The Welsh Government has launched a consultation today
[Tuesday 14 November] seeking views on possible
approaches to redesigning the council tax system to make it
fairer.
Council tax helps to fund the everyday essential services
provided by local councils, which we all rely on – from schools
to local libraries, social care to street cleaning.
A key goal in making the system fairer is that the changes do not
seek to increase the overall amount of council tax raised, and
any redesign should raise the same amount of council tax across
Wales as the current system would.
The current system is twenty years out of date, and it is unfair,
with people living in homes in the lowest council tax bands
paying a relatively higher amount of council tax in relation to
the value of their homes, than people who live in higher value
homes.
The consultation includes different potential approaches designed
to make the tax fairer, including adding new council tax bands,
changing the tax-rates charged for each band, and reviewing
discounts and reductions.
The consultation also asks about the pace of change people would
like to see. The earliest date for any changes coming into effect
is 1 April 2025. However, changes could be deferred until the
next Senedd term, or introduced in stages.
In parallel with this work, the Valuation Office Agency, is
preparing to carry out a proposed revaluation of all 1.5 million
homes in Wales to ensure valuations are up-to-date and in line
with current property values.
Under Welsh Government plans, revaluations would happen every
five years to ensure people are paying the right amount of
council tax in relation to the value of their property. This also
provides an opportunity every five years to keep looking at the
tax bands and tax-rates, so we can keep making it fairer.
While property prices have generally increased, this does not
mean that council tax bills will automatically rise. Many
people’s bills would stay the same after reforms and some would
fall.
The Welsh Government’s three proposed approaches are:
- Minimal reform – a revaluation of properties to check they
are up-to-date but keeping the current 9 bands and tax-rates.
This would bring the current system up-to-date and result in a
small move in the direction of fairness.
- Modest reform – a revaluation plus further reforms to the
tax-rates charged for each band, to spread council tax more
fairly. This means bills for households in lower band properties
would fall, and bills for those in the highest band properties
would rise. This would address both the outdatedness of the
current system and also its unfair, regressive nature.
- Expanded reform – a revaluation plus further reforms
including additional tax bands and changes to the tax-rates. This
approach would see the number of bands increase from 9 to 12,
adding 1 band at the bottom for the lowest value properties in
Wales, and 2 more bands at the top, for the most expensive
properties valued at over £1.2 million. This would be a decisive
move in the direction of fairness.
The Institute for Fiscal Studies has released an independent
report today, providing illustrative examples for how the three
approaches could look in different parts of Wales and for
different types of households.
Nearly half of households in Wales currently receive a discount
or reduction on their council tax bill, through the numerous
discounts and exemptions, and our national Council Tax Reduction
Scheme. This will not change because of this work.
Minister for Finance and Local Government, , said:
“We are asking people to help us shape the future of council tax
in Wales. Achieving a fairer council tax will be one of the
single most beneficial actions this government can take towards
making Wales a more equal nation. The benefits will be felt in
the pockets of many households.”
“This is not about raising more money from taxes and changes are
not going to happen overnight. We see this very much as being a
gradual process and that is why we are also asking for views on
the pace of change.”
This work is being carried out in collaboration with Plaid Cymru,
as a part of the Co-operation Agreement commitment between the
Welsh Government and Plaid Cymru.
Plaid Cymru Designated Member said:
“It is widely recognised that council tax is outdated and long
overdue for reform. This consultation is asking for the views of
people across Wales on what a council tax could look like in the
future and how we can make it fairer. While change is needed, it
will take time meaning bills will not change immediately. We are
consulting not only on what needs to change, but when the changes
could come into place.”
Notes to editors
- The consultation closes on Tuesday, 6 February 2024.
- The consultation is available here (after 10am): http://www.gov.wales/council-tax-reform
- Yn Gymraeg: www.llyw.cymru/diwygiotrethgyngor
- The IFS’s report is available on their website after 10am
- The IFS is Britain’s leading independent economic research
institute. IFS publications are free to view on the IFS website
(www.ifs.org.uk),
where you can also find more information about their research,
governance and funding. Please follow @TheIFS on Twitter
for updates.
