Tue, 25 Jul 06
A Conservative think-tank has proposed replacing four major property taxes with a 1% flat levy on all residential property.
In its submission to the party’s Tax Reform Commission, the influential Conservative Bow Group has proposed that four separate taxes — council tax, inheritance tax, capital gains tax on property sales and the TV licence fee — be scrapped and a new single-rate property levy introduced.
The tax would relieve the tax burden on property owners in the North, while those in the south would pay higher property taxes on average.
There would be a £70,000 band lower limit and properties below this - estimated at one in five - would pay no tax at all. Above that the 1% flat rate would give the average London property at £307,000 an all-in tax of £2,370 per year, slightly more than the current council tax bill plus TV licence fee, but only £590 per year in the North, a significant reduction. The tax on a £1m property would be £9,300.
Mr Wadsworth, the author of the report says that the scheme would encourage older couples and single pensioners living in large homes to move into smaller properties, freeing up larger homes for young families.
Claiming his formula would be neutral overall, Wadsworth also calls for income tax and pensions to be flat rate systems. "Gordon Brown's increasingly complex tax system is not just an obsession of accountants and tax professionals. It does real damage to our economy and harms many of the poorest in our society," Wadsworth said.
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