Sir Michael Lyons' long-awaited review of local government finance is today expected to recommend Sthe introduction of two extra council tax bands. This has prompted the shadow Local Government Secretary, Caroline Spelman, to warn: "The revaluation is now under way by stealth."
If so, good. A revaluation of the existing banding system is long overdue. It is indefensible that rates have been pegged to 1991 property values for so long. The most expensive homes at present pay three times as much as the cheapest. The differential should be greater.
The cowardice of ministers is to blame for allowing this reform to be delayed so long. Overhauling the domestic rates system led to the poll tax revolt. No politician has wanted to touch local government finance reform since. Though Sir Michael is unlikely to suggest it today, revaluations should be made compulsory at fixed and regular intervals. Yet what the Tories are attempting to tap into is not just public resentment at banding rates, but the tax's very existence. Similarly, the Liberal Democrats have proposed a local income tax to replace it. The case for a local levy based on property values is a sound one. Since Britons choose to put so much of their wealth in housing, this is the most effective way to tap it. Yes, it is unfair on old people on modest pensions living in large homes. But the solution here is a rebate system, not a local income tax. …