The BBC mentions something that I didn't see in the article in The Metro:
[The] Local Government Secretary... said the key thing was the relationship between the upper and lower bands of the tax (1), and they were roughly the same as when the tax was introduced. "I've always argued against a revaluation because we know from what happened in Wales that it tends to hit poorer families (2).
So let me get this straight:
1) Council Tax is a highly regressive tax - the tax on the smallest/cheapest homes is set by law at one-third of the tax on the most expensive, despite the fact that the household incomes of those living in the smallest/cheapest houses is probably only a tenth as much as the household incomes of those living in the most expensive - and they have every intention of keeping it that way, which "tends to hit the poorest families"...
2) They could of course make Council Tax more proportional to household incomes by making them more proportional to property values (taking this as a very good proxy for household income), and, AFAIAC, just exempt the main residences of pensioners entirely (who otherwise have to go through the whole means-tested Council Tax benefit rigmarole), which would by definition reduce the tax burden on "poorer families" but nope, they would prefer to force them to pay more than commonsense dictates in order to reduce the tax burden on those at the top.
(And even if they didn't change the amounts due in each band but merely re-shuffled homes between bands in such a way as to be fiscally neutral, this would inevitably make Council Tax slightly less regressive. Three quarters of all homes will have changed hands at least once in the last nineteen years, and a new purchaser's income is a fairly fixed proportion of the price paid at the time of purchase).
So the triumph of Home-Owner-Ist Double Think is to use the self-imposed regressivity (if that's a word) of Council Tax as an excuse for not making it more progressive. Genius.
The Daily Mail can always be relied on to peddle the same Home-Owner-Ist garbage, but mentions some interesting statistics:
Officials at the Government's Valuation Office Agency, an arm of HM Revenue and Customs, have collected information showing that 2.8 million homes have one bedroom, 6.8 million have two, 10.8 million have three, 2.8 million have four and 520,000 have five.
That adds up to 23.7 million homes (which presumably includes social housing) and presumably relates to England & Wales - the Valuation Office Agency says "the council tax valuation lists online [contain] the council tax bands of the 23.2million domestic properties in England and Wales." so that's a tolerable margin of error.
But I suppose the Daily Mail's rant about 'council snoopers' is quite justified. There's no need for physical inspection in 99.9% of cases, because actual selling prices as recorded by HM Land Registry since 2000 should be quite sufficient for a rough and ready tax like Council Tax.
Might As Well Get Them Some Hugo Boss Uniforms, Rowley...
51 minutes ago
5 comments:
Isn't the council tax reflected in the purchase price so that, since most houses have changed hand since the first valuation, the current situation is reasonably "fair"? An old tax is a good tax.
Anon, fair point, but
1) What you are talking about is a shift between privately and publicly collected taxes, without any change in the total bill faced by the more recent purchaser, i.e.
a) Council Tax 'too high' = lower property value = lower mortgage repayments (less privately collected tax).
b) Council Tax 'too low' = higher purchase price = higher mortgage repayments (more privately collected tax).
2. "An old tax is a good tax" Yup. And Domestic Rates/Schedule A tax was better than Council Tax; and the oldest tax of all ('ground rents' or 'land value tax') was the mainstay of all tax systems for thousands of years before that.
What's the point of a revaluation?
I don't think CT is really derived from house prices - rather house price bands are used to allocate the amount of CT the LA feels it can raise. The LA just divides its estimated take by 9 and allocates the ninths to house price bands.
If all the house prices in each band go up (or down) by roughly the same %age it doesn't change which band a given house is in.
Anon 11.54 again. Yes, there might be some small injustice in the system or something that grates with economic theory or efficient taxation, but does this merit such a huge operation (huge in the way it was proposed - granted it could be done very cheaply)? Being a cynic, I feel that somehow, though how I don't know, the Government saw this as a way of getting more in tax off us. Yes, I know; I can't be right or they wouldn't have cancelled it. I'm at a loss. Why court unpopularity for no good reason? Any ideas?
GB, Council Tax is indeed completely made up figures, a sort of mixture of Poll Tax and very modest property-size tax which makes up six per cent of total tax revenues.
Anon: "I feel that somehow, though how I don't know, the Government saw this as a way of getting more in tax off us. "
Exactly. While all the tabloids are raving about the Tories "reversing Labour's hated tax on home improvements" (and there is absolutely no evidence that Labour would have actually gone ahead with it) the Tories can merrily hike VAT to 20% and increase National Insurance by 2%, which will cost each household about £1,000 extra per year.
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