The below Parliamentary question was asked by Dame Tessa Jowell on 2014-06-10.
To ask the Secretary of State for Communities and Local Government, what assessment he has made of the revenue that would be generated from additional council tax bands on higher value homes, broken down by (a) the total revenue generated UK wide, (b) the total generated in the Greater London region and (c) a breakdown for each threshold and band value (i) UK wide and (ii) in the Greater London region.
Brandon Lewis
No assessment has been made as we have no intention of introducing higher council tax bands.
Council tax re-banding would require a wholesale council tax revaluation, hitting ordinary home owners with higher taxes, especially those who have undertaken home improvements. Fundamentally, council tax is not a wealth tax; it is a local charge for the use of local services. The current banded system is intentionally designed to avoid the flaws and inequities of both the poll tax and of domestic rates, the former which taxed multiple-adult homes too much, and the latter which taxed both family homes and pensioner households too much.
I would note that the last Labour Government and Welsh Assembly Government jointly undertook a council tax revaluation and re-banding exercise in Wales in 2005. Four times as many homes moved up one or more bands than moved down. Two-thirds of the net rises were amongst homes (originally) in Bands A to C, meaning that those on more modest incomes were hardest hit.
Labour Ministers originally claimed that revaluation was revenue-neutral, but this was not the case. In the first year of the revaluation, council tax income rose by 10 per cent, of which 4 per cent was due to that year’s increase in Band D rates, and 6 per cent due to more properties in higher bands due to the revaluation (Welsh Assembly Government, Submission to the Lyons Inquiry into Local Government, Annex B: Council Tax Revaluation and Rebanding 2005 Chronology and Facts, March 2006). To place that in context, a 6 per cent rise in council tax receipts in England would today represent a sustained tax increase on hard-working people of £1.4 billion a year, every year.
As the then Chairman of the Communities and Local Government Select Committee, Phyllis Starkey (then the hon. Member for Milton Keynes South West), observed: “The Welsh Assembly – I believe it was my party, but I am not making an excuse for it – took advantage of the revaluation hugely to increase the total [tax] take” (3 February 2010, Official Report, Column 383).
Instead of finding new ways to tax people, this Government has given extra funding to town halls to help freeze council tax. We cancelled any plans for a council tax revaluation. We have handed local residents new rights to veto big local tax hikes, so local people have the final say on the amount they pay. Council tax in England more than doubled under the Labour Government; under this Government, bills have fallen by 11 per cent in real terms, giving families financial security and helping hard-working people with the cost of living.
