‘Regressive’, ‘unfair’ and ‘nonsensical’: Council Tax must go

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.

There is a growing number of calls for Council Tax to be scrapped and replaced, or at least undergo a major revision.

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.

‘Nonsensical’: Anoosh Chakelian does not rate Council Tax

“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.

To find out more – and calculate whether your Council Tax bill could be reduced – click here.

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10 Responses to ‘Regressive’, ‘unfair’ and ‘nonsensical’: Council Tax must go

  1. John says:

    A Poll tax would seem fairer so that all people who live in Croydon should be taxed and not just property owners. We need to ring fence peoples payments so that they can only be spent on services and not hair brained Capital investments. Brick by Brick comes to mind

  2. Isabella Jones says:

    The calls for reforming the Council Tax charging system are long overdue. It’s disheartening to see that the current system has remained untouched since its introduction in 1993. As the average house prices have drastically changed over the years, it only reinforces the unfairness and regressiveness of the Council Tax.

    The concerns raised about the disproportionate burden on the lowest-paid individuals are valid. It’s unjust that even the poorest households are expected to pay a fixed proportion, similar to a poll tax, while those living in areas with skyrocketing house prices pay proportionately less. This regressive nature of Council Tax exacerbates the inequalities within our society.

    The IPPR report’s findings further highlight the inefficiencies and unsustainability of the current system. It’s crucial for the government to take proactive steps in reforming the Council Tax to reflect the present-day value of homes and ensure a fairer distribution of the tax burden. A proportional property tax, as proposed in the petition, seems like a promising solution that can alleviate the burden for the majority of households while still generating adequate revenue for local authorities.

  3. Kevin Croucher says:

    The value of your house seems to be a very crude measure of your ability to pay for local services. On top of this it must be time for responsibility for social care to be removed from local authorities and be funded by central government. Why should care for the elderly and infirm be juggled with paying for libraries and mowing the parks?

  4. Ian Kierans says:

    Even property tax is unreasonable in the manner it is done. Pensioners living in their homes barely above subsustence level are facing higher and higher costs thru inflated asset cost yet use less of the services they are paying for.
    Lets get real about this funding for local authority administration is a dogs dinner but a one route tax like property tax is wrong also. Even business rates are a joke and stifle invstment and growth.

    Everyone should pay a small percentage towards the local services and their administration. Having larger authority administration can obtain greater savings on procurement or by doing it in house.
    Businesses operating in a Municipal area should also pay for the in effect ”captive customer”.
    Online delivery companys use our roads and contribute bugger all – that also should change so that local shops and those with premises have a more even operating environment.
    Perhaps it is time for a sales tax also that is evenly implemented.
    Along with graded property tax at lower levels and still based on ability to pay and earnings and not just artificial value of property.

    It is time the Governemnt should consider letting local administrations keep property sales tax in their areas also. Along with a developer surcharge set high ut can lower depending on building more places that are affordable?

    There are so many ways to obtain required money to enable good and efficient services. Successive Governments have repeatedly failed to do anything as it is convenient to blame others.
    Make no mistake the flaws in Local administrations are completely down to Central Governments idealisms and not in any way for the benefit of human beings who are regularly thrown under the bus they are waiting so long for.

    Croydon Council is still an incompetent administration – more money is unlikely to change that.

    Definitely time for change all round

  5. Hazel swain says:

    the principle of the Poll tax is good,, the more people in your house, the more you use and therefore should pay more … dont see why I as a single person should pay the same as a whole family living in the same size house .

    • Sarah Gills says:

      That only applies to some services (and not many). Other services you may never use or may only use at certain times in your life.

  6. Sally Harbour says:

    I agree that there are huge issues to resolve re council tax – parity between boroughs, property valuations, section reviews, appeal processes – so much has to be done to make this tax fairer and more proportionate.

    But then there is the utter fuck-wit Jason Perry, who went to Michael Gove offering Croydon on a platter. You can forget Council tax reform in Croydon. You can do all the reform you like, it’ll not undo the fucking mess numb-skull Perry showered upon us all with his 15% increase.

    Perry might have got a stiffy whilst crawling across the carpet to Michael Gove, but why should we all pay for his 5min of excruciating please and fiscal arousal? Perry should fund his sexual gratification himself and not at the expense of Croydon Council Tax payers.

    Some might say I’m talking bollocks but why else would Perry ask for a 15% increase when there was no chance that Gove would reduce our overall debt.

    No other Council leader has sacrificed his borough like Perry has done.

    Perry’s actions will cost Chris Philp his seat.

  7. Andrew Pelling says:

    The unfairness of the Council Tax is made more acute by Croydon now levying the second highest Council Tax rate in Greater London.

  8. Sarah Gills says:

    Yet another Thatcher legacy that we are dealing with. There’s a common thread with her government and political party

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