Elections 2005

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LibDems promises on Council Tax

Amid warnings that council tax payers in Hammersmith and Fulham face a post-election tax bombshell, Lib Dem PPC Alan Bullion and the Liberal Democrats today pledged to scrap Council Tax in favour of a Local Income Tax based on ability to pay.

The pledge comes on the 15th anniversary of the Poll Tax riots and just days after the revaluation date for homes in England and Scotland on which future Council Tax bills will be based (1 April 2005).

Council tax is currently based on property values in April 1991 but the government is updating its valuation figures to take account of changes in property prices since then.

Council tax bills for the next ten years will be based on property prices as of the 1 April 2005. Council Tax bills are likely to rise by over £400 because house prices have risen so fast in the area.

By contrast, Liberal Democrat plans to scrap the unfair Council Tax would see a typical family's bill cut by around £450 a year. This is in contrast to Labour and Conservative plans to re-band homes for Council Tax to take account for house price inflation. In Wales, that has already led to Council Tax bills rising by as much as 22% on top of annual increases.

Alan Bullion said,

"Under Labour and Tory policies, property prices as of 1 April 2005 will be the basis for Council Tax bills for the next 10 years.

“Council Tax is simply unfair, and revaluation is a typical Labour stealth tax. Just because house prices have risen in Hammersmith and Fulham, local people will have to struggle to find hundreds of pounds extra in Council Tax. Council tax hits pensioners and people on low and fixed incomes the hardest and revaluation is going to make it worse.

"Fifteen years ago, the unfairness of the Poll Tax led to rioting in the streets. Recent rises in council tax bills have already brought out the protesters, but with 7 million families facing a 20% or more hike in their bills, the protests are going to get worse.

"Both the other parties try and deny it, but they simply have no solutions to the ticking time-bomb of spiralling Council Tax bills. The biggest post-election tax rises will come from the Labour and Tory-backed plans for Council Tax re-banding.

"The whole Council Tax system is bust, and it is time to scrap it. Liberal Democrat plans to replace it with a fair system based on ability to pay would cut the typical family's bill by around £450 a year."

Anyone whose home has gone up more than the national average since 1991 will be moved into a higher tax band and thus see central government grant cuts.

Hammersmith and Fulham will be hard hit because house prices have gone up 263 per cent, according to the latest research from the Halifax House Price Index. Homes could move up two, three or even more bands.

In Wales, where revaluation has already happened, some families will see their council tax bill treble. That could be repeated in Hammersmith and Fulham.

Local Income Tax
· A fair system, based on ability to pay
· Average family £450 a year better off
· 6 million pensioners pay no local tax at all
· Half of people will pay less, a quarter will pay about the same, and a quarter will pay more (Institute of Fiscal Studies)

April 10, 2005