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Michael Johnson's letter to the Telegraph on property taxes

    Michael Johnson's to the Telegraph on property taxes on 5 December 2016

    Paul Johnson, the head of the Institute for Fiscal Studies (comment, November 22), has suggested that we could ease the housing crisis by increasing council tax to reflect property valuations more closely, and thereby fund more construction.

    This is impractical for one reason: cash flow. Many people- notably the retired- have lived in their homes for decades, with their incomes massively lagging property price rises. 

    A more experient approach would be to introduce a capital gains tax on property sales, when the cash would be available to pay it. Such an approach would effectively socialise the uplift in land values across society (via treasury funds).

    Currently, homeowners are becoming wealthier by doing nothing, at the expense of younger people who do not own homes.

    Michael Johnson

    Research fellow, Centre for Policy Studies

    London NW5

    Date added: Monday 5th December 2016