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1

Introduction

The current council tax system has lost nearly all link to value of the property for which it is collected.

Council tax bands in England were last altered decades ago and properties are placed in value bands

based on their estimated worth in 1991. This also means that occupants of all newly build properties

must have their dwelling’s 1991 value estimated before they can pay council tax. In the nearly 25 year

time span between when estimated values were set and now, property values around England have

shifted drastically, resulting in disproportionately low council tax payments by owners of some prime

properties.

Furthermore, 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 (1991 value). 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.

This report presents an in-depth analysis of the council tax system and how it could be modified to

generate more revenue in a fairer way. With major property taxation reforms in progress e.g. new stamp

duty system, proposed mansion tax, an opportunity exists to also pay council tax some much needed and

over-due attention with the aim of raising additional funds for the NHS.

The structure of this report is as follows:

Section 2

broadly discusses property taxation reforms introduced in the UK in 2014.

Section 3

discusses the current council tax system as well as its limitations. The section also

presents a set of reforms that, if implemented, would increase tax receipts and make the

system fairer.

Section 4

examines how the council tax system could be adjusted to raise an additional £1.2

billion for the NHS.

Section 5

draws conclusions based on the preceding analysis.

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