The research showed that a household living in the lowest council tax property band (band A) in London would on average pay five times what a band H household would as proportion of property value.
IPPR claimed that council tax is becoming similar to the unpopular poll tax of the 1990s.
The report A poor tax: Reforming London’s council tax called for reforms to the council tax system in three stages.
It recommended that council tax should be devolved to London as its “unique housing market and devolved government make it the ideal candidate to pilot a customised devolution deal”.
IPPR also said a capital-wide council tax benefit system should be set up to support London’s most vulnerable households. This move could be paid for by a council tax premium of 200% for all empty homes – rising to 300% after two years of being unoccupied. The think-tank estimates this will raise more than £200m a year.
In the long term IPPR called for a fundamental reform to replace council tax with an annual flat rate tax proportionate to present day property values.
Luke Murphy, IPPR associate director, said: “Council tax now looks very much like the poll tax it replaced and it hits the poorest hardest.
“The council tax system should be devolved to London, so the capital can decide its own future. A capital-wide council tax benefit should also be introduced to protect those on the poorest incomes, restoring the protections available to them prior to 2013.
“In the long term, fundamental reform of the system is required to deliver a fairer and more sustainable system of local taxation.”
A report this week from Localis also called for a relaxation of councils’ ability to set their own council tax rates.
