Why council tax is causing even more heartache than the bedroom tax

mark mark mark at tlio.org.uk
Sun Jul 19 23:00:25 BST 2015

Why council tax is causing even more heartache than the bedroom tax
 by Adam Forrest for The Big Issue (published in Issue. No. 1157, June 8 - 14,

"When Russian oligarchs and little old ladies living in Westminster are paying
the same council tax, it's time to reform the system"

Where do council officers like to hang out? Magistrates’ courts. No joke. They
can do useful business there, meeting residents who have been summoned for
non-payment of council tax, negotiating repayment plans in the hope fines can be

The bedroom tax may have spawned more headlines and placards but it is council
tax debt that is causing the most heartache. Arrears continue to rise. Citizens
Advice’s latest figures show the number of council tax debt cases has increased
21 per cent over the year, up to 193,000. In fact, over the past two years,
council tax arrears have become the biggest debt issue seen by the charity.

The rise goes back to April 2013 when council tax benefit was abolished. In the
first six months of the cut, more than 450,000 people were hit with court
summons for arrears.

And since the beginning of April this year, another 250,000 on the lowest
incomes will have found their council tax has gone up. According to the New
Policy Institute, 2.3 million of the poorest families pay an average of £167 per
year more in council tax than they did back in 2010.

Is this fair? Could the debt be avoided? If there is no will to bring back
council tax benefit and add to Britain’s hefty welfare bill, is it worth
considering something more radical – wholesale reform of council tax?

Reforming local property tax is a tricky business. The last time anyone
seriously had a bash, it led to the eventual ousting of a prime minister
(Margaret Thatcher) and the rise of separatist politics in Scotland. Memories of
the poll tax disaster haunt all attempts to tinker. In fact, rebellions over
property taxes go back to the Peasants’ Revolt of 1381, when Richard II’s
government tried to levy a poll tax during a costly war with France. [Note (this
is an insert by me): Council tax was a hastily arranged revised local government
tax after that council tax was ditched in 1991; it was broadly a progressive tax
meaning higher value proprties were taxed more, but whilst removing the
principle of multiple taxation on multiple users, it takes no account of income,
and the main problem has been the council tax bands/thresholds were set 24 years
ago, back in 1991, so it is particularly out of date in London where property
prices have escalated to astronomical levels, rendering the valuation thresholds
of council tax bands completely inadequate in capturing the ever-wider variance
of property values.  Note: The Lyons Report, commissioned by chancellor Gordon
Brown in 2004 and which reported in 2007 - the main main findings for which were
never implemented, said that council tax should be reformed].

Labour’s plan to introduce a mansion tax, an additional tax on properties worth
£2m and over, has gone the way of the dodo following the party’s election
defeat. Whether Ed Balls would have been able to implement and collect the huge
sum promised (£2.5bn a year) is highly doubtful.

If politicians are interested in a fair local property tax that few could object
to, there is a more straightforward solution: revalue council tax bands. The
best argument against the current system is the limited nature of the valuations
– thresholds were set 24 years ago, back in 1991, and they’re grossly outdated.

The bill for a top-end band H home is only three times that of a band A home,
even if the band H home is worth 20 or 30 times as much. It means Russian
oligarchs and little old ladies living in Westminster Council can pay the same
band H maximum: £1,345 a year.

Had the old, pre-poll tax local rates been kept and adjusted with inflation, the
rich would be paying a lot more than they do now. Last year, the European
Commission suggested the UK reform property tax, bemoaning “the regressivity of
the current rates and bands within the council tax system”.

Adding new, higher bands would go some way to solving the problem. As columnist
Simon Jenkins has suggested, London would probably require I, J, K, L and M
bands to cover the wide spectrum of the very top-end properties, from the very
wealthy to the extremely wealthy, extravagantly wealthy and ridiculously

The reason for reform is urgent and obvious. Hundreds of thousands of people
receiving arrears letters, court summons and making appointments with their
local Citizens Advice bureau simply cannot afford to pay the sums being asked of
them. Charging the wealthy more would allow for cheaper rates at the lower end.

The Children’s Society recently raised concerns about an increase in bailiffs
coming round as a result of council tax debt – horrible visits that can leave a
lasting impact on kids’ well-being. There has to be a way of bringing council
tax into the post-property boom age, making the wealthy pay their fair share and
stopping so many dreaded bailiffs from knocking at the door.

Note (again, with more detail): The Lyons Report, commissioned by chancellor
Gordon Brown in 2004 and which reported in 2007 - the main main findings for
which were never implemented, said that council tax should be reformed by adding
new bands to reduce bills for those in the lowest value properties, paid for by
increased bills for those in higher value properties paying more - and stated
that there should be no increase in average council tax bills as a result of
 More info on the website of the Campaign for the Reform of Council Tax:

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