The Welsh Government should press ahead with revaluing and
reforming council tax at the earliest opportunity – and the
governments in Westminster and Holyrood should follow suit. That
is the message from a new reportand comment by researchers from
the Institute for Fiscal Studies (IFS), published today, which
analyses the possible approaches to reform set out in the Welsh
Government’s new consultation on ‘A fairer
council tax’ – published today.
In its consultation, the Welsh Government proposes to revalue
properties for council tax purposes. It also considers some
example ways it might make the tax rates applied to properties in
different bands less regressive than is currently the case, and
perhaps add more bands at the top and bottom to distinguish more
finely between properties with different values. All these
changes would be improvements.
In broad terms, revaluation would benefit areas and households
whose property values have gone up by less than average since
properties were last valued in 2003, and hurt those for whom they
have gone up by more than average. If council tax were also made
less regressive, bills would also fall for areas and households
with low property values and rise for those with high property
values. Such a reform would see average bills fall for low- and
middle-income households, younger households, one-adult
households, renters, and those receiving disability benefits, and
in the more deprived parts of Wales. Average bills would, in
contrast, increase for other types of households, in more
affluent parts of Wales and the most rural areas of Wales.
Impacts on individual households will vary, though, according to
their property and circumstances, as well as the precise details
of any reform implemented by the Welsh Government – which is
still to be determined.
David Phillips, an Associate Director at the IFS and an
author of the comment and report, said:
“The proposed revaluation of council tax in Wales is very
welcome, meaning that council tax bills would no longer be based
on property values more than two decades out of date. Plans to
legislate for regular revaluations in future should help to
ensure Wales does not find itself in this unfortunate position
again. It is just a pity that the consultation document opens up
the prospect of delay from the previously stated intention to
implement revaluation and reform in 2025.
Nevertheless, the prospect of revaluation and reform in Wales
stands in contrast to England and Scotland, which have failed to
revalue properties since council tax was introduced in 1993.
Westminster and Holyrood should take note of Wales and follow
suit.”
Sam Ray-Chaudhuri, a Research Economist at the IFS and
another author, said:
“All three of the approaches included in the Welsh Government’s
consultation include a revaluation, while two would also make the
tax rates less regressive. Any of these would be a marked
improvement on the current system, although making the tax rates
less regressive would go further to fulfilling the Welsh
Government’s stated aim of a more progressive tax system.
Ideally reform would go further still. The Welsh Government
should, for example, also improve the design of the one-adult
discount, whose current structure encourages one-adult households
to live in bigger properties, and multi-adult households to live
in smaller properties, than they otherwise would – contributing
to both under-occupation and overcrowding. Making the discount a
flat amount (rather than being linked to a property’s council tax
band) would remove this distortion and contribute further to
increasing the progressivity of the council tax system.”
READ THE IFS COMMENT AND REPORT.
ENDS
Notes to Editor
- The comment ‘Revaluation and reform of Welsh council tax
should proceed without delay’ by Stuart Adam, David Phillips
and Sam Ray-Chaudhuri is available on the IFS website at:
https://ifs.org.uk/articles/revaluation-and-reform-welsh-council-tax-should-proceed-without-delay
- The full report ‘Assessing the Welsh Government’s
consultation on reforms to council tax’ by Stuart Adam,
David Phillips and Sam Ray-Chaudhuri is available on the IFS
website at: https://ifs.org.uk/publications/assessing-welsh-governments-consultation-reforms-council-tax.
A spreadsheet appendix providing detailed estimates of the
impacts across different parts of Wales and different types of
households is also available for download.
