Council tax should be scrapped because it contributes to wealth inequality, according to a new report.

Radical plans, suggested by the Institute for Public Policy Research, would replace the ‘regressive’ tax and stamp duty with a levy based on the value of people’s homes.

The report claimed housing is currently ‘under taxed’ compared to other assets, leaving those who don’t own a home worse off.

The plans aim to stamp out wealth inequality by scrapping council tax and stamp duty (Picture: Geography Photos/UIG via Getty Images)

The IPPR say if the new property tax was set at 0.5%, it would raise at least as much as current council taxes.


A property tax rate at that level would mean an annual tax bill of £1,243 for the owner of an averagely priced UK home valued at £248,611.



A higher rate would be needed to replace the revenue currently raised from the stamp duty paid by people buying a home.

The IPPR argue that the change, alongside a package of other proposed measures, could help to tackle wealth inequality in the UK.

Carys Roberts, senior economist at IPPR, said: ‘Council tax is a regressive tax as it falls disproportionately on those with lower incomes and wealth.

The new property tax would be ‘far more progressive’ according to the IPPR (Picture: David Cabrera / Getty Images)

‘It’s also outdated, as it’s based on valuations that have not been updated since 1992.

‘A new property tax would be far more progressive, and would effectively capture increases in house prices in a way the current system does not.’

Property owners have seen their wealth and income grow, while rising numbers are locked out of home ownership and must pay increasingly high rents, according to the IPPR.

It said since 1997, average house prices have increased four times faster than average full-time earnings.

A property tax would capture some of these financial gains, while also dampening future house price inflation, it argued.

There could be some local discretion to vary the tax and a homeowner with a high-value property but low income could defer payment until their property is either sold, or left on death as part of their estate, the IPPR said.