The current Government has always had an interesting approach to policy-making. In short, it involves having an idea and it running anonymously in the Sunday papers. If it goes down well, it becomes policy; if it tanks, they put it down to inaccurate media speculation.
Last weekend was the turn of council tax and stamp duty, with reports the chancellor was eyeing up the two as part of a package of measures to plug the gap in public finances post-COVID. There is no doubt council tax is in need of reform – based on 30-year-old property valuations and buckling under the pressure of annual increases, it is no longer fit for purpose.
The shift – to a proportional property tax – would see tax rises in the South East, with tax cuts for the Midlands and the North. Good for the levelling up agenda – and the Conservatives’ grip on the Red Wall – but a slap in the face for the Tory heartlands while low-paid Londoners would see their crippling housing costs soar.
As with all media-mooted policy, it is light on the detail.
But more intriguing was last week’s ten-minute rule Bill, calling for business rates to be scrapped. The plan, raised by Conservative backbencher Kevin Hollinrake, would dump the tax in favour of a rise in VAT that would capture online sales as well as the high street.
Mr Hollinrake – whose North Yorkshire constituency neighbours that of chancellor Rishi Sunak – argues that business rates are no longer fit for purpose. He is right.
A ten-minute rule Bill may be one of those quaint parliamentary processes that go nowhere, but it raises important questions on local government finance that should be out in the open.
What was once a quick revamp to re-localise business rates has become the potential to rethink the whole future of property taxes – taxes that, according to Rob Whiteman, date back to 1600. They may have been more suitable then.
A full scale overhaul of the tax system will take time – and a significant parliamentary majority – and the current Government has already lost a year to COVID. It is politically precarious and, as we all know, property tax reform has been known to topple Prime Ministers.
It will take a brave Government to tackle property taxes. And a braver one to leave them as they are.
