Council Tax

What is Council Tax? Local government is financed by a combination of centrally-administered funding and locallyadministered charges and taxes - the most significant of which is council tax. Council tax combines elements of both its predecessors: the property-based rates system that existed until 1990 and the community charge or 'poll tax' on individuals, which existed from 1990 to 1993. Council tax has both a property value element and a personal element. People's council tax liabilities depend on which 'band' their property is in, the number of council tax payers in the local authority's territory (the council tax base), how much the local authority intends to spend that year and the funding it has been allocated from central Government. 'Collection authorities' include unitary authorities, London borough councils, metropolitan borough councils, and shire district and borough councils. In two-tier areas, the district council collects council tax to pay for its own services and to cover the precept issued by the county council and any relevant parish or community council for the services they provide. Precepts are also added to people's total council tax bills by the local Police Authority and any relevant Fire and Civil Defence Authority. Background Council tax was developed as a replacement for the community charge, whose turbulent threeyear history was extremely unpopular and difficult to administer. The so-called 'poll tax' - a term first used in the context of 1381's Peasants' Revolt, the 'poll' meaning 'head' - was introduced by the Thatcher Government to correct the weaknesses of the domestic rates system. By taxing people rather than property, the community charge taxed large numbers of people previously excluded. Only about 25 per cent of local people were issued with bills under the rates system, but the new system charged adult children living with parents, lodgers etc. Some steps were then taken to mitigate the regressive effects of the community charge by a series of discounts and exemptions. However, there was considerable public opposition to the poll tax and many people refused to register to pay it. Although houses were immobile, people were not, and keeping track of citizens' movements - particularly in cities - combined with widespread protests that occasionally broke into rioting, made the system unworkable. One of the first significant reforms of the Major Government was to replace the community charge with council tax, which combined a 50 per cent property and a 50 per cent personal element, thereby avoiding the worst excesses of both the preceding systems.

Controversies Unlike the community charge, the council tax system was initially widely accepted. But accelerating increases - reaching an average 12.9 per cent in 2003 - have led many to call for its replacement. Indeed, a 2003 report by the Audit Commission described the local government funding system as "fundamentally flawed". Local authorities frequently accuse the Government of underfunding them through central grants while imposing additional duties that they must fulfil - requiring councils to put up council tax to meet objectives they have not been involved in setting. Even so, most opposition to council tax arises from its level - and by extension the local government funding settlement - rather than a perception of intrinsic unfairness. However, accelerating levels have hit people on low or fixed incomes, such as pensioners, the hardest. As a result the Government announced in July 2005 that eight local authorities in England would have their budgets capped and would need to set lower council taxes for that year. Local Government Minister Phil Woolas stated: "Given that we have increased funding to local government by 33 per cent in real terms since 1997, and that all authorities have received formula grant increases either in line with or above inflation in all of the last three years, there is no excuse for excessive council tax increases." In June 2006 Mr Woolas warned that the Government expected an average council tax increase in England of less than 5 per cent in 2007/8. He added: "Authorities should remain in no doubt that the Government will not hesitate to use its capping powers to deal with excessive increases in future years, including requiring them to rebill, if this proves necessary." And true to its word the Government announced in June 2008 that it would take action to tackle excessive council tax rises set by eight authorities for 2008/9. The property valuation bands have also caused some controversy. Currently based on 1991 property prices there have been calls for a revaluation to be carried out. However, the Government has stated that it will not revalue during the lifetime of this Parliament. Statistics The property valuation bands for England are:Band A Up to 40,000 Band B Over 40,000 and up to 52,000 Band C Over 52,000 and up to 68,000 Band D Over 68,000 and up to 88,000 Band E Over 88,000 and up to 120,000 Band F Over 120,000 and up to 160,000 Band G Over 160,000 and up to 320,000 Band H Over 320,000 Each property is valued at April 1991 prices

Source: Source: Direct gov - 2010 Quotes "Hardworking families and pensioners were left feeling powerless and frustrated under the previous government, as council tax bills doubled while their frontline services like weekly bin collections were halved. "This is a radical extension of direct democracy, as part of a wider programme of decentralising power to local communities. Power should not just be given to councils, but be devolved further down to neighbourhoods and citizens." Local Government Secretary, Eric Pickles announcing that the public will be given the power to veto excessive council tax rises - July 2010 "We want fairness in the tax system. Therefore this Government will avoid an unnecessary and expensive revaluation that could lead to increased council tax bills." David Gauke, Exchequer Secretary to the Treasury, confirming that there will be no revaluation of council tax during the lifetime of this Parliament - September 2010