Key Messages

We define tax progressivity as tax liability taking an increasing proportion of household income as one moves up through the income deciles of the distribution of income. Regressivity suggests an inverse version where lower income take up higher tax liabilities as a proportion of household income.

Housing tax reform is a necessary component of wider Housing to 2040 programme’s goals – but has not made any material progress to date.

Council Tax and Land and Buildings Transaction Tax are both in different ways flawed and in need of reform for multiple public policy reasons.

This report examines the two taxes in detail, makes the case for reform, undertakes econometric modelling to support an automatic valuation approach to regular revaluation, a process by which revaluation for a different property tax or even land value tax might also be based.

A deliberative citizen’s panel found that, rather than be unwilling to contemplate changing Council Tax, our participants favoured reform, and the majority were willing to look more closely at fundamental reform.

While we narrow down possible approaches and undertake a balanced review of a selection of recent proposals to reform property taxation, we conclude that this is the beginning not the end of a wider civic conversation and debate about the future of housing taxes, local government finance and Housing to 2040.