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Call for fairness on Council Tax

March 9, 2021 9:06 AM

Help PointSpeaking after Conservative Councillors failed to back a plea for all party support to urge the government to reform council tax, Liberal Democrat councillor Simon Hicks highlighted that average council tax is now over £2,000 for some parishes in Mid Sussex. "It is vital that local services are properly funded yet council tax is out of date and unfair. It is the 'not quite poor' who suffer the most. Those who have enough income that means they don't qualify for benefits but get hit by above inflation council tax increases which costs them more than income tax."

This is after he proposed an amendment at the budget setting meeting for Mid Sussex District Council on 3rd March asking the leader of the Council to write to the government making the case for change. Simon Hicks also highlighted that Liberal Democrat controlled Burgess Hill Town Council had agreed a 0% increase in its own council tax precept because the administration felt it important not to add extra burdens on local people at this difficult time.

"Whilst Mid Sussex District Council itself only comprises 9% of the total precept, the total cost of council services levied by all authorities is equivalent to over a third of what the average person employed in Mid Sussex pays in income tax. Two low earners in a single household can often end up paying more in council tax than they pay in income tax.

The level of tax is determined by tax bands which are still based on property values from April 1991 - almost 30 years ago. Since then, the relative prices of different properties have changed significantly: the average house price in the South East has risen by over five times.

The most valuable properties in 1991 (Band H) attract just three times as much tax as the least valuable properties (Band A), despite being worth at least eight times as much in 1991 and typically even more now. As Paul Johnson of the IFS succinctly put it: 'it's rather like charging VAT at a lower rate on Bentleys than on Fords'.

Because there is no further increment after Band H, which is the equivalent of £614,000 in today's prices, a person in a £614,000 house pays the same as a person in a £5 million house. And for a Band A home, less than £84,000 in today's money, one person is still paying 2/3 of the basic Band D amount.

This is at a time when are growing disparities between those who have maintained their incomes during lockdown and benefited from being able to work from home, and those less fortunate who have suffered financially or are in the squeezed middle, council tax represents a significant burden that falls unfairly on lower- and middle-income groups. It's no wonder council tax is the most unpopular tax in the country, and it is younger people, those who are just starting out that it hits the hardest.