Housing· Tax· Intergenerational Centre Home affairs: options for reforming property taxation 20 March 2018 Adam Corlett Laura Gardiner Over the past 18 months, research for the Intergenerational Commission has illustrated how the assumption that each generation will do better than the one before it is under pressure. This paper is one of a series that moves beyond the diagnosis of these problems to consider what action is needed to address generational living standards challenges. The Intergenerational Commission’s final report later this year will recommend a specific suite of reforms across a broad range of policy areas. In this paper, we present policy options that incorporate ideas from leading thinkers, history and abroad, and set out the strengths and weaknesses of different policy approaches. Our focus here is residential property tax reform. We find that council tax is now too close to the hugely unpopular poll tax it was intended to replace. Its structure is distinctly regressive relative to property values, and valuations have not been updated for 27 years. Property taxation did not keep up with booms in property wealth, and the young are disproportionately affected both by council tax’s regressivity and the negative distortions that council tax and stamp duty have on the housing market. We look at options that raise money – both to tackle the UK’s fiscal challenges as its population ages and to allow stamp duty to be reduced – and that make property tax fairer, simpler and more economically efficient.
