The council tax system in the UK has long been a subject of controversy, described by many as outdated and regressive. Despite being one of the few levies on wealth, it remains stuck in a time warp, with properties not revalued since 1991. This lack of revaluation has led to significant disparities, especially affecting lower-income households. Strikingly, the value of the most expensive properties in London has surged sevenfold since 1991, compared to less than fourfold in the north-east, highlighting a stark regional inequality.
In Hartlepool, a Band H property commands a council tax of £4,755 annually. Residents feel the pinch acutely, paying substantial sums yet receiving diminishing returns in services. Jonathan Brash, a notable voice on this issue, poignantly remarked, "They're paying a fortune and getting less for it. It's not OK." The council tax is also criticized for disproportionately impacting those in smaller homes compared to individuals residing in lavish mansions.
The funds collected from council tax are primarily allocated to essential services, constituting two-thirds of the budget according to the Local Government Association. However, these are services that most citizens neither require nor visibly benefit from. Brash captures this sentiment, noting, "What you're doing is, you're breaking the bond between the taxpayer and the services that are being delivered with that money." He elaborates on the tangible effects this has on communities: "It's community fabric that breaks down. It's the street that doesn't get cleaned, the bin that doesn't get collected as often, the library that doesn't get looked after as well."
The council tax system's inherent unfairness stems from its regressive nature. Individuals in lower-valued properties often pay relatively more than those in high-value estates. In London, homes have seen their values skyrocket multiple times over since 1991, yet similar increases are not reflected in council tax assessments. Such inequities have fueled public discontent and calls for reform. Jonathan Brash captures this injustice succinctly: "It's a fairness thing. Just the idea that somebody sitting in a two-bedroom house in Hartlepool is paying more council tax than somebody who's living in a mansion – it's just offensive."
Despite widespread acknowledgment of these issues, council tax remains a political "third rail" in British politics. Mainstream parties are reluctant to address it for fear of electoral consequences. The reluctance extends beyond England; in Wales, no revaluation has occurred since 2003. In Scotland, proposed reforms were eventually shelved by the government.
The Centre for Cities thinktank suggests a solution: allowing councils to set council tax rates more progressively could result in savings for two-thirds of households, potentially reducing their burden by £500 annually. This proposal underscores the pressing need for a more equitable system that better reflects contemporary property values and income distribution.
David Phillips highlights the dated nature of the current council tax system with a cultural reference:
"when Mikhail Gorbachev was president of the Soviet Union and Chesney Hawkes topped the charts with The One and Only" – David Phillips
This humorous yet poignant comparison underscores how long overdue reform is.