Scrap Council Tax

There is mounting anger all around the UK about the level to which Council Tax has risen. After 8 successive years of inflation-busting hikes, campaigners are now ready to register their protest via the ballot box at the forthcoming general election. Labour and Conservative politicians have merely paid lip service to the problem and may now face the inevitable consequence of their inaction.

UK Council Tax is levied to pay for local services and is based on the value of your property. It bears NO relationship to your income and since 1995 has more than doubled.

The number of protesters calling for Council Tax to be scrapped has grown dramatically over the past two years. The IsItFair Campaign www.isitfair.co.uk was founded in January 2003 and has supporters across the UK. Its petition has been signed by over 85,000 people.

Most campaigners demand that the existing tax based on property value should be scrapped and replaced by an income related tax. There is neither justice nor logic is basing a tax to pay for local services on the value of property as it bears no relationship to the income from which it has to be paid.

Many people now have to pay far more in Council Tax than in Income Tax. Council Tax alone can take up to 30% of people's income if they have a modest amount of savings, and are thereby disqualified from any entitlement to means-tested Council Tax Benefit.

Many pensioners and low paid workers are disproportionately affected. Council tax is regressive - the less income you have, the higher the percentage of your income you have to pay in Council Tax.

If you want to add your voice to the Campaign To Scrap Council Tax go to www.isitfair.co.uk where you will find a lot of information about their campaign and also details of how you could help.

The issue of Council Tax will be high on the political agenda at the forthcoming general election, and nowhere more so than in Wales.

Council Tax payers in Wales are the guinea pigs for the Government's revaluation and rebanding of properties which takes effect on 1 April 2005. England & Scotland will be on the receiving end of their own revaluations in two years time.

It has been estimated that a third of properties in Wales will be moved up by one or more bands. Only 8% of properties have been placed in a lower band.

The relationship between the old and new Council Tax bands (referred to as the multiplier) remains the same. Council Tax for each band is related to the tax for Band D as follows: Band A is 6 ninths of Band D, Band B is 7 ninths, Band C is 8 ninths, Band E is 11 ninths, Band F is 13 ninths, Band G is 15 ninths and Band H is 18 ninths. From 2005 there is now a new band at the top end of the property ladder (Band I) for properties valued at over £424,000. Band I will be 21 ninths of Band D. Looked at another way, the highest band (I) pays 3.5 times the Council Tax paid by the lowest band (A).

The original consultation documents had predicted that around 25% of households would move up, 50% stay the same and 25% move down, and that there would be no overall increase in Council Tax as a consequence of revaluation and rebanding. The reality is somewhat different - in Wrexham, for example, 53% of properties have moved into higher bands with only 1% reduced and 46% remain in the same band.

The final impact of these revaluations will not be known until Councils formally announce their Council Tax for 2005/06. It is estimated that the bills for properties which remain in the same band will increase by up to 5%, and that's the good news.

And now the bad news. The effect on Council Tax bills for those properties that have moved up one band or more will be dramatic. A third of properties have increased by one or more bands. An increase of just one band equates to a hike of anything between 12% and 22%. Moving from Band C to Band D is equivalent to 12% more, from Band D to Band E is 22%. And it gets worse - moving up two bands means an increase of up to 44%, although it has been announced that there will be transitional relief to restrict any rise to only one band in any year. My interpretation of this is that a property that has been reassessed from Band D to Band F (i.e. up 2 bands) will increase by 22% in April 2005 and then by a further 18% in April 2006. These rebanding increases are in addition to any "normal" increases which cover increased services, inflation, pay awards etc.

It is widely expected that there will be a political backlash, the timing of which would be most unwelcome to the Government in the event of a general election on May 5. Protest groups are gathering momentum and anyone who wishes to protest may wish to join the UK-wide IsItFair Campaign.

The IsItFair Campaign wants the present system based on property value to be scrapped and replaced by an income-related tax for local services. For more information go to www.isitfair.co.uk

In the 2001 general election Labour secured 85% of the parliamentary seats in Wales (34 out of 40) in exchange for just 48.6% of the votes cast.

The other key players got 49.1% of the votes and only 6 seats between them. Plaid Cymru got 4 seats (with 14% of the vote) and LibDem got the other 2 (also 14% of the vote). The Conservatives polled 21% of the votes and didn't get a single seat.

As well as winning 4 seats Plaid Cymru finished 2nd in 12 other constituencies.

Before the next general election many voters in Wales will have been hit particularly hard by their latest Council Tax bill and may be looking for redress at the ballot box. See "Revaluation & Rebanding in Wales - The Bad News."

Both Plaid Cymru and Liberal Democrat parties have firm commitments to scrap Council Tax and replace it with an income related tax. Labour and Conservative parties will retain the system based on property value.

What impact could Council Tax pledges have at the general election?

Although an unprecedented collapse in the Labour vote would be required in order to overhaul some of their massive majorities e.g. Aberavon, Blaenau Gwent, Swansea East, there are some constituencies where Plaid Cymru and LibDems can win.

Plaid Cymru can certainly expect to win Ynys Mon from Labour (majority 800). Could they overturn Labour's majority of 6673 in Llanelli? The LibDems can expect to win Cardiff Central from Labour (majority 659). Beyond that who knows. If the strength of feeling about the continued inflation-busting hikes in Council Tax, coupled with the promise of change to an income related tax by Plaid Cymru and LibDems, turns it into a major election issue then sparks could start to fly on election day.

Will a sufficient number of voters turn their backs on Labour, ignore the Conservative alternative and boost the number of Plaid Cymru and Liberal Democrat seats?

Watch out Labour MP's, the scrap Council Tax protest is coming to a ballot box near you!

Since 1997 the Government has insisted that it will not increase Income Tax, as if this would be tantamount to political suicide. But as we all know it has had no inhibitions whatsoever about presiding over inflation-busting hikes of over 80% in Council Tax which could be conveniently blamed on local authorities.

The Government has manipulated the system of grants to local authorities in a way that has enabled them to place an additional tax burden on Council Tax payers which would otherwise have had to be met from general taxation, i.e. Income Tax.

One of the consequences of using Council Tax as a stealth tax has been to impose a disproportionate burden upon those least able to pay. The Government's remedy for the ills of the present system is to direct ever more people towards means-tested Council Tax Benefit. They are at best just papering over the cracks in a system of taxation that is now unworkable. It has been stated that an estimated 1,800,000 over 60's don't claim the Council Tax Benefit to which they may be entitled, and the number is growing.

The administration of Council Tax Benefit is an expensive and increasing cost to tax payers. We have a growing bureaucracy to administer Council Tax Benefit in each of the 350+ council tax billing authorities. Every single one of these 350+ councils is assessing claims, notifying claimants, etc and pushing around the paperwork necessary to provide relief to those with the lowest income.

The Government seems blind to the obvious solution to this problem. Council Tax Benefit would cease to exist if Council Tax was replaced by an income related tax for local services. A Local Services Tax, related to everyone's income, would take into account the existing personal allowances that are used for Income Tax and thus eliminate the need for any benefit.

Under the present system those who have saved a modest amount for their retirement are now faced with having to dip into their savings to help pay their Council Tax bill. People just over the Council Tax Benefit threshold are worst affected by this regressive tax - the less income you have, the higher the percentage of your income you have to pay in Council Tax.

The boot is now on the other foot - it may now be political suicide on the Government's behalf to ignore the rapidly growing number of protests that the present system of Council Tax must be scrapped and replaced by an income related tax.

The IsItFair Campaign www.isitfair.co.uk is leading the crusade for this grossly unfair tax to be scrapped - if you agree, you should join them.