Interactive Investor

Controversial wealth levy suggested to replace stamp duty and council tax

20th May 2021 15:44

Marc Shoffman from interactive investor

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Think tank Bright Blue is the latest to suggest a tax on wealth.

A think tank has proposed targeting wealthy property owners with a controversial new wealth tax.

A wealth levy proposed by liberal conversative think tank Bright Blue would replace stamp duty and council tax.

A report, titled Home truths: options for reforming residential property taxes in England, proposes creating an annual proportional property tax (APPT).

The report’s authors, professors Paul Cheshire and Christian Hilber, say the APPT would help achieve government aims of levelling up and delivering net-zero carbon emissions.

Property owners would be charged 0.11% of their home’s value each year, plus a local charge set by councils.

It would rise to 0.14% for second homes, but there would also be discounts for greener properties.

The idea has been backed across the political spectrum, with support from Vince Cable, former Treasury minister David Gauke and ex-chair of the public accounts committee Dame Margaret Hodge.

Ryan Shorthouse, chief executive of Bright Blue, says: “If the government is serious about levelling up the country, it needs to focus on reforming this country’s taxation, not just spending.

“Now is the ideal time for the government to introduce difficult, radical reforms to support people and places that have struggled in recent decades.

“If it doesn’t, it will have squandered an ideal political opportunity to really make a difference in those communities.”

It echoes an idea put forward by a group of tax experts and academics on the Wealth Tax Commission last year that suggested a levy on all individual assets worth more than £500,000 to help repay state support during the pandemic.

A wealth tax has previously been rejected by the government and has plenty of critics.

Michael Stimpson, partner at wealth management firm Saltus, says: “A wealth tax is a model that has historically proven to push wealthier individuals out of the country in question and raise limited revenue.

“There were around 12 countries in Europe in the 1990s that operated a wealth tax and now there are only three: France, Spain and Portugal.

“It’s generally a failed model and, for me, is not an obvious route out of the pandemic.”

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