IFS Zooms In: The Economy How to fix property taxes
Oct 30, 2025
Stuart Adam, an expert in housing taxation, is joined by IFS economist Ben Zaranko to tackle the complexities of the UK's property tax system. They delve into the absurdities of council tax based on outdated 1991 valuations and discuss how stamp duty discourages home moving, impacting housing allocation. The conversation highlights the need for reforms, such as a proportional council tax that could replace both council tax and stamp duty, ensuring fairness and efficiency in property taxation for all.
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Council Tax Uses Obsolete 1991 Values
- Council tax is levied on residents but bands are based on 1991 property values, which is wildly outdated.
- That outdated base makes the tax unfair and arbitrary across today's housing market.
Stamp Duty Discourages Moves And Locks People In
- Stamp duty is a transaction tax that discourages moving and reduces housing market fluidity.
- It disproportionately affects high-price areas and locks people into suboptimal housing choices.
Council Tax Is Regressive By Design
- Council tax is regressive with respect to property value: richer properties pay a smaller share.
- That contrasts with other taxes and is hard to justify economically or politically.