The coalition government has postponed the revaluation of council tax bands on the totally false grounds that it would "penalise the poorest". Eric Pickles is reported to have claimed that, coming out of a recession, the government would not want to impose "an extra £1 600 of taxation on ordinary families."
This is nonsense and the government and Pickles must know it. There is no relationship between the total council tax a local authority raises and the banding values of the properties within its area. What the banding values do is determine how the payment of the tax is to be distributed. At the moment it is distributed according to property values in 1991. since when houses have increased in value. If they had all increased in value a the same rate, then the proportion of the total tax paid by each household would have remained unchanged. If in this period the value of some houses has increased proportionally more than others, then they will pay more and the others less, but an overall increase of £1 600 is ridiculous. If the total council tax levied remained unchanged then this would be a zero sum
A revaluation would penalise the poor rather than the rich only if humbler abodes had increased in value proportionately more than posh ones. If this is the case, then the simple solution would be to broaden the scope of the lower bands, A and B, add a few more bands above the present top H, and widen the ratio of the difference between top and bottom band payments above the present paltry three. Such a revision would be more equitable and sound less draconian than Vince Cable's proposal of a Mansion Tax
Of course, Liberal Democrats believe that council tax is a flawed and inequitable method of collecting local government revenues, and advocate a local income tax. Personally I am not totally sold on this idea, as I think it wrong to limit local government revenue to one source only. Local income tax along with that long standing Liberal demand for a Land Tax would be my preferred long term solution.
So bring on "site value rating," another good Liberal idea that has been ignored for far too long.
Saturday, 2 October 2010
Council Tax Band Revaluation Fraud
Posted by Peter Wrigley at 06:36
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