Burnham faces pressure for major property tax overhaul

Prime minister Andy Burnham is facing calls from Labour figures and left-leaning think tanks to overhaul property taxation.

The proposals include replacing council tax and stamp duty with a proportional property tax (PPT).

Burnham has previously supported the principle of a PPT. However, he has indicated that major property tax reform is not imminent.

Michael Jacobs, emeritus professor of political economy at Sheffield University, is among those advocating change. He previously served as an adviser to Gordon Brown.

Jacobs is editing a Compass publication setting out 70 policies the government could consider.

He told the BBC that replacing council tax and stamp duty with a proportional tax could reduce bills for many households. Owners of higher-value properties would pay more.

One model previously backed by Burnham is promoted by the Fairer Share campaign. It would impose an annual charge equivalent to 0.48% of a property’s value.

The rate would rise to 0.96% for second homes, empty properties and homes owned by foreign nationals.

Under the proposals, many homeowners could face higher bills, particularly in and around London where property prices are typically more expensive. However, households in lower-value properties could pay less.

Estimates suggest the system could result in London contributing an additional £7.5bn annually.

The Institute for Public Policy Research (IPPR) has also called for reform.

A paper by Oxford professor Ben Ansell proposes replacing council tax and stamp duty with a PPT. The measure would form part of a wider shift in taxation towards property and wealth.

Prof Ansell’s proposed “fiscal contract” also includes extending National Insurance to older workers. It would align capital gains tax with income tax rates.

The proposals also include an investment allowance designed to protect normal investment returns.

Prof Ansell said: “Our tax system has increasingly shifted responsibility towards younger workers while protecting many of those who have benefited most from decades of rising property and asset wealth.”