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Council tax report urges reform Council tax report urges reform
(20 minutes later)
People who live in the most valuable houses in England should pay more council tax, a review of local government funding has recommended.People who live in the most valuable houses in England should pay more council tax, a review of local government funding has recommended.
Sir Michael Lyons' report calls for a new top rate council tax band, along with a new bottom rate to cut bills for those in the cheapest properties.Sir Michael Lyons' report calls for a new top rate council tax band, along with a new bottom rate to cut bills for those in the cheapest properties.
He said the reform would not mean an overall rise in the amount of tax paid. The savings limit for pensioners should be higher and council tax benefit be paid as an automatic rebate, it adds.
Sir Michael said: "Council tax is not 'broken' but is seen as unfair and has been put under too much pressure." Sir Michael said: "Council tax is not 'broken' but is seen as unfair."
'Support and understanding''Support and understanding'
His review suggests that in the future ministers should consider ear-marking a fixed proportion of income tax to local authorities. In the short term, he says the burden on pensioners should be eased by raising their savings limit to £50,000.
The review also calls for council tax benefit to be paid automatically as a rebate, so that £1.8bn in unclaimed benefit reaches the poorest.
In the future ministers should consider ear-marking a fixed proportion of income tax to local authorities, Sir Michael said.
KEY SHORT-TERM RECCOMENDATIONS Automatic rebate for those entitled to council tax benefitRaise the savings limit for pensioners to £50,000New powers for councils to charge for domestic waste levy a supplementary business rate in consultation with businessEnd capping of local authoritiesImprove transparency of the tax systemProvide incentives for local authorities to promote economic growthKEY SHORT-TERM RECCOMENDATIONS Automatic rebate for those entitled to council tax benefitRaise the savings limit for pensioners to £50,000New powers for councils to charge for domestic waste levy a supplementary business rate in consultation with businessEnd capping of local authoritiesImprove transparency of the tax systemProvide incentives for local authorities to promote economic growth
He said they should also consider giving councils the power to levy a local tourist tax.He said they should also consider giving councils the power to levy a local tourist tax.
Sir Michael added that future governments could consider introducing local income tax or "re-localisation" of the business rate.Sir Michael added that future governments could consider introducing local income tax or "re-localisation" of the business rate.
However, he said these were issues for the longer term and such reforms would need "greater public support and understanding than currently exists".However, he said these were issues for the longer term and such reforms would need "greater public support and understanding than currently exists".
Earlier, he told BBC Breakfast that council tax is "workable", but said bills for the cheapest homes should be cut and those for properties worth over £2.5m raised.Earlier, he told BBC Breakfast that council tax is "workable", but said bills for the cheapest homes should be cut and those for properties worth over £2.5m raised.
Sir Michael said: "The issues for this Government to concentrate on are that council tax is a workable tax if you can take the pressure off it and if you can deal with issues of perceived fairness, and that's particularly the needs of the elderly.
"There are some changes to be made immediately, particularly to deal with the needs of pensioners, who I think are bearing too heavy a burden under council tax."
KEY MEDIUM-TERM RECCOMENDATIONS Revalue council taxNew bands with higher bills for those in more expensive properties and lower bills for those in the cheapestConsider reserving a fixed proportion of income tax for local governmentGive councils the power to levy a "tourist tax"Improve incentives within the grant systemKEY MEDIUM-TERM RECCOMENDATIONS Revalue council taxNew bands with higher bills for those in more expensive properties and lower bills for those in the cheapestConsider reserving a fixed proportion of income tax for local governmentGive councils the power to levy a "tourist tax"Improve incentives within the grant system
Sir Michael, professor of public policy at the University of Birmingham, said earlier that pensioners could be assisted by replacing council tax benefit with an automatic rebate.
Public sympathy for the idea of a local income tax may not be sustained once voters realise how much it will cost them, he added.Public sympathy for the idea of a local income tax may not be sustained once voters realise how much it will cost them, he added.
"There is popular support for a move away from council tax," Sir Michael told the BBC's Today programme. Blair Gibbs from the Taxpayers' Alliance said the review was a "missed opportunity".
"The problem is that most people think they won't pay any more." He added: "It gives the green light to profligate councils to spend and waste even more of our money by raising council taxes and introducing a raft of new ones.
HAVE YOUR SAY No council tax system can ever be fair to everyone Adam, Sutton Coldfield Send us your commentsHAVE YOUR SAY No council tax system can ever be fair to everyone Adam, Sutton Coldfield Send us your comments
VisitBritain said it opposed the tourist tax proposal.
A spokesman said: "Accumulative taxes on tourism already make Britain the second-highest taxed country in the world for tourism."
At the weekend Communities Secretary Ruth Kelly ruled out any revaluation of council tax bands before the next general election.At the weekend Communities Secretary Ruth Kelly ruled out any revaluation of council tax bands before the next general election.
She said that the idea of bringing in a new top band for homes worth over £1m was a "non-runner" during the current Parliament.
Sir Michael said earlier that the attitude of the government made revaluation "an issue for the future".
"It's a question of some paying more and some paying less," he added.
Chancellor Gordon Brown and Deputy Prime Minister John Prescott commissioned the report in 2004.Chancellor Gordon Brown and Deputy Prime Minister John Prescott commissioned the report in 2004.