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12

3.1

Concerns with the council tax system

Several features of the council tax system suggest that it is in need of reform. Firstly, the current design

has lost nearly all link to value of the property for which it is collected. In the nearly 25 year time span

between when the estimated values were set and now, property values around England have shifted

drastically. While house prices have risen overall in the period, they have done so at different rates and

to a different extent from region to region.

Figure 4: Average house price in England, by region, indexed so that 1991=100

Source: ONS house price index, Cebr analysis

As shown in

Figure 4 a

bove, the average house price in London, the region which has noted strongest

growth since 1991, has increased fourfold since the time council tax bands were set and properties

valued.

Secondly, with just eight bands currently in place, the council tax system is not particularly progressive.

At present, all properties are placed within one of the eight existing bands ranging from A to H. Band A is

the lowest and encompasses properties valued at up to £40,000. On the opposite end of the spectrum,

band H applies to those that occupy properties worth over £320,000, with no more detailed breakdown

available above that value.

50

100

150

200

250

300

350

400

450

500

1991

1992

1993

1994

1995

1996

1997

1998

1999

2000

2001

2002

2003

2004

2005

2006

2007

2008

2009

2010

2011

2012

2013

North East

North West

Yorkshire & The Humber

East Midlands

West Midlands

East

London

South East

South West

© Centre for Economics and Business Research - Report Commissioned by Howard Cox for the FairHomeTax.UK Campaign