Wednesday, April 27, 2005

RICS for fairer council tax banding

RICS Calls For Fairer Council Tax Rebanding
www.bychoice.co.uk

Tax bands must be readjusted in line with house price inflation, says a report from the Royal Institution of Chartered Surveyors...
Council Tax revaluation in England will lead to unduly large increases in council tax bills unless the tax bands are readjusted in line with house price inflation, according to research published by RICS.
Examining the process in Wales, the RICS work shows how re-banding was not carried out in line with Welsh house price inflation - house prices have risen an average 129 per cent in Wales since 1991.
This has resulted in more homes automatically entering higher bands and costing Welsh council tax payers £53 million over and above local council tax rate rises, says the report.
Two Billion Increase This cuts across assurances that the total revenue collected from council tax in Wales would not change because of the revaluation and re-banding. If the same model is adopted in England, average council tax bills (and revenues) will rise when the revaluation kicks-in in 2007. RICS estimates this would mean a £2.04 billion increase in council tax revenue collected.
Welsh council tax revenues are set to rise by around 10 per cent in 2005/6. Of this increase, four per cent is accounted for by bill increases in each band to fund local services (the lowest increase in council tax since its introduction) but six per cent is due to the impact of more houses moving into higher bands.
RICS Economist David Stubbs, said: "It has been publicly stated that council tax revaluation is a revenue neutral exercise. It's not about increasing the overall tax take.
"If the Welsh model is adopted in England we will see a disproportionate number of houses moving up into higher bands in Southern regions where house prices have risen above the national average since 1991.
"Since the last revaluation in 1991 house prices in England have risen by an average 162 per cent. To remain tax neutral any re-banding exercise must take account of this."
The value of houses in England on April 1 st this year will affect how much council tax people pay. The first revaluation of English homes since 1991 is being carried out by the Valuation Office Agency under the 2003 Local Government Act.
Five Yearly RevaluationsRICS believes that five yearly council tax revaluations, timed so as not to conflict with the regular business rate revaluations, would be the most realistic period of time for Council Tax revaluation in England.
More localised banding would remove some of the perceived unfairness of council tax by achieving a more accurate local tax base, says RICS.
The Lyons independent inquiry into local government, which is considering council tax reform, will report by the end of this year.

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