A new WPI Economics report released today, “Living Longer with the Proportional Property Tax”, backed by the Fairer Share campaign, emphasises the urgent need for property tax reform. The current property tax system in the UK is not only unfair but it is also potentially contributing to adverse health outcomes and a stagnation in life expectancy.

The research reveals a stark correlation between Council Tax burden and life expectancy. For every 0.2% increase in Council Tax burden, there is a one-year reduction in life expectancy, underlining the significant role property taxes play in shaping health outcomes. By 2021, following years of spending cuts, life expectancy was nearly 10 years shorter for the people living in the most deprived areas compared to the least deprived.**

The report also highlights a strong relationship between health status and Council Tax bands. Individuals in lower Council Tax bands, who bear a disproportionately higher tax rate, are more susceptible to poor or very poor health. For instance, 17.1% of people in Band A report bad or very bad health, which is three times higher than in Band D (5.6%).***

Property tax, particularly Council Tax, affects life expectancy and health outcomes for multiple reasons:

•     Reduced household disposable income, particularly affecting the poorest households.
•     Exacerbated housing affordability issues, contributing to poorer health outcomes.
•     Perpetuated inequality in Local Government Funding, leading to underfunding of critical services like adult social care that significantly impact health.

On reduced household disposable income, a stark disparity exists in the effective rates of Council Tax between the richest and poorest areas. While the richest areas, such as Westminster, have an effective rate as low as 0.06%, poorer areas such as Blackpool face rates of 1.17% and higher (see table below). This discrepancy diminishes the disposable incomes of the poorest individuals, which has knock-on impacts for their health.

On housing affordability issues, households facing affordability challenges are nearly twice as likely to experience poor health. 26% of households with the lowest incomes spend over a third of their income on housing costs, whereas only 3% of those with higher incomes face similar burdens. Council Tax, by limiting the housing supply and distorting the property market, contributes to unaffordable, insecure, and low-quality housing.

On inequality in Local Government Funding, poorer councils with higher social care budgets are compelled to charge relatively higher Council Tax rates. For instance, the median household in the North East pays 0.77% of their property value in Council Tax annually, while in London, it is only 0.28%.*** This inequality in Local Government Funding leads to disparate access to essential services crucial for healthier and longer lives.

The Fairer Share campaign advocates for property tax reform, particularly a shift to the Proportional Property Tax (PPT). Implementing PPT would result in reduced tax bills for 75% of households, effectively addressing income and health inequalities while maintaining revenue neutrality. The WPI Economics research published today indicates that Local Authorities with lower average life expectancy will benefit more from this switch.

Andrew Dixon, Chairman and Founder of Fairer Share, commented:

“Council Tax is not only regressive but also leads to adverse health outcomes, hurting life expectancy for the poorest and least healthy across the country.

“With negative impacts on disposable income, housing, important health services and local government funding, now is the time for reform.

“Proportional Property Tax would help those worst off, reducing bills for 75% of households. Policy makers need to act now to stop the spiraling impacts of an unfair property tax system.”

Grahame Morris, Member of Parliament for Easington, said:

“We must not ignore the crucial interconnections between Council Tax reform, disposable income, improved health, and life expectancy, which are hitting vulnerable communities hard.

“Council Tax is a broken and regressive system that is hampering our economy and our well-being: the alternative is a Proportional Property Tax.”

Simon Fell, Member of Parliament for Barrow and Furness, added:

“The evidence presented is compelling, revealing that even a small increase of 0.20% in Council Tax burden maps to a reduction of one year in average life expectancy. This alarming statistic underscores the urgent need for change, as housing affordability, quality, and security profoundly impact the health outcomes of individuals and communities.

“It cannot be right that the owner of a £30 million mansion in Westminster pays a council tax burden of just 0.06%, meanwhile the owner of a £120,000 home in Barrow pays a council tax burden of 0.80%. And to compound the unfairness, life expectancy in my constituency is seven years lower than it is in Westminster.

“The current system is out of date, and unfair for Furness residents, and many others across the UK. That is why I am calling for reform to the way we tax properties in the UK.”

The graph highlights the differences across seven Local Authority areas: three with a high Council Tax burden (Blackpool, County Durham and Barrow-in-Furness), two of the lowest (Westminster and Kensington & Chelsea) and two areas that form part of the constituencies of the Chancellor and Shadow Chancellor of the Exchequer (Waverley and Leeds). Detailed life expectancy data for men and women is included in the table below: