Council tax burden greater for poorest households than highest earners
The council tax burden for the poorest households in London is six times greater than that for the highest earners as a proportion of their income, according to the Institute for Public Policy Research (IPPR).
On average, the poorest 10 per cent of households in London see 8.1 per cent of their income before housing costs swallowed up by council tax, the think tank said. This is about six times the proportion of
income for the richest 10 per cent of households, at 1.3 per cent. The calculations include those entitled to council tax support and receiving it and those who do not receive it.
The IPPR, which describes itself as a “progressive” think tank, argues that the council tax system takes too little account of ability to pay and is therefore unfair. The research said that a poor take-up of council tax support is partly responsible for the “excessive burden”.
Luke Murphy, IPPR associate director for environment, housing and infrastructure, said: “Council tax is a poor tax. It hits the poorest hardest, it is increasingly not fit for purpose and is in dire need of reform.”
Earlier this week, another think tank, the Resolution Foundation, argued that council tax is outdated, regressive, and, despite being notionally based on the value of homes, functions in many ways like its hugely controversial predecessor – the poll tax, which charged households a flat rate. The Foundation argued that under the council tax system wide bands can cover significantly different property values, meaning that council tax’s link to property values is “weak”.
In February, it was announced that Parliament approved a funding settlement for English local authorities that would see a real terms increase in available resources over the next two years and give them access to more than £200bn from 2015 to 2020 to deliver the services local communities need. The threshold at which councils must hold a referendum before raising council tax has been set in line with inflation at 3 per cent.
Secretary of State for Housing, Communities and Local Government Sajid Javid said in February: “Parliament has today approved a settlement that strikes a balance between relieving growing pressure on local government whilst ensuring that hard-pressed taxpayers do not face excessive bills.”