LOCAL TAX RISES STILL ON THE WAY WARN CONSERVATIVES (21/09/05)

Christopher Wolverson, Leader of the Conservative Group at Somerset County Council, today welcomed the Government’s announcement that it is to postpone the planned council tax revaluation in England, but warned that the plans for local tax rises have merely been delayed not cancelled.

The Government have indicated that the controversial revaluation will be postponed until after a review of local government taxation by former Labour councillor, Sir Michael Lyons. During the general election, Conservatives called for the council tax revaluation to be cancelled outright in light of the experience in Wales, where revaluation has forced council tax bills to go through the roof. There, the joint Liberal Democrat-Labour Administration initiated the detailed work into council tax revaluation in Wales which introduced a higher council tax banding (a new Band ‘I’).

Christopher Wolverson explained “Under this Labour government and the Liberal Democrats at County Hall, council taxes in Somerset have soared by 86% in the last 8 years. The Liberal Democrats may try to claim it is Labour’s fault, but they must accept responsibility – in 1997/98 a Band D Property paid £508 as the County proportion of Council Tax, in 2005/06 it will be £939, an increase of £431.”

“Behind the spin, Labour’s latest announcement is only a postponement – not a cancellation – of the revaluation, and we are still to find out what nasty surprises their review in local taxation will bring.”

“Only Conservatives have provided the effective opposition to these tax hikes – by contrast, Liberal Democrats voted in Parliament to support Government plans for revaluation and higher council tax bands. I fear that Labour’s third-term tax hikes planned for Somerset are still to come, and all they have done is reset the clock on this ticking tax timebomb.”

“Both nationally and at County Hall, Conservatives will continue to fight for value for money for the tax payer”.

Notes to Editors

John Prescott’s department announced on 20 September that the council tax revaluation in England will be postponed until after an inquiry into reform of local taxation by Sir Michael Lyons.

http://www.odpm.gov.uk/pns/displaypn.cgi?pn_id=2005_0193

When the Local Government Act 2003, which introduced the provisions for revaluation in both England and Wales, was debated in Parliament, the Government pledged, ‘revaluation will not lead to increases in the council tax yield’ (Hansard, 7 January 2003, Col. 53). But this year in Wales, where council tax revaluation was two years ahead of England, one in three homes has moved up one or more council tax bands and tax revenues have soared by 10 per cent in the first year alone.

The Government’s first inquiry into the reform of local taxation called for new, higher council tax bands: ‘there is a clear case for reviewing council tax bands and the ratios between them at the time of revaluation’ (ODPM, Balance of Funding Review – Report, July 2004, p.10). It outlined the possibility of a ten-band system of council tax where ‘homes in Bands above D would pay more’ (p.31). Sir Michael Lyons is now conducting a second inquiry.

http://www.local.odpm.gov.uk/finance/balance/report.pdf

The Labour Government is introducing a new form of local taxation in Northern Ireland – which could be a potential testing ground for England. Under the ‘discrete capital values’ system, yearly tax bills will be 0.78 per cent (varied locally) of the value of the home, with no maximum cap. Under this ‘son of rates’, homes worth £200,000 and over will face soaring bills. They concede, ‘some households will be faced with substantial increases in their rate liability’. This system may be introduced in England (Northern Ireland Department of Finance and Personnel, Consultation Report on the Reform of the Domestic Rating System, March 2005).

http://www.nics.gov.uk/ratingpolicy/pdfs/domesticreport.pdf

Liberal Democrat support for higher council taxes

Liberal Democrats have repeatedly supported both revaluation and re-banding.

Liberal Democrat peers voted with Labour to support the council tax revaluation. Conservatives voted against (Lords Hansard, 17 July 2003, Cols. 976-80).

· Liberal Democrat peers voted with Labour to introduce new laws allowing higher council tax bands. Conservatives voted against (Lords Hansard, 10 September 2003, Col. 339).

· Liberal Democrat MPs voted with Labour to ratify the legislation which allows for new bands and the rigged revaluation. Conservatives voted against (Hansard, 10 March 2003, Col. 126).

· It was a Lib-Lab administration in Cardiff which initiated the detailed work into council tax revaluation in Wales, and introduced higher council tax banding (a new Band ‘I’).