John McDonnell said the crisis in local authority funding gave an opportunity to look afresh at tax reform

A land value tax could replace council tax under a Labour government, John McDonnell has said.

The shadow chancellor made positive signals today about the prospect of Labour backing the levy as part of a huge reform of tax, after the party said in its general election campaign last year that it would examine the idea.

Cuts to local government have rendered Britons open to radical solutions, Mr McDonnell said, adding that an opportunity had arisen to hold “rational” debate.

Labour said in its election manifesto that it would look at introducing an annual levy based on the value of underlying land, rather than property.

The council tax system is based on out-of-date house price valuations and critics complain that it is regressive.

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