There’s an assumption buried in this idea:
More than 10m households would benefit from lower council tax bills if the government reformed the “arbitrary and unfair” annual property charge to reflect the growing divide between London and the south-east and the rest of England.
The Institute for Fiscal Studies (IFS) said average bills across most of the Midlands and north would fall by more than 20%, with more modest falls across much of the south-west and parts of east England should ministers introduce a system more aligned with house price growth over the past 30 years.
Council tax bills would fall by 56% in Blackpool, 57% in Stoke-on-Trent and 60% in Kingston upon Hull, the tax and spending watchdog said, ending decades of punishing tax rates in many of Britain’s most deprived areas.
That assumption being:
The IFS said revaluation and reform of council tax could contribute to the government’s “levelling up” agenda. “But this depends crucially on central government funding for different councils being reallocated in line with the updated property valuations and council tax system.
“If this funding were not adjusted, each council would need to raise as much council tax as now if it wanted to maintain spending.”
To explain. Changing the rates system itself – or the valuations it is based upon – won’t make any damn difference at all if we remain with the overall system itself. For each local council is trying to squeeze a certain amount of money out of the local population to pay for local services. Which is, obviously, as it should be. Local taxes for local people.
So, if we change the ratings bands, the property valuations, then to gain the same cash end result, local councils will have to change the multiple of those valuations which is charged as tax. Bills only change in cash terms if we assume that the multiple (or, actually, fraction) stays static while the valuation changes.
The only way the cash bill changes on average over a local council area is if there is redistribution of the domestic rates across local authority boundaries. Which is something the Blair government ramped up and something that the Tories have dampened down. For the obvious reason that the poorer areas tend to vote Labour, the richer Tory. It’s easy enough to read who would support redistribution from richer to poorer given that.
As to what should happen about redistribution. We’ve already got a highly redistributive national tax system and a highly redistributive national benefits system. Which is enough. Local councils should be living off what they can raise locally in order to pay for local services. At which point the revaluation of rates across the country makes no difference at all to local – cash – rates bills. Which is as it should be.
Now watch people like Owen and Polly demanding this revaluation – without mentioning the redistribution inherent in their demands.