Whenever the national press needs someone to work out some difficult sums or engage in economical predictions, one of the gurus they turn to most often is Professor John Muellbauer of Nuffield College, Oxford. Now to many, the science of economics is a matter of voodoo, tricks with smoke and mirrors designed to baffle anyone not educated to university level.

But to Professor Muellbauer, economics is a matter of careful commonsense and sober thought.

And, with most people's council tax bills having recently thudded softly onto their doormats, the Professor's 12-point plan to reform the system makes for topical reading. "We are at the stage now where young Oxonians can't afford to buy houses in their own city," he explains. "By having a property tax of even rates across the board, we would take a lot of steam out of the housing market. When the poll tax was introduced, economists predicted that costs would rise by 20 per cent - and the present form of council tax has a very large poll tax element and is only weakly related to property values. If we don't want to go back to something as crude as domestic rates, we still have to slow down the market, which is rising at 16 per cent - we need to bring these rises to a halt."

"The tax should be proportionate to the value of the house; so a person living in a million pound house would pay 4,000 a year and a person living in a 100,000 house would pay 400. And that would not only be fair, it would be economically efficient." Prof Muellbauer himself is the 55-year-old father of two children and he and his family have lived in Summertown since 1981. And if his radical proposals were ever to come into effect, he says he'd be quite prepared to see a hefty hike in his own property tax.

"The houses in our street have gone up by 80 per cent, compared to three years ago. It's ridiculous," he sighs. "I'd be very happy to pay my fair share of any new tax." "If you talk to foreigners about the current set-up in this country, their jaws hang open in amazement. And if we were able to calculate a likely 20 per cent rise when the poll tax was introduced, we can also easily bring about a 20 per cent reduction - and that would have a knock on effect in bringing down interest rates and taking the steam out of the economy. As it is, I believe we are in a boom and bust cycle again, although the Chancellor keeps going on about how he's abolished boom and bust. When the bust comes, it will be regional rather than national, although Oxfordshire is rather well placed, being a big service centre. Unemployment will a lot higher in the north and come the next upturn, we will have lost our capacity for production." Prof Muellbauer and his colleague GavinCameron's 12-point plan states clearly that an efficient property tax would help create a far better balance between the booming service sector and the depressed manufacturing and farming industries.

It goes on, "A government that prides itself on 'joined-up thinking' , for which avoiding boom and bust has become a mantra and which wishes to keep open the notion of joining the Euro might have been expected to be interested in bringing about such reform. But this appears not to be so: reform of the council tax is not on the agenda. "A second form of regressiveness lies in the fact that second or third homes attract only half the tax of first homes. One effect of this is to push up prices in commuter and holiday villages, pricing young families out of their traditional communities. There are three main reasons for a property tax - the first is to create a level playing field between owner-occupiers, tenants and landlords and between rent income and other forms of income. It is unreasonable for rent income to be tax exempt when other forms of income are taxed. An owner-occupier does not pay rent by virtue of ownership. "This is a form of income and should therefore be taxed. A property tax achieves this effect. The second reason is the general one in favour of a broad tax base, especially including taxes which are hard to avoid and cheap to collect. And the third is that property values in part reflect communal investments, for example in schools, roads and amenities."

It is not essential to be an economics genius to understand John Muellbauer's arguments.

Any young couple from Oxford trying desperately to get on the property ladder in their own city will get the Professor's gist immediately.

Story date: Monday 10 April

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