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Will a property tax work in the UK?

It seems that government plans to abolish the council tax system and replace it with a property tax, based upon regular valuations of individual homes, is well underway. Despite concerns that this could create a £400 million budget black hole in Scotland the surprise leak in The Times newspaper yesterday has caused great controversy and may put the government on a collision course with UK voters.

There are two possible reasons why council tax could be abolished and replaced by a property tax, with one of the main ones being the fact that those in larger homes (or the wealthy of the UK) will obviously pay more. Secondly, even though it may seem like a strange time to bring in a property tax, let's not forget that the tax rates would be based upon a like-for-like budget replacement at these relatively low property values. If the authorities were to maintain a standard tax rate into the future they would benefit substantially from future property price increases, to the detriment of UK homeowners.

This is a massive gamble by the Labour Party and has great similarities with the Conservative poll tax problem which ultimately brought down Margaret Thatcher's government. Quite why the government is even contemplating such a move as we head towards the general election is very much open to debate.

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