Commons Sense

House of Commons · Westminster Hall

Council Tax and Stamp Duty Alternatives

17 May 2023 · 14 other contributors · 8,869 words

Opened by Simon Fell Con Barrow and Furness

Responding minister: Andrew Griffith

TaxationHousingLocal Government

Summarised by AI from the official record, so it can contain mistakes.

Read the full transcript on Parliament.uk

At a glance

Simon Fell raised concerns about council tax and stamp duty alternatives in Westminster Hall. A government minister responded.

Key points

  • Concerns raised about the inequity and inefficiency of council tax and stamp duty, with only 29% of people considering council tax calculations fair.
  • Proposed replacing the current council tax band system with a flat tax of 0.48% of property value, plus a surcharge for second homes and empty properties.
  • Expected annual surplus of 5.4 billion and freeing up over 750,000 houses annually from the proposed tax changes.

Key requests to Government

I propose replacing the current convoluted band system with a simple flat tax of 0.48% of property value, plus a surcharge for second homes and empty properties. This would result in an annual surplus of £5.4 billion and free up over 750,000 houses annually.

How the debate unfolded

MPs spoke in turn to share their views and ask questions. Here's what each person said.

Opened the debate

Simon Fell Con Barrow and Furness

I am concerned about the inequity and inefficiency of our current property taxes, particularly council tax and stamp duty. Only 29% of people consider council tax calculations fair, with those in lower-value homes bearing a disproportionate burden compared to wealthier homeowners. Council tax relies on outdated valuations from almost three decades ago and creates an unfair band structure. Stamp duty hinders efficient housing use by discouraging transactions and exacerbating the housing crisis.

Other contributors (14)
  • Aaron Bell Con Newcastle-under-Lyme

    Aaron Bell supported the proposals for a fairer council tax system and highlighted that under Fairer Share's plan, average households in Newcastle-under-Lyme would gain about £600 per year. He noted that 97% of his constituents would be better off due to outdated property valuations impacting poorer constituencies more severely. Asked whether a Labour Government would revert the stamp duty limit to its previous level.

  • Chris Loder Con West Dorset

    West Dorset has one of the highest council tax rates in the country, with an average band D property costing £2,300 per year. The revenue support grant for London boroughs is significantly higher than that for rural areas like Dorset, which adds to the financial burden on local residents. Asked the Minister to review stamp duty changes specifically for the Dorset Council area.

  • Helen Morgan Lib Dem North Shropshire

    Suggested that stamp duty and similar taxes could be graduated based on a building's energy performance to encourage retrofitting and meet carbon targets. Suggested that reassessing valuations and introducing higher bands of council tax could address some inequality in the current system.

  • James Murray Lab Co-op Ealing North

    Expressed concerns about the increase in council tax and called for the windfall tax on oil and gas producers to be strengthened. Opposed the recent stamp duty changes, arguing they are not a wise use of public money.

  • Jill Mortimer Con Hartlepool

    Jill Mortimer highlighted the unfairness of high council taxes in Hartlepool and proposed a proportional property tax to save her constituents £950 on average. She also pledged to work with the Conservative-led coalition to cut council tax.

  • Karl McCartney Con Lincoln

    My constituency supports the proposed proportional property tax system as it offers significant benefits and would alleviate the burden on local residents. It is important to recognise that many are unhappy with current council tax levels.

  • Kirsty Blackman SNP Aberdeen North

    Discussed the land and buildings transaction tax in Scotland, which is more proportionate than stamp duty in England. She highlighted short-term reforms for council tax and measures to support young people, such as abolishing council tax for those under 22.

  • Mary Foy Lab City of Durham

    Council tax is regressive and based on property valuations from 1991, making it overly reliant on locally raised revenue streams to offset Whitehall cuts. Mary Foy calls for a re-evaluation of property prices and progress updates on local government finance reform.

  • Mary Robinson

    She congratulates her hon. Friend on the debate and highlights that council tax is subject to the whims of local political parties, using Stockport as an example where the Liberal Democrats put up council tax by 4.3% despite their pledge to freeze it.

  • Peter Gibson

    Analysis shows that almost 99% of homes in Darlington could benefit from a £750 annual reduction in council tax. Peter Gibson highlights the adverse effects of stamp duty on home ownership and suggests considering alternatives to council tax, such as a proportional property tax.

  • Peter Grant

    Peter Grant questioned Tim Farron about the high council tax rates in Hartlepool compared to Westminster, suggesting it was due to previous Labour administration policies. Inquired whether the Government sees any benefit in giving councils the power to raise taxes based on something other than property values.

  • Richard Burgon Lab Leeds East

    The Government needs to look at more progressive taxation alternatives due to the regressive nature of council tax. Richard Burgon mentions research showing low-income households spend two to four times more on council tax relative to their income compared to richer households, and encourages taxing high net worth individuals.

  • Robbie Moore Con Keighley and Ilkley

    The empty homes premium in council tax disproportionately affects young families who want to buy an unfurnished property. This additional tax makes it difficult for them to renovate their properties within the two-year timeframe before significant penalties apply.

  • Tim Farron Lib Dem Westmorland and Lonsdale

    Tim Farron argued that council tax is regressive, with wealthy individuals paying less than those in social rented homes. He proposed a proportional property tax to address this issue and encouraged downsizing while discouraging second home ownership. Encouraged the Minister to reconsider the fairness and outdated nature of council tax, suggesting it should be on the table for consideration.

Government Response

Andrew Griffith

It is a pleasure to see you in the Chair, Mrs Harris, and to serve under you today. Let me join others in congratulating my hon. Friend the Member for Barrow and Furness on securing this well-attended debate. I note the largely cross-party nature of the contributions—with the exception of the speech by the hon. Member for Ealing North—and I will try to reflect that in my tone. We welcome this opportunity to discuss the important issue of property taxation, including the current status of council tax and stamp duty. Council tax is the most fundamental tax: we pay it every month, it is highly visible, it has an impact on all sorts of important decisions and, when we pay it, we know what services we are getting for it. It ensures that households contribute to the cost of local services, whether that is fire and rescue, refuse collection, transport, libraries or dealing with potholes. On aggregate, council tax raises about £36 billion for local councils in England. Stamp duty is an efficient tax to administer and collect. It raises a substantial sum—£14 billion that the Government use to pay for essential services, such as the NHS, schools and police. The proposal to reform council tax acknowledges the opportunity for local authorities to diversify their sources of revenue but would remove any ambiguity about centralising control over these funds. The system is often accused of being overly centralised, but this proposal would absolutely remove any ambiguity whatever, and that is something that the advocates of this proposal may want to think about. The impact on those with low and fixed incomes of moving any sort of basis of property tax should be thought about carefully. Moving towards a more periodic review of values poses the question of how that revaluation would take place. Certainly, some of us are shy of algorithms, but in all likelihood, unless we were to recruit an army of estate agents-meet-inspectors, we would be using some algorithmic method. My hon. Friend the Member for West Dorset talked about the compensating mechanisms of revenue support grant. The Government are levelling up in many ways, but that is another way in which we can seek a fairer outcome for our constituents. The ability to have second homes pay double will increase net benefit further. However, this issue needs careful consideration due to the work-from-home economy blurring the line between first and second home ownership. Today, we have heard some thoughtful proposals, and a number of points have been made on both sides. In conclusion, these issues are important, and there are real consequences not only for our constituents but for the housing market. We need to think through the unintended consequences at every point. Help to downsize would be one potential benefit for us all. The Government will continue to act where appropriate to do so. I thank hon. Members for their thoughtful contributions.

Get updates like this by email
▸ Assessment & feedback
Summary accuracy