Andy Burnham’s long-standing support for replacing council tax with a land value levy has reignited a debate that could reshape one of Britain’s most politically sensitive areas: how homes, property wealth and land are taxed.
The proposal, backed by the former Greater Manchester mayor and potential future prime minister, would represent a fundamental shift away from taxing properties through the current council tax system towards a model based more closely on the underlying value of land.
Supporters argue the change could create a fairer and more efficient system. Critics warn it could leave homeowners in high-value areas facing significantly higher bills, with London expected to be among the regions most affected.
Research by Policy Engine analysts Vahid Ahmadi and Max Ghenis examined the impact of replacing council tax with a land value levy and found that some higher-income households could face annual increases approaching £1,000.
Households in the second-wealthiest tenth of the population could see bills rise by an average of £991 a year, while those in the wealthiest tenth could face an average increase of £966.
The findings highlight the central tension behind land tax reform: shifting the burden away from earnings and towards accumulated assets may improve fairness, but it also risks creating significant disruption in areas where property values have risen sharply.
The capital is likely to be a key battleground in any future reform.
London’s property market contains some of the highest land values in the country, meaning a system linked more closely to land prices would inevitably place greater pressure on many households in the city.
At the same time, supporters argue that the current council tax system does not adequately reflect modern property wealth.
Council tax bands are based on historic valuations, creating large differences between the tax paid by households and the current market value of the land beneath their homes.
Burnham has previously described council tax as “highly regressive” and argued that Britain needs a different approach to property and business taxation.
“I’ve long been persuaded of the argument for a land value tax,” he has said.
The challenge for policymakers would be designing a system that captures gains from rising land values without creating sudden financial pressure for households who may be asset-rich but cash-poor.
The debate also reflects a wider political question about the balance between London and the rest of the UK.
Burnham has spent years campaigning for greater devolution and increased investment outside the capital, particularly in regions such as Greater Manchester.
A government influenced by those priorities could face difficult choices over infrastructure spending, transport investment and economic policy.
London’s supporters argue that the capital remains a crucial driver of national growth, generating tax revenues that support public spending across the country.
Mayor of London Sadiq Khan has repeatedly argued that protecting investment in the capital benefits communities nationwide.
The tension between regional rebalancing and maintaining London’s competitiveness is likely to become a defining economic debate in any future government.
Property taxation is only one area where Burnham’s economic agenda could come under scrutiny.
His previous views on regional investment and transport have also raised questions about major infrastructure decisions, including the future of Heathrow expansion.
Burnham has argued that greater investment should be directed towards regional airports, while opponents of Heathrow expansion have also questioned the environmental and economic case for another runway.
Any changes to council tax, land taxation or airport policy would require legislation and detailed consultation.
But the debate has already begun.
For supporters, land value taxation offers a chance to modernise Britain’s outdated property tax system and reduce reliance on taxing work.
For critics, the risk is that reform could undermine confidence among homeowners and investors.
The question facing any future government is not simply who pays more.
It is whether Britain can redesign its tax system without damaging the investment and economic activity needed to create future growth.
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