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Comment by prostoalex | Hacker News Reader

Is property tax waived for residents?

UK has never quite had US-style property tax, as that would be incredibly unpopular with hereditary landowners. Instead we have "rates", based on imputed rental value and paid by the occupier of a property. There is also stamp duty at time of sale, and capital gains tax (which is waived for principle residence).

After a disastrous attempt at a poll tax, the system was renamed "council tax" for residential property. It's banded, so very high value property is under taxed. e.g. http://www.theguardian.com/money/2012/mar/09/council-tax-in-...

"Under" taxed in what sense? These taxes pay for things like street lighting and street sweeping, which is the same on every street. It should be the same fixed amount for everyone.

Actually most council tax revenues (usually 40 to 50%) go to the local police.

That's plainly not true. Even if we accept the notion that taxation occurs on a pay-for-direct-utility model (which isn't true in the general case for any western nation afaik), larger homes with more land will clearly require more lighting and sweeping per person than an apartment block.

Pretty sure that the local council doesn't sweep or light peoples private property, dude.

You do realise that the street outside a large property is typically substantially longer per person than that of an apartment block, right?

>It should be the same fixed amount for everyone.

We tried that. It didn't work.

Yeah... That's the dirty little secret of poll tax. It was fair and the people who protested were the ones who don't pay their fair share for local services.

Define "fair". You can't just s/equal/fair/. If you meant "equal", say it. Don't argue morals by wordplay.

I do, above.

It is patently absurd that, for example, the maximum council tax levied by The Royal Borough of Kensington and Chelsea is currently £2133.58.

You can own a £10m property in the borough, earning upwards of £1m per year in rental income and appreciation, and only have to pay £2k to the local council.

Meanwhile, those living in the absolute worst accommodation in the borough still have to pay £711.19.

That actually sounds about right. The logic of fleecing those who can more afford it may not have good moral foundation. Its tempting, but can you explain how the borough gives more benefits to the rich than the poor? Possibly just the opposite.

That is how the existing system is supposed to work, but the property valuations and bandings have become divorced from the current state of the property market.

Note that, in theory, a secondary function of the council tax should be to prevent habitable properties being left unoccupied for extended periods of time.

Unfortunately when the tax amounts to a rounding error on the ROI for a property, it is completely ineffectual. Hence the large number of empty 'investment' properties in London, further inflating an already overheated property market.

The rich have no moral right to real estate at all. Real estate was created by God or whatever you believe, not the sweat of ones brow. Property is a social construct; society sets the rules. Property tax is one way of smoothly implementing a lease concept (every century, the property must be repurchased from the government. This works out in both 99 year lease societies and in the common 1% annual tax rate societies).

Furthermore, there is no moral right to ineritance.

I guess we grew up in different societies then. Mine has definitely a strong moral right to property. Maybe you need to find one that works in your imaginary way.

If you're renting the place out, it's the residents that pay to the local council - so you don't pay a penny. However, you are paying income or corporation tax on the rent, and capital gains on the appreciation once realised.

Why should someone who's lived in a property for decades be taxed out of their house just because the area they live in has become a desirable area?

I mentioned the rental income more as an indicator of the 'utility' one derives from having use of the property during ownership. Alas, given how negligible the sum is in the scheme of things, it scarcely matters who assumes the burden.

To your actual point, to tax someone out of a £10m home in London today the council tax rate would have to be increased many thousands of times over. That is not a realistic danger.

This policy is seeing a resurgence of popular support in the form of the 'Mansion tax', but really all we need is a more equitable council tax.

NB: however there's also Inheritance Tax, which does upset some hereditary landowners; that's completely different to property tax, but including for completeness.

https://www.gov.uk/inheritance-tax/overview

That's completely optional tho'; Milliband didn't pay a penny on the £1.5M house his "socialist" father left him.

Residents pay council tax, it's a banded tax and doesn't get very high even for the most expensive properties.

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