Opinion

Council tax valuations have been around since Chesney was No. 1

Council tax has been with us since The One And Only was No. 1, but it's pushing the poorest deeper into hardship, says Andrew Dixon. Property tax needs reformed, urgently.

To say our current property tax system is out of date would be a major understatement. Council tax is based on property valuations from 30 years ago, undertaken when Chesney Hawkes was No. 1. Perhaps The One and Only was simply a reference to your first council tax evaluation.

Partly as a consequence of being so behind-the-times, council tax is also deeply unfair. People who live in modest homes get a worse deal than those living in the wealthiest areas, while struggling renters are hit just as hard as their, often older, counterparts who have made it on to the property ladder. Too often, council tax works for the millionaires rather than the millions – and works against the drive towards intergenerational fairness.

That’s why the Fairer Share campaign is pushing our parliamentarians to back a fairer system that works for everyone. Our analysis shows that if the government were to scrap council tax and stamp duty and bring in a simple proportional property tax, this would bring in exactly the same amount of revenue as the current arrangement. Set at a flat rate of 0.48 per cent of a property’s value, and a proportional property tax would mean lower bills for 76 per cent of households in England and average savings of £435 a year. Furthermore, 99 per cent of the households in the most deprived 10 per cent of constituencies in England would benefit from the change.

Of course, inflated prices mean the value of some homes may not always tally with the finances of those who own them. For that reason, there would be safeguards in place to protect those who live in valuable properties yet do not have a lot of disposable income. Under a proportional property tax, the so-called “asset rich, cash poor” who cannot afford to pay it would have the option to defer payments and pay instead a modest interest rate until they sell up and settle the balance.

For 30 years council tax has been writing its own obituary. But, since the pandemic hit, changing the financial outlook for millions of people, the case for abolishing council tax and bringing in a fairer property tax system in the UK has only become more compelling. 

Council tax is one of the household bills on which millions are falling behind, creating debt and forcing people out of their homes

Earlier this year, Citizens Advice revealed that council tax debt was the number one debt issue they were dealing with, seeing people racking up millions in arrears as a result of Covid-19. This month, we also learned that
2.5 million people are behind on their broadband bills, with 700,000 of them falling into the red during Covid. It comes at a time when people are more reliant on broadband for work and for helping their children with school work, with UK adults spending an average of 22 hours online each week.

At the same time, charities have reported a sharp rise in benefits issues, rent arrears, court action and potential eviction and homelessness since the onset of the pandemic. As protections put in place for renters came to an end in England in May this year, polling showed that almost one-in-10 private renters were behind on their rent, equating to more than 350,000 tenants across the country. That polling coincided with a 17 per cent increase in people coping with issues around being evicted from their private rented accommodation, compared to the same period one year previously.

As The Big Issue’s campaign to Stop Mass Homelessness shows, these big bills for those struggling to get by cannot go on. Council tax is one of the household bills on which millions are falling behind, creating debt and forcing people out of their homes. 

And, as The Big Issue’s Today for Tomorrow Campaign has rightly stated, the pandemic has shown we need more long-term planning in government. By building momentum behind Lord Bird’s Wellbeing of Future Generations Bill, the campaign is hopefully helping to make this happen and deserves to be widely supported, as it currently is by a range of organisations and MPs from all parties.

If passed, the bill will require the UK Government to work to prevent problems, including poverty, from happening. It would also require ministers to give current and future generations a voice in decision-making. 

This is exactly the kind of approach that we need if households across the country are to receive the fairer property tax system they deserve. By scrapping council tax and stamp duty and introducing a fairer system of property tax, the government could deliver real ongoing savings to millions of people who have been pushed towards poverty and homelessness during the pandemic. 

Instead, 30 years since it was drawn up, we are still stuck with “the one and only” regressive council tax system which unfortunately has more staying power than Chesney Hawkes.

Andrew Dixon is founder of Fairer Share, which works to reform out-of-date property taxes. #TaxHomesFairly

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