Editor: Several suggestions are being made as to how we can pay the £400bn bill for the pandemic, such as the imposition of a wealth tax, a raid on pension funds, or withdrawal of tax relief on ISAs. I think none of these are appropriate or politically acceptable.
Instead, the government should implement comprehensive reform of property taxes to raise the significant monies required while also correcting unfair anomalies.
First, the presently egregious business rates payable should be set back to 30% of market rental value. This will significantly help the high street, which pays 25% of the £30bn this tax raises, despite retail being only 5% of the economy.
Second, stamp duty for domestic homebuyers should return to 1%, as it was under Thatcher. This will restore house mobility, boosting local economies.
Third, council tax bands should be replaced with a residential property tax at 1% per annum on the net value of the property, after mortgage off-set, and with generous discounts, perhaps 25%, for single occupiers and pensioners. Cap the tax at £2m net value, except for non-resident investor/owners, who should pay at 2% with no cap.
Finally, variable rates of VAT should be introduced, at 25% on all online sales, 15% on high street sales and 20% where online purchases are collected in store.
UK housing stock has a reported value of £7.4trn, with mortgage debt circa £1.4trn. With a taxable base at, say, £5.5trn, after allowance for discounts and caps, a Covid/Brexit debt of around £500bn could be paid off within a decade or less. Thereafter, the surpluses could fund fully restored local authority services, national infrastructure projects, and reduce the national debt.
Anthony H Ratcliffe, Ratcliffes Chartered Surveyors