WE NEED A STRATEGIC REVIEW OF PROPERTY TAXATION

The concept of pre-Budget purdah seems to have been well and truly forgotten, as Rachel Reeves and her colleagues have repeatedly crowd-tested various solutions to the nation’s parlous public finances in an attempt to find out which, if any, of the measures suggested might win public approval - leaving an impression that ideas are being floated ‘on the hoof’, leaving the business world in a state of uncertainty, writes Guy Gowing.

Next week the actual Budget speech will reveal which direction the Chancellor has chosen to go in.  Whilst it is inevitably going to involve pain, thankfully British business is remarkably resilient and life will go on, albeit with ever-more hurdles put in front of those who could and should be driving the growth that the economy so desperately needs.  But it may cool the appetite to invest.

When it comes to property taxation, various measures have been mooted.  There can be little doubt that reform is required: the current system has grown organically and untidily and is no longer really fit for purpose.

Let’s take stamp duty as an example.  Often dubbed a ‘tax on mobility’, it certainly reduces liquidity in the housing market.  Thresholds have failed to keep pace with the market, and the tax has become ever-more progressive.  Today the average homeowner trading up will face an SDLT bill of £12,400.  This penalises those who want to relocate to find work, and disincentivises downsizing.

However, SDLT raised £10 billion in revenue last year.  If it were abolished (as some, including Kemi Badenoch, have suggested), the question is: what will replace it?

Few would argue that reform of council tax is long overdue.  When it was hurriedly introduced, in the shadow of the poll tax riots, every home was assigned to one of eight bands based on its value in April 1991.  The idea was to do a revaluation every five years; 34 years later, we are still waiting.

The shifting market over that period has led to significant disparities, and a revaluation and recalibration is long overdue.  There is speculation that we will see a premium paid for the current bands F,G and H, but this is simply the politics of envy and will lead to unintended consequences with hard-working middle-class families worst affected.

There may be a place for a new premium band I, but only on the most expensive homes, which would have little impact in Norfolk.

Meanwhile, business rates have become an unfair tax on occupiers, placing a massive burden on business and acting as a significant barrier to economic growth.

Chancellors have a habit of using Budgets to make eye-catching short-term announcements; what is really needed is a long-term, strategic review of all property taxation.  Will we get that next week?  I’m not holding my breath.