Hundreds of thousands of Londoners could be hit with a £1,000 tax rise if a land value levy backed by Andy Burnham is introduced to replace council tax and stamp duty. Such a major change is likely to impact the capital hardest, just as the new 'mansion tax' has, given that the city is more wealthy than other regions.
Burnham's Long-Standing Support for Property Tax Reform
The Greater Manchester Mayor has long supported major reform of the property tax system. Voters go to the polls in Makerfield on Thursday, and Mr Burnham is seeking to defeat Reform UK's candidate Robert Kenyon and return to Parliament to launch a bid to be Labour leader and Prime Minister. If he succeeds in ousting Sir Keir Starmer, who has vowed to fight any moves against him, Mr Burnham is expected to push for more radical government.
Land Value Tax: A Key Policy
One measure he has backed in the past is a land value tax (LVT) to replace council tax, and possibly stamp duty. 'I've long been persuaded of the argument for a land value tax,' he said recently. 'I'm personally keen to see reform of council tax. It's a highly regressive tax. I see a big case for land and property and business taxation to be changed.' Five years ago, he argued: 'There is a really interesting discussion about how we reform property tax. The party can't tiptoe around it any more. Council tax is bearing too much weight.'
Impact on Londoners
In 2010, when Mr Burnham launched his first attempt to be Labour leader, he said: 'The LVT, an annual tax on the market rental value of land, would allow for the abolition of stamp duty - a tax on the aspiration of young people to put down roots and get on with life.' If council tax alone was replaced by a land value levy, on a cost neutral basis to the Treasury, people on higher salaries in the country would pay around £1,000 more, according to a Policy Engine analysis by Vahid Ahmadi and Max Ghenis. They concluded that the bottom income decile (the poorest tenth) in the country would gain £481 a year on average, which could include some Londoners in more deprived communities. They also found that the ninth decile, or the second-richest tenth, would face a higher property tax bill of £991 and the top decile a figure of £966, many of whom live in the capital.
Political Implications and Potential Backlash
However, many politicians have talked about reforming the property tax system but when in Government are fully faced with the potential backlash from such a move. Tax reform is often heavily resented by voters who lose out, and while it is welcomed by those who benefit from it, possibly not on the scale of the resentment from those who end up paying more. If Mr Burnham does become Prime Minister, he is also expected to channel significantly more public funding to the regions, and away from London.
Broader Policy Implications
A third runway at Heathrow could be thrown into jeopardy, especially if Ed Miliband becomes Chancellor. Net Zero Secretary Mr Miliband has previously opposed a bigger Heathrow, and Mr Burnham has argued such airport investment should happen in the regions. However, ditching the plans for another runway at the west London airport would be unpopular with some unions.
