The proposals being considered include a land value tax, a proportional property tax, or changes to the point at which higher-value homes face additional charges. The plans remain under discussion, with Burnham saying he would need to consider the impact on public finances and remain within fiscal rules.
A Possible Replacement for the Current Council Tax System
Council tax is currently based on property valuations from 1991 and is divided into eight bands, from A to H. Burnham has argued that this has created differences between households because property values have changed significantly since the system was introduced.
Speaking to the BBC’s Laura Kuenssberg, Burnham said some residents in Greater Manchester pay “much higher” council tax than people living in larger homes in London. He said former chancellor Rachel Reeves was right to begin reforms aimed at creating more fairness, particularly for properties that have increased in value but have not seen their council tax band adjusted.
According to reports from the i paper, the Treasury is examining a proportional property tax model as one possible option. The proposal, supported by campaign group Fairer Share, would replace council tax and stamp duty with an annual charge of 0.48 per cent based on a property’s current value.
The campaign group says the model could reduce bills for many households, with areas such as Hartlepool potentially seeing average savings of around £950 a year. Fairer Share claims around 75 per cent of households would be better off under its proposal.
Debate over Fairness, Funding and Future Tax Decisions
The possible changes have prompted discussion about how property taxation should work across different parts of the country. Jonathan Brash, the MP for Hartlepool, said the proposed approach could mean lower bills for households in his area while keeping funding available for local services.
“For Hartlepool, the impact is significant. Under this approach, 100% of households would see their bills fall, with an average saving of around £950 a year,” Brash said. He added that the system would be designed so councils would still receive the money they need, with national redistribution where required.
Burnham has also addressed concerns about whether wealthier households should expect to pay more under his leadership. He said there were “big decisions ahead” and that any changes would need to align with the Labour manifesto and public finance rules.
The Prime Minister said he would take a cautious approach to government spending and taxation. He said he understood that any reform would need to be considered carefully in relation to the commitments made during the election. The council tax proposals are still being explored, and no final decision has been announced. The debate centres on whether a new system could create a different balance between households, property values and local authority funding.
