Law & Justice

Progressive Taxation, A Tax on Residential Property

Posted on by Ian Cooper
27
Mar

In Luke 12 we get the principle of ‘to whom much is given much is expected’ and this underlies the idea of progressive taxation–the wealthy pay more.

But because of fixed indirect taxes and tax avoidance/evasion on income tax, UK tax is less than progressive.

So let’s tax residential property. It can’t be avoided–you can’t hide a house, it could be cheap to collect–collected with council tax, it would discourage buy to let and homes as investment, taxes on wealth creation like VAT could be reduced and it would be progressive, socially and regionally.


Thesis Background
--Ian studied history at Cambridge and has been involved in the work of L'Abri Fellowship and Christian Heritage.-- The tax could be based on a percentage of the value of the house and paid annually: a £1M house and above could pay at a rate of 1%, so £10,000 for a £1M house, and rising with the value of the house ; a £500,000 house and above , at the rate of 1/2 %, so £2.500 for a £500,000 house and a house less than £500,000 at a rate of 1/4%, so that a £100,000 flat would pay £500. The big exception could be non-earners, like retired people and the disabled who could be exempt 50% of the tax. Another possibility would be to have a 10% exemption for each child in the house so as to help families.

3 comments

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  • Ian Cooper • author
    • 4 years ago
    Thank you Andrew. I'm very sympathetic to people trying to get on the housing ladder and think my proposal will actually help. House prices are high because of inadequate supply and too much demand. Demand has increased because of family breakdown, people living longer, immigration, low interest rates, government help to buy schemes and significantly because of buy to let. This last is caused by people preferring to invest in property rather than pensions etc. If they were discouraged from this by a property tax then more and cheaper property would be released onto the market and that would help those first time buyers.
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    • Andrew Bryce
      • 4 years ago
      Well it is certainly worth a try. I believe that some kind of wealth tax could help bring us closer to the Jubilee principle in Leviticus, but I would like to see that applied to all wealth, not just property.
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  • Andrew Bryce
    • 4 years ago
    One major drawback of this proposal is that it would generate serious disincentives to investing in property. The UK has a severe housing shortage as it is, so we need to be encouraging house building and house buying so that we have enough places for people to live. A tax on residential property would create an extra barrier to people trying to get on to the housing ladder and discourage people from becoming landlords, thus putting more pressure on the rental sector (i.e. higher rents). 
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