Nick Clegg and Council Tax: More joy in heaven over one sinner who repenteth
Back in 2004, as the Labour government moved towards deciding how to bring council tax up-to-date (having made a commitment to do so back in 2001), NPI (in its guise as the Centre for Council Tax Reform) wrote Council Tax: the answer? The culmination of a series of in-depth studies for different local government umbrella bodies, the pamphlet distilled our understanding of what was necessary yet possible.
Its key conclusion (advanced against those who would abolish the tax), was that although flawed in some ways, the council tax rested on some sensible principles and was capable of reform. The forthcoming council tax revaluation was the opportunity for that reform which should focus at the two ends of the current system of bands. The logic for this was that measured by the statistical link between the council taxes paid in the middle bands B to F and the incomes of households in those bands, those at the bottom (band A) were typically paying too much while those at the top (bands G and H) were paying too little.
In those days, the Lib Dems were bitterly opposed to the council tax, preferring instead a local income tax. When the Tories came out against any change in the 2005 election, Labour lost its nerve and, after a short interval, cancelled its own legislation that had mandated a revaluation to take effect in 2007. From memory, the undertaker’s part was taken by David Miliband.
Nick Clegg’s reported advocacy of extra council tax bands for properties worth £2m or more is therefore a very welcome step. Whether the detail is exactly right is a matter for another time. The idea that that there should be a single principle on which the tax for all homes is based (as opposed to a special, even arbitrary principle for ‘mansions’) is clearly correct in theory. The question is whether tagging extra bands on the top makes sense from the point of view of the council tax system as it is. Our research from nearly a decade ago shows that it is.