May 7th, 2006


Council Tax Suggestion

The current situation in the UK is that you pay money to the local council based on the worth of your property - with the worth being broken down into bands to simplify things somewhat.

The value of each property is based on valuations going back to 1991 and the government has recently postponed reevaluating the amount the places are worth, scared of offending people whose property has gone up significantly in value. The amount of council tax would remain the same overall, but because some people would pay more the government is terrified that those people who riot in the streets (or vote for The Other Side, which is clearly much worse).

The main objection seems to be from people who have lived in an area for decades and have watched the prices go up around them. Which may leave many older people with a property they couldn't afford to buy nowadays, and would be forced to move from if they paid significantly higher council tax.

Also, there are many questions about how to re-evaluate the property prices. The market is always in flux, and you can bet that a large proportion of people would complain about the amount they were told their hoem was worth.

The obvious answer to the problem is to move from a silly property tax to income tax - and preferably to just build it into national income tax and redistribute it (councils currently get 3/4 of their income from central government anyway, and there's a totally disproportionate amount of fuss over this remaining 25%).

However, if we _are_ going to stick with a property tax then there's a very simple answer:
Base the value of the property on....the amount people last paid for the property. Then charge them a percentage of that value each year. Remove bands entirely - they'd just distort the market further - and just base it on what the actual lastk nown value of the property.

This means that old people with a building they paid peanuts for will be paying a low amount, whereas property investors or those deliberately moving up in the world will pay higher amounts. Everyone will know in advance how much their council tax is, and there won't be a nasty surprise to look forward to when the council _does_ reevaluate the property.

The only problem I can see is for people whose properties have remained in the family for generations - there would need to be some sort of reevaluation when it's passed on. But I believe this occurs for inheritance tax anyway.

I'm sure I've missed an obvious problem somewhere - anyone?