Fairer Council Tax: consultation

The Case for Further Change

Although the changes implemented from 2017 resulted in increases for properties in Bands E, F, G and H, Council Tax remains regressive, with the average tax on a Band H property being around three times the Council Tax for a Band A property, despite the fact that Band H properties are estimated to be worth on average fifteen times the value of a Band A property.

The chart below plots Council Tax liability as a proportion of household income (Net Equivalised Income^[5]). It shows both the continuing regressive nature of Council Tax (the blue line), and the significant impact of the CTR scheme (the green line) in addressing this.

Source: The Commission on Local Tax Reform (Volume 2: Technical Annex). Note equivalisation is a standard methodology that adjusts household income to account for different demands on resources, by considering the household size and composition. Each data point relates to Council Tax liability (before and after the Council Tax Reduction scheme is taken into account) for the median household in each income decile group, expressed as a percentage of equivalised income.

This consultation therefore asks for views on further changes to the multipliers that would further address the inherent unfairness of the present Council Tax rates.