This blog will answer the question “Will Council tax be abolished?” It will discuss the various problems with the concept of council tax. It will cover the various suggestions for reforms that have been made throughout the years. Further, the blog will also mention the various suggestions for reforms to replace with the council tax that was proposed.

Will council tax be abolished?

No, it does not appear that council tax will be abolished. Talks for abolishing council tax have been made for a long time, but no result has come out so far, nor does one seem to be coming anytime soon. The governments are not ready to abolish the process of council tax.

Problems with the existing council tax system

The council tax system is such that people who have more can afford the most expensive homes pay very little, while the ones with homes worth lesser value have an unreasonable burden upon them Moreover, the existing council tax system which while not encouraging the efficient use of the limited supply of housing, under-taxes larger and often underused properties and penalises people for moving homes. ThroughoutAll throughout the UK, people are affected by this council tax system, whether they own a property or rent it.

It places the most burden on youngsters, people with little earning and living in the less prosperous portions of the country, having modest-sized houses. It has been designed such that the wealthy property-owners and the people who own multiple properties benefit from it. Also, the prices of properties have been rising, as has been the council tax while the average income has seen almost no change.

Placing the responsibility of the charge on the local councils has resulted in the taxes paid being arbitrary, where residents of certain councils are paying a lot more than those of others.

Another deficiency within the existing council tax system is the difference between the range of values of each band. Since all the properties in one Band are charged the same, those at the lowest in each band pay the same as the highest, which is unfair on many accounts.

For example, for Band A, an owner of a property costing £5,000 will pay the same as the owner of a property of value £40,000. Looking at this the other way round, both these persons living in Hartlepool will pay £1,065 for their Band A property, while if they lived in Westminster, they would have had to pay £551. 

There are currently 8 parliamentary constituencies where the average household pays at most 0.2% of their property’s value in council tax, while there are 41 constituencies in the North and Midlands in which the average household’s council tax burden is 1% or more than 1%. In a few councils such as Easington, County Durham, if we measure the council tax charge against the average cost of a home, there are a few households who are paying as much as three times the rate of council tax.

Another impact of this decentralised tax system is a situation where, for example, within 20 years a property-owner in Easington can expect to have paid 37% of the value of their property in council tax, while a one in Westminster would have paid just 1.9% of the value of their property.

All this clearly shows a highly unfair tax, being something that is supposed to be a property tax but is in no way linked to the property.

The council tax system is one that was introduced hastily almost 30 years ago, replacing Community Charge, or “Poll Charge.” But it possesses several characteristics that are the same as its predecessors. In that haste it appears that the system of council tax has been poorly designed, which has now come out of date, is unpopular and is unfair.

This council tax system has become more of a wealth tax on the poorer sections of the UK, which is now in urgent need of a comprehensive overhaul.

The system of taxation could be a sustainable means of funding local government services while also being progressive concerningconcerning property values as well as representing an unduly large burden in terms of income for poorer portions of the country.

Thus, council tax is an economically inefficient and increasingly unsustainable tax, particularly because of its banding system, reliance on considerably outdated property prices and the inconsistencies between that and commercial property taxation.

Campaigns and petitions for fairer property taxes

Several campaigns and petitions have been made throughout the history of council tax, to abolish this unfair and problematic system. Some of these instances are discussed below.

Letter by MP

Kevin Hollinrake, the MP for Thirsk and Malton urged the Prime Minister to replace the present system of council tax and stamp duty with a proportional property tax (PPT). this tax would charge all the properties at a flat rate of 0.48 per cent annually, not classifying them in fixed Bands.

This suggestion includes the tax money to be split between the national government and the local authorities, with 0.32% of the earnings going to the local councils. This tax would be levied on the value of a person’s property each year. It also levies the same amount for persons owning more than one home. They have to pay the same levy on each property they own.

Petition in September 2019

A petition to abolish council tax was made in the Parliament in September 2019, which was closed after 6 months. 

The petition demanded that the existing council tax system being unjust, should be abolished. It stated that the residents of the UK were paying taxes on everything as it is and that there was no necessity for council tax on top of it, which increases every year without justification.

Therefore, it is something that should be abolished forever.

Petition in July 2021

Another petition to abolish council tax and fund local authorities from general taxation was made as recently as July 2021, which was again closed after 6 months.

This petition stated that the fact that people in England are forced to pay council tax, is an absolute disgrace, especially in the current economic climate, and therefore it should be completely abolished.

Campaign for fairer local taxation

A petition was sent to the department for local government and communities in favour of abolishing council tax and replacing it with any fairer system of local taxation. This petition pointed out the issues in the existing council tax system such as using outdated values of properties, set on unaffordable rates, and the severe measure of liability orders.

It pointed out how the poorer persons are forced to choose between eating, heating, rent payment and payment of council tax.

In lieu of all these, the petition urged the government to abolish the system of council tax and bring about a fairer property tax. This petition is still in the running.

News for council tax to be abolished

All above discussed petitions throughout clarify that efforts have always been made for council tax to be abolished, but in vain. No result has come out of them so far.  

However, the result from the Fairer Share Campaign has put pressure on the government to change council tax and think towards the proposed proportional property tax. There has been increased pressure on the Chancellor of the Exchequer to scrap the council tax system as well as stamp duty.

But, despite all this pressure, not even the council tax rise in April 2021 was postponed, despite the financial struggles faced by people due to the COVID-19 pandemic.

Therefore, the discussions by the people and platforms that council tax will be abolished are just that for now – discussions. They have roots in truth, but they have not proved true as yet.

Suggestions for reform

Moving to a proportional system of taxation for the property would lessen the burden on people, lower the bills for most of the households, which need it, and would free up thousands of homes for people who need them. Several reforms for council tax to be abolished and new taxation regimes to be introduced have been suggested from time to time.

Some of the reforms in place of the existing council tax system are:

  • Council tax based on the fixed band should be changed to taxing based on a percentage of the value of the property.
  • Stamp duty on property occupied by the owner should be abolished.
  • Levying council tax from tenants should be changed to taxation from the owners. 
  • Owners genuinely incapable of paying council tax should have a proper recourse mechanism rather than the barely-there discount system present in the existing council tax regime.
  • The existing council tax should be made simpler by removing so many additional sub-clauses synch as single occupants, empty homes, second houses, multiple adults etc. All these serve just one purpose – that to complicate the system.
  • A re-evaluation of all properties needs to take place as soon as possible. Charging at a rate decided almost three decades ago is more than just unjust.
  • Undeveloped plots should also be subject to property tax, to refrain developers who collecting land just to sell later at an increased price.
  • Council Tax should be devolved to London, as part of the comprehensive spending review conducted by the government.
  • People who are low on income should be protected by introducing a capital-wide council tax benefit system which supports the poorest and most vulnerable.

Conclusion 

This blog answered the question “Will Council tax be abolished?” It discussed the various problems with the concept of council tax. It covered the various suggestions for reforms that have been made throughout the years. Further, the blog also mentioned the various suggestions for reforms to replace with the council tax that has been proposed.

FAQs

Why would council tax be deleted?

Council tax needs to be deleted or abolished because it is an outdated, inefficient and problematic law that needs to be replaced with a fairer system in accordance with the present rates.

Is council tax a progressive tax?

In the recent time, council tax has become a regressive system – charging properties as classified under fixed vbands on their values almost 30 years ago, rather than a rate based on the current value of the property.

Do you have to pay council tax on universal credit?

Yes, you do have to pay council tax on universal credit. But the amount of your council tax might be reduced if you are receiving universal credit. You Need to apply the same to your local council in any such scenario.

What is Council Tax based on?

Council tax is based upon the value of your property, which determines which Band your property is in, the number of adults staying at your property, the circumstances of people, and the income of the person responsible to pay the council tax.

Why is my council tax more than my Neighbours?

Your council tax might be more than your neighbour’s because you might be in a different council tax band than your neighbour. It can be different even if one of the two of you is in the wrong council tax band

Citations 

https://www.theweek.co.uk/coronavirus/106538/coronavirus-will-council-tax-be-abolishped
https://www.express.co.uk/life-style/property/1385398/is-council-tax-being-abolishped-EVG

http://taxpayersagainstpoverty.org.uk/news/abolish-the-outdated-council-tax-and-replace-it-with-a-fairer-property-tax

https://www.theguardian.com/politics/2021/mar/14/reform-urged-for-outdated-council-tax-that-hits-poor-hardest
https://www.trustforlondon.org.uk/publications/poor-tax-reforming-council-tax-london/
https://www.ftadviser.com/mortgages/2020/10/01/mp-urges-govt-to-abolish-council-tax-and-stamp-duty/
https://petition.parliament.uk/petitions/567904
https://fairershare.org.uk/faq/
https://www.theweek.co.uk/coronavirus/106538/coronavirus-will-council-tax-be-abolishped
https://petition.parliament.uk/archived/petitions/245615

John has 22 years of experience in financial services. This spans across financial research, financial services (As a qualified mortgage broker and underwriter), financial trading and sales at global investment banks. While working as a publishing research analyst, he covered European bank credit and advised institutional clients on investment strategies at both JP Morgan and Societe Generale. John has passed all three levels of the CFA (Chartered Financial Analyst) programme.

John has 22 years of experience in financial services. This spans across financial research, financial services (As a qualified mortgage broker and underwriter), financial trading and sales at global investment banks. While working as a publishing research analyst, he covered European bank credit and advised institutional clients on investment strategies at both JP Morgan and Societe Generale. John has passed all three levels of the CFA (Chartered Financial Analyst) programme.