Revaluating council tax could play a key role in the government’s ‘levelling up’ agenda and help those on low incomes, the young and disabled, according to a new study.
The study by the Institute for Fiscal Studies (IFS) claims average bills would fall in the Midlands and North and much of the South West if properties were revaluated, based on 2019 house prices.
Council tax bills are currently based on the on the price a property would have sold for on the open market on 1 April 1991 in England and 1 April 2003 in Wales.
According to the research re-evaluating properties to 2019 prices would lead to a 20% fall in average bills in most of the Midlands and North.
The biggest reductions would be in Lancashire, with average bills down 15% in Fylde and Wyre and 13% in Ribble Valley.
While the biggest increases would be in inner London, with average bills up 45% in Hackney, 34% in Wandsworth and 30% in Lambeth.
Only four local authorities outside London (Brighton and Hove, Bristol, Cambridge and Oxford) would see an increase of over 10%.
But the report argues that this depends on central government funding being re-allocated in line with the updated property valuations and council tax system.
‘The failure to revalue council tax for almost 30 years means the tax bills households face bear less and less relation to the values of their properties,’ said IFS senior research economist, Stuart Adam.
‘At a minimum the government should therefore revalue properties and put in place a cycle of regular and frequent revaluations to stop us getting in this situation again. Ideally it would undertake more radical reform too.’
‘Reform would create millions of losers as well as winners, which means doing it would probably involve some political pain. But it must be done at some stage, or we would still be basing council tax in 2091 on relative property values in 1991 – an absurd state of affairs. With a government with a large majority, the next few years looks like as good a time as ever.’
Commenting on the report, the chief executive of the Chartered Institute for Public Finance and Accountancy (CIPFA), Rob Whiteman, said: ‘The case for council tax reform remains very strong. Councils cannot continue to rely on a regressive source of revenue alone and need a plurality of taxation sources to achieve sustainability, genuine devolution and fairness to taxpayers.
‘For the public sector to continue to deliver quality services for those who need them most, we must identify long-term, sustainable funding solutions.’
Photo Credit – Nattanan23 (Pixabay)