Council tax is a vital part of local government funding in the UK, providing revenue for services such as waste collection, social care, and policing.
Yet it is also one of the most controversial parts of the tax system. The pricing bands are based on house prices from the early 1990s and have not been updated since. Critics say that council tax is outdated, unfair and no longer fit for purpose. Moreover, the chancellor is reportedly looking at ways to reform the tax in the Budget later this month. So, should council tax be scrapped? Renter Rhys Thomas, political editor Hugo Gye, housing correspondent Vicky Spratt, estate agent Charles Curran and homeowner and social affairs journalist Hannah Fearn share their perspective.
Rhys Thomas: I begrudge paying for failing services
I live alone, so I get the Single Person’s Discount, which is 25 per cent off my council tax bill. But if I had someone living with me and we split the bill, I’d be paying less despite not having a discount applied. Make sense of that.
For renters, council tax is also more of a potluck than anything with a sense of fairness or means testing. I have lived in bands B to F. My rental fee has stayed consistent across these properties, but the council tax has been near double that of another place. While to an extent you can choose where to rent, the rental market is difficult and pressurising and often council tax is a forgotten consideration when choosing somewhere. It creeps up on you like mould.
Worse still is justifying what the money goes towards. I recently had to pay an entire year in one go because having moved into a new home, it took so long to get the necessary details from the council to pay, that I was then overdue with my payments.
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If councils can’t run themselves well enough to onboard people, is it any surprise there are potholes outside the door, bins overflowing for lack of collection days, emergency services that take a lifetime to turn up, schools closing, and homelessness on the rise? All of these are issues that council tax is meant to improve, and things seem to get worse, not better.
To be clear, I’m not anti-tax, but I am fed up with being made to fork out a significant amount of my income for a service that is barely running anyway; especially when there are obvious fixes to this system. For instance, taxing corporations more could solve literally everything and still leave them billions (or at least hundreds of millions) in profit. I’d have more money to spend with said businesses then too. The circle of capitalist life.
Rhys Thomas is a writer and renter
Hugo Gye: It’s unfair, outdated and should be replaced immediately
Council tax is a terrible way of taxing property. It should be abolished and replaced as soon as possible.
It is quite literally outdated: the bands are based on how much a home was worth in 1991, which is indefensible.
It is unfair: owners of luxurious mansions pay the same as those living in much more modest homes. And it is inefficient: council tax is levied on the value of a property rather than the underlying land. That disincentivizes people from building more densely on the plots they own, because they would attract a higher tax bill.
A better system by far would be a land value tax, which crucially would be paid by the owner of a particular property rather than its occupier, set at a (small) percentage each year of the current value of the land on which a home or business sits.
That would be a good way of taxing wealth – something the UK does haphazardly – without stopping development and without requiring constant property revaluations. This could replace business rates and stamp duty, too, while we’re at it. The time is ripe for a rethink of how the UK’s property taxes work.Hugo Gye is The i Paper’s political editor
Vicky Spratt: Councils need better funding than this
The short answer is yes, but it must be replaced with something else if it is.
Rachel Reeves is rumoured to be considering changes to council tax, but no politician will take on such reform lightly. They will be haunted by the spectre of Margaret Thatcher’s ill-fated “community charge”, better known as the poll tax. Indeed, it was one of the policy failings that finally undid the Iron Lady.
And, yet, take it on they must. Why? Economists widely regard the council tax as unfair, regressive and out of date.
More than that, in recent years, local councils are increasingly cash-strapped because their spending on emergency provisions such as SEND and temporary accommodation has spiralled in recent years, while cuts to their funding throughout the 2010s diminished their spending power. A reformed council tax – or some sort of property tax, which is what it should be replaced with – is one of the ways that local councils could raise the money they urgently need, asking those with the most to pay more.
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Now, that doesn’t mean change will be easy. There will be winners and losers; some people who are heavily mortgaged on expensive homes will undoubtedly suffer, and these risks will need to be taken into account.
Nonetheless, all over the country, councils are crumbling and local public services are struggling. The money to improve everyone’s experience of society has to come from somewhere, making council tax fairer and more effective, and bringing property taxes in line with current property values seems a sensible place to start.
Vicky Spratt is The i Paper’s Housing Correspondent
Charles Curran: A reform could tank house prices
Council tax is a local levy for local services, divided on a graded scale between the residents who use those services equally. Any tax that seeks to raise much more than is required by the Councils or seeks to tax much more for the same services is likely to be controversial.
Seeking an alternative which taxes on the value of assets would be to the detriment of those who own property and are short on cash (such as pensioners) and will affect, for example, the ability of mortgage companies to continue lending in that area as prices fall and refinancing becomes much more expensive.
The consequences of any tax changes must be very carefully considered. When buyers negotiate a purchase price, they will need to bear in mind these changes – and how they will impact both their disposable income and purchasing power. All of this, of course, could have an impact on the Treasury and the public finances.
Charles Curran is the Managing Director at Maskells estate agents
Hannah Fearn: There is a better way
Council tax was designed to share the cost of essential local public services between all residents. But after massive cuts to the state during the Conservative austerity years, it has taken on the huge and growing cost of child and adult social care – and it can’t keep up.
The Conservatives gave councils the right to keep raising council tax, but with an ageing population, it’s still falling well short.
But it can’t just be scrapped overnight, either: those care services need to be paid for, and everybody should contribute. My suggestion is for a hybrid system: a lower per-person charge which can be funnelled directly into local services, and a much higher local annual property tax based on land values and levied only on homeowners (which would replace stamp duty too).
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This would encourage older people sitting on empty bedrooms to downsize, charge people more fairly based on their wealth, and also – because the cost of housing, and therefore the tax raised, varies across the country – force central government to look again at sharing tax income more fairly across the country.
Everyone has a right to better public services, and this is a more realistic way to pay for it.
Hannah Fearn is a freelancer writer and reporter specialising in social affairs
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