The costs of a Garden Tax

It’s that time of year again: the bills are going up. April has arrived and brought with it a flood of eye-watering rises, not least the calls to cough up yet more council tax. Across England, the typical household is facing a nasty 4.7 per cent rise. Council leaders are going cap in hand to ratepayers, pleading poverty and demanding dosh, all while paying their town hall top brass huge remuneration packages and continuing to waste money left, right and centre.

That’s not to say all councils are badly run or don’t have to deal with tighter budgets. Some good local councillors get it and understand public anger, but the calls for even higher taxation don’t seem to be going away. More and more, politicians are promising things they simply can’t afford, but have to scrabble around to find money for. And council tax has become one of the main ways to access the cash.  

But household budgets are already stretched and the cost of living is too high. Voters’ patience is wearing thin and politicians may soon have to find other, sneakier ways of getting more of our money. Like the shameless and unpopular clean air zone charges, which are coming to a city near you soon.

How else might government try and raise the money? We’ve taken a look at some recent examples to try and work out what the next big tax bill might be.  

As a general rule, bureaucrats like property or land taxes because they’re hard to avoid. They need to be easy to implement and passable as ‘progressive’. Finally, they have to have a catchy name.

One such tax, which hit the headlines in the last election, is the so called ‘garden tax’. In a nutshell, this involves rolling council tax (and business rates) into a single charge on land itself. In other words, slapping a tax on the plot - including farmlands, driveways and your back garden. Despite a public backlash, the idea received wide ranging support, including from John McDonnell and the Adam Smith Institute.

So how would this work in practice? Let’s take one council by way of example. Sefton Council in Merseyside, covering Southport and Bootle, has made some impressive innovations in bureaucracy and administering council tax, identified in our paper on automating the state. At the same time, Sefton have been quick to decry government cutbacks and put up council tax by almost 3 per cent. So a pretty middle-of-the-road case study.  

Now assume they want to raise revenue with a garden tax. Based on Land Registry figures and the applicable post codes (PR8 and PR9), the average houseprice in Southport in 2018 was £197,978. According to estimates from the Labour Land Campaign, one of the main proponents of the garden tax, land value comprises 55 per cent of a property’s total value. In Southport, that would be a taxable £108,888. According to the campaign, the "standard" land value levy could rise as high as 3 per cent for residential homes. While prices might eventually adjust, that gives us an immediate garden tax on a typical property in Southport of £3,267.

Here comes the crunch: the current Band D council tax is £1,570. Assuming the average property price, that would mean an extra £1,697 to pay, straight away. A rise of that size would make even the heftiest council tax bills blush. In simple terms, the typical household in Southport could face an eye-watering local rate rise of 108%. Council taxes would more than double.

This would be the story across the country too, with London, its suburbs and flourishing towns hit hardest by land taxes levied by eager councils. Homeowners would feel the squeeze. A tool as blunt as the garden tax could force many to simply sell up. But councils would surely be delighted to have finally found the extra funding they crave.    

Council tax is deeply unpopular, but there aren’t any obvious replacements. The key is keeping it low and cutting down on waste. Taxes are never painless. So next time you hear a politician calling for a clever council tax replacement, or a new levy to cover the ‘funding gap’, remember: it could end up costing you your patio.  

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