Headlines: January 28th, 2008

A tax on high earners could cut council tax bills by 200 pounds for each household according to a report from the New Local Government Network. It argues that levying a small supplement in income tax on people earning more than 200 thousand pounds a year would take the pressure off council tax bills and allow reforms to take place without penalising householders.

The think-tank is calling for a new 10 per cent income tax band for those high earners with the revenue being used to fund a general reduction in council tax. Its report says this ‘local property levy’ would save an average of 205 pounds on an average band D council tax bill.

Reducing council tax bills in this way, it goes on to suggest, would make it possible for difficult reforms to take place, including the abolition of the tax as it is and renaming the charge as a ‘Local Property Levy’. Alongside this the revaluation of properties in England could take place and from then on property prices could be tracked each year so the Levy valuation remained fair and consistent. It also wants an end to the Government’s right to cap local authorities and for councils to get newf iscal autonomy with the ability to introduce local variations to national banding rules.

The NLGN argues that Council Tax is Britain’s most unpopular tax, with 67 per cent of respondents in a recent YouGov survey saying it was unfair. The report’s author, Dick Sorabji says, “Council tax is broken. The immediate crisis in council tax is simple, it is too big. The first step on the route out of the trap is to offset a national cut in council tax with less unpopular increases in other taxes”