IFS says ‘unfair’ council tax system needs urgent reform
The current council tax regime is “arbitrary and unfair” and should be overhauled as a part of the government’s levelling up agenda, according to a leading economic think tank.
A new report from the Institute for Fiscal Studies (IFS) has called on the government to update the way council tax is calculated to make it fairer for people outside of London.
The IFS, in particular, called for there to be a re-evaluation of the property values used to calculate council tax.
Currently, the rate of council tax is based on 1991 property values.
The think tank said this made it unfair for areas outside of London as “values in Hackney are over nine-times what they were” in 1991, “compared to just over two-and-a-half-times in County Durham”.
The report also said that the tax regime needed to be “more proportional” to the value of the property after a re-evaluation has taken place.
The IFS said: “The bill for a Band H property is just three times that for a Band A property, despite Band H properties’ being worth at least eight times as much as Band A properties even in 1991.”
Stuart Adam, a senior research economist at the IFS, said an update of council tax would fit well within the government’s levelling up agenda, which aims to create more economic opportunity outside of London.
“At a minimum the government should revalue properties and put in place a cycle of regular and frequent revaluations to stop us getting in this situation again,” he said.
“Reform would create millions of losers as well as winners, which means doing it would probably involve some political pain.
“But it must be done at some stage, or we would still be basing council tax in 2091 on relative property values in 1991 – an absurd state of affairs.”