A severe tax on property would simply force property owners to raise rents. This in turn would price people out of the market. The housing stock would suffer as property owners would have no excess funds to make improvements and repairs to property. Building of new property would slow as the market for property deteriorates.
Beyond that...
VAT has had disastrous effects on European economies (go look at the price of goods in Europe. Significantly higher in real terms than in the US). Part of this lies in the way VAT obscures the tax portion of cost, allowing governments to surreptitiously raise taxes. This has happened in most developed countries where VAT is implemented.
You also mention government doing many wonderful things with its newfound revenue, but the reality is that government spending is usually wasted on bureaucratic bloat and other inefficient allocations.
