05/07/05 - Conservatives Call For Action On Local Taxation

LOCAL TAXATION

Conservatives will today hold an Opposition Day debate on local taxation.

Conservatives

Conservatives believe that council tax must be reformed – for example, by introducing an automatic discount for pensioners, and drastically scaling back the Whitehall regulations and burdens that have forced up local councils’ costs.

We oppose turning a local services tax, based on fixed property bands, into a crude wealth tax – either in the form of a local income tax as the Liberal Democrats propose, or through the introduction of higher council tax bands and a rigged revaluation, as Labour favour.

Labour

1. • Council tax bills in England have soared by 76 per cent (+£525 on Band D) from 1997-8 to 2005-6. The typical household now pays over £100 a month in council tax. Council leaders are warning of another sharp rise in council tax bills next year, exactly the same as happened after the last General Election.
2. • A third of the increase in the basic state pension has been taken up in higher council tax for a typical pensioner.
3. • The Government is currently conducting a council tax revaluation in England, with new bills due to be issued in April 2007. In Wales, where the revaluation was two years ahead of that in England, four times as many homes have moved up a band as moved down. If this were to be repeated in England, 7 million homes will move up at least one band, leading to a typical increase of £270 a year, every year.

Liberal Democrats

Liberal Democrat Treasury spokesman, Vincent Cable MP, has admitted that many homes would pay more under local income tax (LIT). ‘If there are two full-time earners in the house, there would be more tax’ with the new tax starting to bite for families with combined salaries ‘in the mid £30,000s’ (Evening Standard, 21 September 2004).

A typical working family in England in 2005-06 would pay a LIT tax bill of £1,701, compared to an average council tax bill of £1,009. This would mean an extra £692 a year, an increase of two- thirds.

Defeated Liberal Democrat MP for Guildford, Sue Doughty, has admitted, ‘local income tax was a real sticking point… young professionals such as two teachers living together struggling to pay the mortgage really didn’t like the policy’ (BBC Radio 4, Today Programme, 11 May 2005).

Councillor Justin Tomlinson, "Local residents are tired of Labour's endless Council Tax hikes, which have seen typical bills rocket 76% since they came to power.  Not content with the annual stealth tax hikes, we are now facing the re-banding exercise - yet more costs for the suffering Council Tax payer.  It is only the Conservatives who are prepared to drive down Council Tax, local residents deserve better value for money."