Councils have warned Andy Burnham that the proposed introduction of a 'mansion tax' risks causing confusion, undermining accountability and damaging local services.
The levy on owners of properties valued above £2 million, announced by Rachel Reeves in the autumn budget, would be complicated and create an "inefficient parallel system" to council tax, the Local Government Association (LGA) has warned.
Consultation and Concerns
A consultation on the proposed high value council tax surcharge concluded earlier this month, with the Government now reviewing responses.
Andy Burnham described the concept of a mansion tax as symbolising "the politics of envy" during his unsuccessful bid to become Labour leader in 2015. However, the Prime Minister has recently backed reforms to property taxes, citing "regressive" council tax and a new land value tax as areas of potential focus.
Administrative Burdens
Under the current proposals, councils would be responsible for billing, collecting and enforcing the surcharge – but would have no say over the tax rate, eligibility rules or exemptions. Moreover, councils would not retain the surcharge revenue they collect under current plans, with the income set to be returned to the Government.
In its response to the consultation, the LGA stated the plan would create "a complex, costly and inefficient parallel system" to the existing council tax system with "significant" staffing, legal and technology costs, and risks leaving councils "out of pocket" if the Government does not fully fund new burdens.
Revenue and Accountability
The Government has stated that revenue generated would support local government services, but the LGA said little detail has been provided on how this would work in practice, amid uncertainty over whether the funding would be additional rather than offset by cuts elsewhere. Further information on how the surcharge will support services is expected to be outlined at the next spending review.
The LGA also cautioned that a national tax labelled "council tax" could confuse residents who may hold local councillors responsible for a tax "that has nothing to do with them". The system could also place a disproportionate burden on areas with only a small number of high-value properties, it added.
Calls for National Administration
The LGA has urged the Government to consider national administration of the surcharge rather than delegating it to councils. Should an alternative to using councils not be found, the Government must be transparent in bills issued and any other related material that the surcharge is a national charge, the LGA said.
The organisation added that upfront investment must be provided to allow councils to prepare for the surcharge, and the Government must guarantee that the costs of administrative, legal and enforcement activity can be recovered.
Kam Rai, chair of the LGA's resources committee, said: "The surcharge is a national tax, yet councils would be left to administer it, carry the risk, and deal with the confusion it will create for residents. Without full funding for implementation costs and clear accountability, this proposal risks adding cost and complexity at a time when councils are already under enormous pressure. We need a cast-iron guarantee from government that any money raised must be genuinely additional and must not be used to offset reductions elsewhere."
A Government spokesperson said: "This tax is expected to raise around £430 million per year to help fund public services and is addressing a longstanding unfairness in our country, where a Band D home in Darlington or Blackpool pays more in council tax than a £10 million mansion in Mayfair."
