A recent report suggests that increasing property taxes on wealthy individuals could generate £3.9 billion in revenue while reducing council tax for the majority of households. The Institute for Public Policy Research (IPPR) advocates for property tax reform to lower council tax bills for 80% of households and allocate funds for essential public services.

According to the IPPR, the existing council tax system is outdated, leading to discrepancies where homeowners in affluent areas pay less council tax compared to those in less affluent regions. Under the proposed changes, only the top 10% of properties would experience a council tax hike.

Council tax is currently determined based on a property’s valuation band, with values calculated from fixed dates in the past. The IPPR suggests an immediate 50% tax increase on bands F and G, as well as a 100% increase on band H properties to generate the targeted £3.9 billion.

A significant portion of the revenue, around £1 billion, would be utilized to reduce council tax bills for lower band categories A to D, resulting in average savings of £45 for the majority of households. The IPPR argues that these reforms aim to create a fairer council tax system by ensuring that those benefiting the most from property value increases contribute proportionately.

Additionally, the IPPR recommends raising the non-resident buyer surcharge from 2% to 6% to curb short-term profit-making in the housing market. Recent discussions by Chancellor Rachel Reeves also hint at the introduction of higher council tax bands targeting owners of expensive homes or implementing other measures like levies on property values or capital gains taxes on luxury property sales.

IPPR economists emphasize the urgency for a fairer and more efficient council tax system, asserting that the proposed reforms would support working families, enhance local services, and establish a more equitable tax framework. They believe that these changes could be the initial steps towards a more balanced property taxation approach, benefiting millions of households and aligning with government efforts to alleviate the cost of living.

In response, a spokesperson from HM Treasury highlighted the Chancellor’s commitment to addressing economic challenges, focusing on essential priorities such as reducing waiting lists, national debt, and the overall cost of living.