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Thursday, April 21, 2005

Council Tax hikes were our fault says Labour Minister

English Local Government Minister, Nick Raynsford, cannot be very popular with the Wales Labour Party. That is because his intervention on Council Tax yesterday has undermined their entire General Election campaign.

Until now the Labour position on rebanding in Wales was quite straightforward. They argued that it was necessary, that it was fiscally neutral and that responsibility for the subsequent Council tax bills rested entirely with local Government. Admittedly, they floundered a bit in places like Cardiff where two thirds of householders face increased payments of £100 plus, despite the fact that the local authority has cut the Council Tax, but they tended to gloss over that and hope that nobody would notice. Thanks to Mr. Raynsford this is no longer possible.

Mr Raynsford told the Guardian that the government is still committed to a fairer system which does not increase the cash yield from council tax, the remit of the Lyons inquiry. Not introducing a higher band, which would almost certainly push up receipts, is the "logical conclusion" of his promise that the English revaluation will be "revenue neutral", he insists.

His emphasis in these remarks was on the fact that Council Tax rebanding should be revenue neutral, which it has not been in Wales, and he ruled out a new higher band because he believes that this has pushed up Welsh Council Tax bills. In other words he explicitly blamed the Labour Assembly Government's rebanding exercise for increasing Council Tax bills by an average of 9% here.

What is worse from the point of view of English taxpayers is how little he seems to understand what actually happened in Wales. It is, of course, impossible for a rebanding exercise to avoid having winners and losers. The key to acceptance lies in how many losers and by how much they will lose. That is where the Welsh Assembly Government have got their exercise so wrong.

Secondly, Mr. Raynsford seems to believe that all the fuss in Wales is over the fact that an additional band has been created for the most expensive properties. Er...no! The biggest losers in this rebanding exercise have been taxpayers with modest incomes living in band A, B and C houses. Large numbers of these properties in Cardiff and elsewhere have been moved up one band or more because of the buoyant property market.

As I have argued before, if you have a property tax then frequent revaluation must be a feature of it. That is why, when we were in Government, we argued that the Assembly should be pushing for a local income tax instead. Mr. Raynsford may be trying to spin that revaluation as somehow harmless but it is inevitable that no matter how much they water it down there will be substantial numbers of people facing higher bills in England regardless of their income. It is that essential unfairness that is the main reason why Council Tax should be replaced by a local income tax.

And look at this! It seems that the massed Labour ranks are breaking formation even more on this very issue. If, as Junior transport minister Charlotte Atkins has said, Labour is planning to scrap Council tax "because it was regressive", then what is all the fuss about? Do they have a hidden agenda after all to accept Liberal Democrats plans for a local income tax once the election is over? She has apologised and retracted, so maybe not. But sometimes these gaffs are more revealing about hidden intentions than they are about political disunity.
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