Burnham called for stamp duty and council tax to be replaced by property tax

Some of Britain’s leading economists have called on Andy Burnham to dismantle UK tax, calling for stamp duty and council tax to be scrapped and replaced with an annual property tax.

The group, which includes Lord O’Neill of Gatley, a former Goldman Sachs chief economist who advises Burnham, has written an open letter to the man expected to become the next prime minister, warning that structural change cannot be delayed.

Their intervention allows for Prosperity 2030, a five-year plan from the Institute for Global Prosperity of University College London presented on Thursday, which the signatories say “shows how fiscal, social and infrastructure policies can open up the country’s grid”.

Burnham is set to enter Downing Street on July 20 if he wins the Labor leadership, inheriting an economy burdened by high debt and forced low growth. Westminster and the City are looking at his financial plans, as well as his choice of chancellor, especially after his speech in Manchester last week calling for a massive devolution. As Business Matters has reported, Burnham has already signed off on a “movement” of the tax, promising to cut business rates for bars and high street industries.

The core of the report is a single national contribution tax that will replace six separate taxes: income tax, employee and self-employed national insurance, dividend tax, inheritance tax and capital gains tax. This penalty will range from 0 percent to 22 percent, with a maximum rate of 46 percent applied to the “low definition” of income, raising an estimated £75 billion after five years.

That “simpler, more efficient system” would fund nine new services, transforming the welfare state by providing support in kind rather than cash.

Locally, the plan will scrap stamp duty and council tax in favor of a 1 per cent property tax, ending what the report calls “the absurdity of a low-end terrace paying more than a high-end mansion”. The reverse option will ensure that “no one is forced to sell to pay”. The idea is in line with proposals already circulating in the Treasury for an annual levy instead of stamp duty, and is opposed by the Institute for Fiscal Studies, which has long argued the case for abolishing stamp duty as one of the most damaging taxes to the British economy.

The new property levy probably won’t pass without a fight, however. Sir James Cleverly, shadow secretary of state for housing, communities and local government, has already called it a “garden tax … straight out of the Corbyn playbook”. And it’s not the first Burnham-linked tax idea to settle apartments: the debate over what a Burnham wealth tax would mean for UK business and investors is still fresh.

Andrew Percy, co-chair of the social prosperity network at the UCL Institute for Global Prosperity and lead author of the report, said “it’s a plan to cut tax on working people, end tax which is holding back the housing market, and put young people into paid work. The question is no longer whether Britain can afford to change.”

Alongside Lord O’Neill, the signatories of the letter include Professor Dame Henrietta Moore, founder and director of the institute, Professor Jonathan Portes of King’s College London, Professor John Muellbauer of Nuffield College, Oxford, and Danny Sriskandarajah, chief executive of the New Economics Foundation.

Their verdict on the recent history of Westminster is unequivocal: “Seven prime ministers in ten years have inherited the same challenge and failed to solve it for the same reasons: the problems are structural and systemic.”