MSN Money consumer champion: Council tax

Council tax - time to head north, oh and block up your windows

Sun, 20 Apr 2008 21:32:20 GMT

At last I have found a way for us all to enjoy cheaper council tax bills..... move to Scotland. Although there are lots of great reasons to move there (beautiful countryside, stunning cities, lovely people and fabulous Talisker) Scottish homeowners also pay around half as much in council tax as their English neighbours.

English families have seen their council tax bills rise more than £4,000 in the last ten years, as opposed to £2,000 north of the border. In Wales, average bills have increased by a total of £3,989.

If you live in the south of England then you will be hit hardest - bills in Devon have risen by £5,000 in the last decade, compared to £1,500 in Liverpool.

The figures have been calculated by the Conservatives. David Cameron has pledged to keep council tax rises down if he is elected: "As part of our commitment to decentralise and deregulate government, we'll relieve councils of the unfunded burdens, regulations, inspection and red tape that have forced up council tax. And we will give local residents a new power to stop high council tax rises, by requiring any excessive rise by a council to be backed by a local referendum."

New - and almost certainly around 4% higher - council tax bills are dropping through letterboxes. Meanwhile.....

Just when it seemed that the government had changed its mind on revaluation, I read in today's Sunday Telegraph that plans to overhaul the council tax system have not been cancelled but only postponed.

It seems that although the government announced it had dropped its controversial proposals to revalue every home in England, a local government minister called Phil Woolas told inspectors responsible for compiling a database of homes, "this is a postponement, not a cancellation".

The paper reports that Woolas praised as great work the Welsh council tax revaluation, which had gone ahead by then and which saw four times as many homes move up a band as moved down.

The database being compiled by inspectors will eventually cover all 23 million homes in England. Families living in homes seen as having desirable features, such as scenic views, face significant increases. Precise details of whether the view is of the sea, hills, mountains, lakes, fields or golf courses have been recorded. Different codes are provided for a "partial view'' and a "full view''. There are also codes for different sized balconies, as well as the number of parking spaces.

Why don't they go the whole hog and just return to the 17th century 'window tax'? Designed to impose tax relative to the prosperity of the taxpayer because it was based on the number of windows, this was nothing to do with local services (which were non-existent at that time) but was an early form of income tax.

Bringing everything from parking to views into the equation takes this to a whole new level of nonsense. Does this mean that someone living at the top of a high rise flat with a balcony and an amazing view will be charged more? Will someone who overlooks a golf course pay more Why? Can anyone tell me how any of these things create higher demand on local services?

Have you taken council tax into account when you have moved house? Please comment below......

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Council tax - do you pay more than the Prime Minister?

Wed, 26 Mar 2008 13:08:32 GMT

Call it 'regionalism', call it political spin, it does seem that there is a pronounced difference between the council tax paid to local authorities in the north and south of the country, with one notable exception who I shall come onto shortly....

In the most tightly squeezed cities and districts - which also happen to be mainly Conservative controlled areas - the tax burden has gone up by more than 150% in a decade. But the most favoured cities have seen the tax they pay go up by only 50% since Labour came to power in 1997, according to parliamentary questions.

Lowest increases in council tax receipts have come in Liverpool, where the take went up just 49% between 1997 and 2007. Redcar in the North East, St Helens on Merseyside, and Tameside in Manchester also received low amounts of extra tax from their residents. Meanwhile, in the City of London, the tax rose by 206%. Outside London there were increases above 150% in parts of Cambridgeshire and Devon. A string of councils saw their collection level go up by more than 140%.

Consultancy firms Local Government Futures and Oxford Economics have carried out research which shows that each person in the South East pays the Treasury nearly £2,000 more than they receive back in public spending on services such as schools, hospitals and infrastructure projects. Under the new system of judging what Treasury grants should be paid to local authorities, councils in areas judged poor and needy have been getting much higher amounts, all thanks to everyone's favourite, former Deputy Prime Minister John Prescott.

The fact remains that council tax has doubled under Labour, even when inflation is taken into account. The average payment was £564 when Gordon Brown took over as Chancellor in 1997. Have your local services become twice as good in that time?

If that has not got you sufficiently hot under the collar then stand by for the imminent announcement of the new council tax increases, expected to hit the 5.1% mark - nearly twice the rate of inflation. In England next year, the average family will pay £1,373 - £52 higher than the band D rate in 2007/08. Find out what your new council tax bill will be.

And here's the best bit... whether you live north or south, the chances are that you pay more council tax than the prime minister.

That's certainly true if you live in Haringey, Richmond, Newcastle, Blackpool… - in fact, it's true if you live in any of 175 different council areas up and down the country.

And even if you pay less than Mr Blair did as Prime Minister - his annual bill was £1318 - you'll probably still find you pay a higher proportion of your income than he did. Living in 11 Downing Street and earning £183,932 a year (not to mention his wife's income, for her book and her "charitable" speeches), Blair paid just 0.7 % of his income in council tax.

But a pensioner living in Brent, in a band D flat, on an average pension of £13,000 a year pays £1,299.46 a year - that's only 54p shy of being 10% of his income. A pensioner in Brent pays more than 13 times as much of his income in council tax as the Prime Minister does.

Have your say... is council tax fair? Please share your comments by clicking on the link below......

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Do you hate stamp duty more than council tax?

Mon, 10 Mar 2008 07:13:05 GMT

Just when you thought your most hated tax was council tax, news arrives that the average stamp duty bill for first time buyers has almost doubled in the last five years. A report from the Halifax shows that the average bull in 2007 was £1,751 compared to £960 in 2002.

Buying in the south will mean first time buyers pay stamp duty in 99% of local authorities compared to 42% in the north. The average first time buyer paid a 3% rate of stamp duty in 2007 with a bill of £8,675; the highest of any region. Outside the south of England the highest stamp duty bills for the average FTB in 2007 were in Daventry in the East Midlands (£1,853) and Harrogate in Yorkshire (£1,843).

Now Halifax is calling on all political parties to raise all the stamp duty thresholds to account fully for the rise in house prices over the past decade and to commit to raise all the thresholds in line with house price inflation in the future. Although the 1% duty threshold was raised from £60,000 to £120,000 in 2005, this is nowhere near enough.

I wish I could say there was hope but I don't think it will arrive in this week's Budget.

The sad facts are that if the lowest stamp duty threshold had been increased in line with house price inflation since March 1993, it would now stand at £191,000. This would be £66,000 above its current level of £125,000. If the higher stamp duty thresholds were increased in line with house price inflation since July 1997 - when the £250,000 and £500,000 stamp duty thresholds were introduced - they would now stand at £720,000 and £1,440,000 respectively.

Residential stamp duty is estimated to yield the Treasury over £7 billion for 2007, the bulk generated by the higher stamp duty band.

Current stamp duty bands:
Less than £125,000 - zero
£125,000< £250,000 - 1% on entire house price
£250,000< £500,000 - 3% on entire house price
£500,000+ - 4% on entire house price

Work out how much you need to save.

Meanwhile, the latest figures show that the UK housing market is slowing. A monthly survey from the Halifax shows that prices across the UK fell by 0.3% in February, taking the annual rate of inflation down from 4.5% to 4.2%.

Do you hate stamp duty more than council tax? Are you a first time buyer trying to save for your new home and pay stamp duty? Leave your comments below....

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Council tax campaign: have you been ripped off?

Tue, 26 Feb 2008 08:34:28 GMT

It's our most hated tax. Even though it represents a small proportion of our income compared to other taxes, since it was introduced there have been nothing but huge inflation-busting hikes for no apparent gain in the public services.

We have virtually no say in increases which are frequent and large. Our council tax bills are expected to increase by an average of 4% this year alone. They have doubled since 1997.

It is the most unfair and opaque element of our tax system.

Now the government has reportedly failed to tell tens of thousands of householders they are paying too much council tax.

Worse still, ministers have known for at least two years that many homes are in the wrong tax band but have kept quiet, according to the Sunday Telegraph.

Concerns about the situation and the likelihood of 'adverse press coverage' were apparently raised at a Council Tax Revaluation Board meeting in 2005. Too late guys.

A spokesman for the Department of Communities and Local Government said: "Whilst the Valuation Office Agency believe the overwhelming majority of council tax bands are accurate, anyone who has evidence that they are in too high a band can request a review and lower their banding. If successful, they will also qualify for a rebate from their council."

Oh please. So not only do they screw up, take our money and then keep quiet about it for years, they want us to investigate whether or not we have been ripped off and then try to claim our money back.

Last Spring, Sir Michael Lyons published a long-awaited report outlining plans for a major shake-up of the council tax system. He recommended a new top rate council tax band for the country's most expensive properties and a new bottom rate band to cut bills for those in the cheapest homes. The government has not implemented any of his recommendations yet.

Local government officials are also calling for a radical overhaul of the tax. Sir Sandy Bruce-Lockhart, chairman of the Local Government Association which represents the interests of local government in parliament, has warned that at present, tax payers are taking on too much of the burden for funding local authorities and local services. He urged chancellor Gordon Brown to implement comprehensive structural changes to the tax, rather than merely tinker with the banding and warned that current council tax levels were too high, saying "The council tax system is unfair, unsustainable and in desperate need of wholesale reform. Much of the failing of the present system can be attributed to political short-termism, confusion and a failure of will to reform a structure that is decades out of date. If nothing is done, council taxpayers, particularly vulnerable groups such as the elderly, will face ever bigger bills or see services cut.”

At last someone who talks sense.

It is time for the government to simplify council tax and make it more transparent.

A revaluation of UK homes is long overdue: the current valuation system dates from 1991. Unless this is accompanied by a radical overhaul of the current banding system, revaluation would almost certainly see millions of homes pushed into a higher council tax bracket.

Councils must identify homeowners who have been over-charged and provide refunds with interest.

There has to be accountability about how the money is raised and spent.

There has to be more help for those who simply cannot afford to pay.

Increases in council tax should only be made after councils have presented a clear case to an independent body.

Councils should be made to refund or lower the tax when they fail to provide proper services.

I would love to know what you think about this. I will be posting more on council tax in the coming weeks, keeping you informed and looking in more depth at the Lyons proposals. Please leave your comments below...

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