't really with Council Tax itself it's with what it's paying for.

The majority of my Council Tax goes towards adult social care. Given that most of us are likely to need some form of care during our lives, I don't think it should be funded through a property tax.

We already have a national system for funding things everyone benefits from, such as the state pension through National Insurance. I'd rather see adult social care funded nationally in a similar way, with everyone contributing through NI or another national tax.

Once you've taken adult social care out of Council Tax, then we can have a proper discussion about whether Council Tax should be replaced or reformed.

As a single person, I also find the current system hard to justify. Using a simplified example:

• Council Tax on each house is £100.
• A single occupier pays £75 after the 25% discount.
• A household with two adults pays £100 in total, or £50 each.

Yet all three adults have the same entitlement to adult social care if they need it. In effect, the single person has contributed significantly more per person towards a service they have exactly the same right to receive.

I know this is a simplified example, but it illustrates the point. If we're funding services that benefit individuals, then every working adult should contribute equally towards them, regardless of how many adults happen to live in the same property.

I know the Community Charge ("Poll Tax") was deeply unpopular, but that was over 30 years ago and there were many reasons for its failure. The principle that every adult should contribute equally towards universal local services isn't necessarily wrong just because one implementation was.

That's why I'm not convinced a Land Value Tax solves the problem I'm describing. It changes what is being taxed the land instead of the property but it doesn't answer the bigger question of who should pay for adult social care. If anything, it still links the funding of a universal service to where someone lives rather than spreading the cost across the whole working population.

I never said they shouldn't!

I don't know the rationale behind exempting renters, but that's what I read somewhere recently.

Maybe it's a mechanism to reduce the number of landlords with hundreds of properties or something and free up more properties for sale. That means building lots more social and affordable housing of course to house those currently renting.

I think it's reasonably likely that property taxes change the value of properties.

I also think there's a frustrating transition problem. If income taxes were lower and property taxes were higher, such that on net there was no change, I think long-term this would be a good thing. (Taxes always somewhat disincentivise the thing you're taxing. Disincentivising living in a big house seems less bad than disincentivising earning money) However, during the transition phase, there will always be a bunch of people who really lose out. If you raise property taxes and lower income taxes, the newly retired have a really sucky time of it.

Of course, if the issue is raising property taxes AND not lowering other taxes - I think the government is awful at spending money, and should get better at spending money before it asks for more of it.

But is it a land tax or a property tax you’re talking about here, @Itchthescratch?

They’re very different. I’ve seen proposals for a land tax at 0.48% mooted. Nothing else. A land tax makes more sense to halt the hoarding of excess land by developers.

It’ll involve people (and the taxing authorities) understanding the size and value of the land their houses sit on. Flat leaseholders in London may end up not owing anything, for example.

It’s all to play for.

https://www.standard.co.uk/homesandproperty/property-news/andy-burnham-new-land-value-tax-how-would-it-work-b1286663.html

This article says it would only be paid by owners, not renters. So, people in rental properties would no longer be paying any tax to local councils or would the council tax remain and homeowners pay the land tax?

Because we live in a society and that means its more effective to share resources in order to fund public services & support those more vulnerable who dont have the capacity i have to earn a fuck ton.

I believe the proposed tax is around 0.5%, so you wouldn’t be taxed at a higher rate than them.

We have property taxes where we live, 0.5% for flats, 0.75% for houses and 1% for empty properties. It works well and is fairer and than Englands council tax.

Often ime those living in council properties or social housing often had more disposable income than those paying a mortgage so why can’t they contribute

I really don’t agree with this at all, Labour isn’t representing the working classes

Except that a rebanding doesn’t necessarily happen, even after a change of ownership and a huge extension being built!

The point if this is to tax wealth not people.

If you have some poll tax type thing based on number of people, median earners with modest assets mr & mrs jones, pay more than mr filthy stinking rich who owns masses of assets.

"But its not fair"

Define "fair"? Is it fair that capitalist economics rewards the city quant trader 20 times more in earnings per year than the intensive care nurse who works more hours?

Many of the wealthy people who earn a lot are able to do so in part because they get to live in a stable, low corruption economy with legal protections & low crime, good regulation to limit risk, a well educated healthy workforce..... all underpinned by public funding.

You can make more money in a country with well off customers to buy your products!!

Wealth redistribution might not seem "fair" but wealth accumulation certainly isn't either