Council Tax Campaign

The Campaign For A Fairer Council Tax

Council Tax Commentary

Welcome Comment

We welcome the Government’s commitment to a revaluation of the property prices underpinning the Council Tax system, which is long overdue. We also agree with the introduction of a fixed revaluation cycle.

We believe, however, that revaluation without further reform is not a fair or politically viable option. A ‘straightforward’ revaluation (i.e. with the existing eight bands uplifted in line with house price rises, and current payment differentials retained) will cause serious problems. Firstly, across the country, poorer households will tend to do less well from revaluation than the rich. In regions with below-average house price rises, there will be no tax cuts for households who are already in Band A. In areas with above-average price increases, most poorer households will see bills rise, but many high-value homes will not move up into new payment bands. On top of this the ‘flat tax’ problem will be exacerbated. In four regions, half or more of homes will be in Band A, so at local level Council Tax will take little account of ability to pay.

The White Paper’s discussion of the fairness of Council Tax is encouraging. We welcome the Government’s acknowledgement that Council Tax is perceived to be unfair, because it is regressive relative to property values. We are also pleased to see that the Government is prepared to contemplate additional Council Tax bands.

It is positive that the Government has postponed making decisions and ruled nothing out. It is committed to legislation that will enable future reform and has promised to listen to outside views in deciding what approach to adopt. It is clear, however, that there is more to do to convince policy makers and opinion formers that revaluation without reform is unfair and politically indefensible. The challenge now is to demonstrate why revaluation alone is unworkable, to develop realistic options for reform, and to gather support for change.

The White Paper’s Concerns about Reform

The White Paper discusses problems caused by the imperfect relationship between house prices and incomes. The concern is that if Council Tax becomes more progressive relative to property prices some low income groups might suffer. This is an important point, but we believe it does not pose a fundamental barrier to reform. This is because there is a reasonably good link between incomes and house prices, at least at local level.

Admittedly, some groups do face unusually high burdens. These include tenants and key workers in property hot spots and some older people. We think the Government should explore possible solutions, rather than abandoning the subject as ‘too difficult’. Possible approaches that could be considered include:

Asset-rich, income-poor: pensioners owning expensive homes who have low incomes could under-pay Council Tax, in exchange for the local authority building up a charge on the property. Councils would be paid on the sale of the home.

Low paid workers and tenants in property hot spots: the Government could consider special rebates for property hot spots or consider changes to Council Tax Benefit. The Government may also want to consider whether the system should take account of regional price disparities.

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