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Wales’ finance secretary Mark Drakeford confirmed plans for a land value tax remain on the table as a potential long-term replacement for council tax and business rates.

The former First Minister said the Welsh Government continues to explore the feasibility of a land value tax as used in countries such as Denmark and Singapore.

Professor Drakeford has long supported a land value tax (LVT), arguing those who have the privilege of ownership should pay something back for that privilege.

While council tax is regressive because it imposes a lower burden on the rich than the poor, LVT is progressive as it flips that proposition around.

As the name suggests, land value tax (LVT), which has been described by some economists as the “perfect tax”,  is levied on the value of the land rather than the property itself.

‘Radical’

Proponents argue LVT is easier to collect, more efficient and difficult to avoid, while discouraging speculation and encouraging people to bring idle land back into use.

Prof Drakeford told the Senedd: “I am anxious to see this discussion move beyond the theoretical and into the realms of the practically possible.”

He explained that the Welsh Government has invited tenders to test approaches to valuing land, with submissions for every aspect of the work despite some initial scepticism.

The finance secretary, who will stand down at the 2026 election, said: “I want to use the coming months to test the boundaries of what might be possible in the next Senedd term.

“Let’s open the door to more radical, fundamental and progressive reform in the future.”

‘Unfair’

In a statement on local taxes on June 10, Prof Drakeford highlighted ongoing consultations on council tax discounts and enforcement as well as business rates reform.

He said: “The current system is unfairly weighted against those who experience difficulty in paying. I want to shift the focus from harmful escalation towards supportive prevention.”

Prof Drakeford stated ministers will introduce a new council tax appeals process by April 2026 that will be “easier to navigate and provide a better, modern system for taxpayers”.

Peter Fox, who led Monmouthshire Council for a decade, agreed that council tax is regressive by nature “and that it will never really become a fair local tax”.

The Tory welcomed confirmation that the “crucial” 25% single person discount will remain but warned of the impact of continual increases in tax bills – including a 7.2% average this year.

‘Flawed’

Mr Fox accused the Welsh Government of increasing tax on families “by stealth” through underfunding councils which, in turn, pass on the shortfall to people. He called for reform of the “outdated and flawed” local government funding formula.

Prof Drakeford replied: “Almost every local authority in Wales will agree that the formula needs revision – nobody can agree on how that should be done. The 22 local authorities each believe that the formula uniquely disadvantages them.”

Heledd Fychan, Plaid Cymru’s shadow finance secretary, agreed with the need for more radical and progressive change in the longer term.

Ms Fychan urged the Welsh Government to rethink proposals to stop considering a hospital as an individual’s long-term or permanent home for council tax purposes.

She said: “We know of examples where people have had to remain for a very long time in hospital. It’s not the patient’s fault. It doesn’t appear fair to me that they should be penalised.”