Heather Jameson 20 March 2018

Scrap 'outdated and regressive council tax, says think tank

Council tax is ‘outdated and regressive’, and the Government should consider scrapping it in favour of a fairer system, according to a think tank.

As its relationship to property values gets weaker and weaker, council tax looks increasingly like the unpopular poll tax it was introduced to replace, the Resolution Foundation has claimed.

The think tank claims council tax is regressive due to the ‘wide bands’ for council tax, the small difference in the rates of the bands, the out of date property values it is based on and the regional variation.

Principal researcher at the Resolution Foundation, Laura Gardiner, said: ‘Despite replacing the unpopular ‘poll tax’, council tax has come to look increasingly like it. It’s time we looked to abolish it.

‘The council tax you pay is meant to be tied to the value of the property you live in, but when someone living in a property worth £100,000 pays a tax rate five times higher than someone living in a property worth £1m, something has gone seriously wrong.

‘The government should implement a new system that is truly progressive and avoids the ludicrous situation of people in mansions paying little more, and in some cases less, than families living in tiny flats.’

The think tank claims council tax could be reformed with additional bands – a mansion tax – or increased rates in the top bands, but that would not resolve the regressive nature of the tax and ‘more fundamental reform is likely needed’.

In its report, Home affairs, it suggests the Government could consider a ‘scrap and replace’ option to reform the poll-tax like nature of council tax, creating a new progressive property tax.

It suggests a 0.5% tax on capital value would raise £1.6bn compared with council tax. A similar 1% rate but with a £100,000 tax free allowance per property would boost revue by £8.6bn, but would mean no tax for the bottom 14% of properties.

A 1% rate, with a regional tax free allowance, and a higher rate of 2% on properties over £500,000 would raise £8.4bn.

The report calls for the end to discounts for second homes, empty properties and single adult households. Other changes could include: 

  • Allowing authorities to vary property tax rates
  • Basing a new tax on property rather than land values
  • Basing a new tax on capital rather than rental values
  • Shifting property taxes to owners, rather than occupiers
  • Increasing income based means testing
  • Making payment easier through income sources
  • Allowing deferral of payment, or payment through an equity stake
SIGN UP
For your free daily news bulletin
Highways jobs

Early Years Entitlement and Sufficiency Officer

City of York Council
Grade 7 Level 1 - 4 (£29,230 to £31,391 per annum) reduced pro-rata
Are you experienced in Early Years Education Funding and looking for a new challenge? York, North Yorkshire
Recuriter: City of York Council

Administration Apprentice

Essex County Council
Up to £12348 per annum
Administration ApprenticeFixed Term, Full Time£12,348 per annum rising to £22,072 per annum on the second yearLocation
Recuriter: Essex County Council

Head of Finance (Deputy S151 Officer)

Babergh & Mid Suffolk
£60,757 - £73,775 (plus national pay award)
Together we are building a more resilient, sustainable future. Suffolk
Recuriter: Babergh & Mid Suffolk

Community Care Business Unit Assistant

Sandwell Metropolitan Borough Council
Band D, SCP 9 -17 (£25,119 - £28,770 per annum)
An opportunity has become available for four Community Care Business Unit Assistants, based in Finance. Sandwell, West Midlands
Recuriter: Sandwell Metropolitan Borough Council

Social Worker

London Borough of Richmond upon Thames and London Borough of Wandsworth
£36,426 - £49,503 per annum

Recuriter: London Borough of Richmond upon Thames and London Borough of Wandsworth

Linkedin Banner

Partner Content

Circular highways is a necessity not an aspiration – and it’s within our grasp

Shell is helping power the journey towards a circular paving industry with Shell Bitumen LT R, a new product for roads that uses plastics destined for landfill as part of the additives to make the bitumen.

Support from Effective Energy Group for Local Authorities to Deliver £430m Sustainable Warmth Funded Energy Efficiency Projects

Effective Energy Group is now offering its support to the 40 Local Authorities who have received a share of the £430m to deliver their projects on the ground by surveying properties and installing measures.

Pay.UK – the next step in Bacs’ evolution

Dougie Belmore explains how one of the main interfaces between you and Bacs is about to change.