England’s council tax system criticised in new report

The Resolution Foundation has published a report on the beneficial effects of Scotand’s new council tax reforms which are set to make England’s council tax system the ‘most regressive’ in the UK.

The report revealed the Scottish government’s proposed council tax reforms will hit the richest tenth of households hardest and described the current system in Scotland as ‘out-dated’. It outlined the tax ‘disproportionately taxes those in lower value homes’. The current band structure creates a tax rate of over 1.5 per cent of a property’s value in the cheapest homes, compared to less than 0.1 per cent in the most expensive homes.

The Scottish National Party’s (SNP) proposed reforms will act to increase council tax for those in the top bands, while exempting lower income households from the increase, through the Council Tax Reduction system and boosting per-child Council Tax Reduction allowance.

It is predicted the government would generate around £100m, half of which will come from the richest fifth of households. The report has also calculated that the average loss across the bottom half of the income distribution would be £11.

Adam Corlett, economic analyst at the Resolution Foundation, said: “Britain’s council tax system is out-dated, unfair and in urgent need of reform. While the issue has largely been ducked in England, Scotland now looks set to embark on significant improvements.”

He added: “The upcoming Scottish election looks set to be a key battleground for progressive taxation of properties – as well as incomes. It’s a debate that will likely benefit lower income households in the round, whichever party prevails, and one which parties across the UK should look to.”

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