Posted 05.03.14
As town halls set their Council Tax bills for the new financial year, a report published by the Joseph Rowntree Foundation (JRF) calls on policy makers and politicians to start thinking about long-term replacements for the Council Tax.
The research - After the Council Tax: impacts of property tax reform on people, places and house prices - by a team at Heriot Watt University, examines the impact of replacing the system which, 21 years since its inception, has become unfair, unpopular and outdated.
Council Tax is regressive, taking a larger proportion of money from low income households in cheaper properties. Ministers have offered grants to freeze Council Tax bills, but this is becoming unsustainable to fund in the long term and some local authorities are increasing bills anyway.
With the current system becoming unsustainable and reaching crisis point, the report contains detailed models of alternatives to the current system, which could cut bills for those on low to middle incomes.
One option examined in the report is a progressive property tax, phased in over time and based on property values, which would cut bills for two-thirds of households.
A progressive property tax would shift the burden from poor families in cheaper properties, to richer ones in more expensive properties. This reform would bring about a greater level of fairness between people and places, the report authors conclude. However, the report was unable to make policy recommendations based on the modelling.
The modelling suggests that bills - currently just under £1,400 a year under Council Tax - would fall by £202 a year for the poorest, cut the median bill by £279 a year and increase them by £184 for those on the highest incomes.
The authors of the report conclude that a national property tax would have to reflect each households' ability to pay (so as not to unfairly penalise the asset rich, cash poor) and any reform would need to be phased in carefully over time. Also - London would need to be treated as a special case because of its unique housing market.
For a summary and the full report click here.
Posted 20.03.14
New figures published show that 231 councils intend to take up the offer of additional central government funding to help freeze Council Tax this year.
The Government is providing up to £550 million in extra Whitehall grants to local authorities that freeze their bills from this April.
Any local authority that chooses to raise Council Tax by 2% or above must put it to a public vote.
To further local accountability, from this year, every vote cast by councillors on Council Tax and budgets should be made a matter of public record and allow residents to see where elected representatives have voted.
A list of councils that have opted to take part in the Government's 2014 to 2015 Council Tax freeze initiative can be accessed via this link.
