Thread by @GeorgePeretzQC

I think that this by @IPPR is absolutely right. But NB the overlap with thinking about devolution and much stronger local government.

https://twitter.com/IPPR/status/1438772799703851011

A critical devolution issue is local government finance: if you want seriously to devolve power to local level, you have to give it its own tax base, immune from Westminster’s tendency to grab power by fiddling around with finance.

And also immune to its tendency to concentrate all restrictions on public spending on local government, in the hope that Westminster will avoid responsibility for the consequences.

Property tax is an ideal local government tax. It’s clear which authority gets what, and taxpayers can’t move it from a high tax to a low tax area.

If you were going to make this tax the main basis of LA funding, however, you would need a rather higher average rate than 0.5% (which is roughly the rate you’d need to replace Council Tax).

Quite painful bills for some. And endless stories about pensioners in (now expensive) houses faced with huge bills.

(You could of course cut other taxes - eg income tax - to make the overall take much the same and shift taxation from income towards - largely windfall - wealth.)

(You could also make the point that encouraging people to move out of property that is bigger than they need, instead of incentivising them to stay as our current system does, would be a good thing.)

(Both very strong points on the merits. But obvious political issues with each.)

Another issue would be huge disparities between local tax bases (the reason why such a tax is regionally redistributive, as pointed out in the paper). An equal tax rate would raise far more per resident in Camden than in Hartlepool. So you’d need some form of evening-out.

Unfortunately, unless you put very strong ring fences round the evening-out process, it would give Westminster a route back in to fiddling around with local government finance, tweaking the process to shovel money to favoured authorities (cf Thatcher and Wandsworth).

None of this is easy: but if you support real devolution and real “levelling up” - i.e. strong local government rather than jumping to Ministers’ latest wheeze - you need to think about these issues.