Council tax is a farce – it’s time for a real property tax

a post by Laura Gardiner for the Resolution Foundation blog

It’s an open secret that council tax is a dog’s dinner. It was conjured up in the early 1990s as a half-way house between the hated ‘poll tax’ and the old domestic rates system, meaning those in top-band properties have much lower tax rates than those in cheaper homes. In England and Scotland, it is based on valuations that are 27 years out of date. And it allows local authorities with the highest property wealth to charge the lowest rates of all.

The result is that council tax only weakly relates to property values, and is therefore highly regressive. On average those living in £100,000 homes pay around five times the tax rate of those living in £1 million mansions. And a fifteen-minute walk in South London can take you from a £2.1 million flat with a £700 council tax bill to a £400,000 flat with a council tax bill 66 per cent higher. The ‘property tax’ label council tax gets given is a farce – it looks far more like the poll tax it replaced.

So why isn’t council tax a major political battleground? Politicians may be wary of touching it given it is used to finance local government. Or they may be scarred by botched revaluation attempts. Or maybe it reflects the national mood where wealth – of which property is a major part – is much less often discussed than incomes despite being huge and much more unequal.

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