‘Outdated’ and ‘regressive’ council tax set for reform under Welsh Government-Plaid Cymru plan

The Welsh Government and Plaid Cymru have set forth plans to reform the “outdated” and “regressive” council tax system.

Proposals include a revaluation of all 1.5 million properties in Wales to ensure valuations are up-to-date and people are paying the appropriate amount, they said.

The Welsh Government said that under the plans, the onus for paying the tax will be shifted off the shoulder of less affluent people and onto those who can afford it.

The reforms, which are part of the Co-operation Agreement with Plaid Cymru, would “ensure a more progressive approach to supporting the local services which council tax helps pay for, including schools, social care provision, policing, fire and rescue services, and road infrastructure,” the Welsh Government said.

An initial consultation on the reforms has opened today and is open for 12 weeks.

Rebecca Evans, Minister for Finance and Local Government, added: “Council tax pays for essential local services we all rely on, but the way it is currently charged has a disproportionate impact on less affluent people.

“These reforms will bring the council tax system up to date while making it fairer, meaning council tax is less of a worry for people with tighter household budgets. The reforms are not intended to raise more revenue from council taxpayers overall as, while some people could pay more, many others would pay less, and we will consider the need for transitional arrangements for any changes.

“We recognise this is a significant exercise and that we have a great deal of work to do before any changes can be introduced. These proposals are at an early stage so I encourage people to have their say through the consultation.”

Council tax bands

Council tax pays for around a fifth of spending by councils, but the current system is nearly twenty years out of date. Homes in the highest tax band can be worth more than nine times the value of homes in the bottom band, yet only pay three and a half times more council tax.

The Welsh Government said that the plan launched today is for a future system which rebalances the tax burden on households, funds services that benefit everyone, and has regular updates to keep the tax fair.

The last revaluation of properties in Wales was in 2003. While the value of homes has increased significantly since then, the system would remain a relative one, so increasing property values would not necessarily lead to increasing council tax.

Plaid Cymru Designated Member Cefin Campbell said: “Council tax is one of the most outdated and regressive forms of taxation which places a heavier burden on some of our lower income households, and disproportionately impacts poorer areas of Wales. It is time to make it fairer and the proposals we have jointly agreed offer a chance to do just that.

“These proposals are the first step in changing the council tax system which could make a real difference, by making the system fairer and more progressive while still supporting the services delivered by local authorities.”

‘Hurt’

Responding to plans outlined by Labour and Plaid Cymru to launch a revaluation of council tax across Wales, the Welsh Liberal Democrats have stated the proposals don’t go far enough and skirt around reform rather than implementing the systemic change needed.

Commenting Welsh Liberal Democrat Leader Jane Dodds MS said: “We currently have a once-in-a-lifetime chance to make real changes to council tax in Wales.

“Despite both Plaid Cymru and Labour previously pledging to work towards a land value tax to replace the outdated council tax system, these proposals don’t seem to bring us any closer to the systemic changes needed.

“Reforms must go beyond a simple revaluation and the changing of tax bands.

“I am also seriously concerned that should re-evaluation go-ahead during a period of extremely inflated property prices such as the one we are experiencing now, these proposals could hurt the very people they are designed to help.”

‘Careful’

WLGA Leader, Cllr Andrew Morgan said that council tax was an important source of funding for all our local services from schools and care services, through to waste collection and transport.

“While it accounts for around 20% of everything councils spend, it is nevertheless significant, and it is vital that this local tax is kept up to date and fair,” he said.

“A tax that is based on property values that are nearly 20 years out of date cannot be fair and that must be addressed. The system must be made fair across the range of household incomes.

“Any proposal will have to be carefully considered given the quirks of the local housing market, and we will work with ministers to ensure that we can deliver this important reform.”