Prime Minister Rishi Sunak was 11 when England’s Council Tax bands were set. At the time, the average house price in Britain was £56,853.
There are growing calls not only for a reform of the way local authorities, like cash-strapped Croydon Council, are funded by central Government, but also to re-set the unfair Council Tax charging system.
Council Tax, which in Croydon was increased by 15per cent in April by Tory Mayor Jason Perry, was only ever introduced in 1993 as an emergency measure, to get the Conservatives out of the hole they had made for themselves with the even more unpopular Poll Tax.
But in England, Council Tax’s eight bands, set in 1991, have never been reviewed or revised since, reinforcing the fundamental unfairnesses within the system.
Michael Gove, the Levelling Up Secretary, ordered a review of local authority funding in the autumn, of which nothing has been heard since…
Critics of Council Tax say that it is out-dated, unfair and regressive.
“At the lower end, the charge behaves like a poll tax, with even the poorest property being expected to pay a fixed proportion of the sum owing by the mean property in the Council Tax bands,” according to respected economist Richard Murphy.
“The result is that council tax features very heavily in the overall tax bills of the lowest paid in the country.
Because Council Tax is effectively capped, richer individuals in London pay proportionately less than those living in places where house prices have not risen as fast. And poorer local authorities raise less in Council Tax because of higher numbers of residents eligible for reductions. So they end up having to set the highest rates.
The New Statesman’s Anoosh Chakelian wrote recently that by refusing to change Council Tax bands, “successive governments have allowed Council Tax to become regressive and nonsensical”.
Chakelian said, “No one wants a Council Tax rise in the middle of a cost-of-living crisis.
“But at the heart of those unwelcome bills is a tax that makes no sense at all.
“Most of the big English councils are putting their Council Tax up by 5per cent.” Lucky them, says almost every reader living in Croydon.
“There are all sorts of reasons for this, which can mainly be boiled down to a long, painful shift of central government costs (and blame) onto local authorities, and an ageing population: social care budgets are covered by councils.
“Instead of putting more and more pressure on local authority budgets, the government should focus on reforming the system to reflect the true value of people’s homes today.”
The IPPR think tank published a detailed report that described Council Tax as “increasingly regressive” and therefore “unfair”, which “takes too little account of ability to pay”. The IPPR report said that the Council Tax system is “inefficient” and “increasingly unsustainable”.
The IPPR report, commissioned by the Trust for London, said that Council Tax could be a sustainable means of funding local government services while also functioning as a progressive tax on property wealth.
“However, at the moment it is highly regressive in relation to property values as well as representing an unduly large burden in terms of income for poorer Londoners.”
IPPR said that Council Tax is also “economically inefficient” because of its banding system and the “reliance on considerably outdated property prices”.
And they warned, “Furthermore, it is increasingly unsustainable as a source of local government finance, a trend which is only set to continue.” Welcome to Croydon, and Slough, and Thurrock…
There is a petition that calls for a proportional property tax, based on the present-day value of homes, which claims that it would raise the same levels of tax income for local authorities, while cutting bills for the majority of households.
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