A progressive property tax – replacing the 'widely discredited' council tax – could reduce bills for the poorest tenth of households by £202 a year on average, and increase them for the top tenth by £184, according to a new study by the Joseph Rowntree Foundation.

The authors examine the impact of four tax regimes on households: the existing council tax system; the existing council tax system based on revaluation; a flat-rate national property tax; and a progressive national property tax.

Key points

• A progressive property value tax would reduce the size of median gross bills by £279 a year compared with the council tax.
• Almost two-thirds of households would see bills fall by more than 10 per cent, while fewer than one-quarter would experience increases of more than 10 per cent.
• A progressive property tax would reduce gross median bills for the poorest tenth of households by £202, and increase them for the top tenth by £184.
• When a progressive national property tax is compared with the current council tax, median bills are lower across the income spectrum, apart from the top 10 per cent.
• Bills for people living in London – including low-income households – would rise across the income distribution, so London might have to be treated separately.

Source: Chris Leishman, Glen Bramley, Mark Stephens, David Watkins and Gillian Young, After the Council Tax: Impacts of Property Tax Reform on People, Places and House Prices, Joseph Rowntree Foundation
Links: Report | Summary | Inside Housing report