Lyons report: add top, bottom council tax bands to increase fairness

The Lyons report reviewing local government funding has proposed that two new council tax bands be created, one for the most expensive properties and the other for the least expensive. The proposal applies only to properties in England.

Pointing out that many people see the current council tax band structure, based on property value, needs to be seen as more fair, but admitting that “ ‘fairness’ means different things to different people”, the report itself justifies the proposal for new tax bands at the top and bottom of the scale will focus reform on those with the most and least ability to pay.

The report contends that there is a higher correlation between property value and income, and thus ability to pay the council tax, at the top of the scale, and that there is a larger concentration of individuals with the least ability to pay at the bottom of the scale. According to the report, adding bands would reduce council taxes for many of the poorest while the focus of higher bands would be on those individuals with above-average incomes. It anticipates that if extra council tax bands are implemented, about half of English households would change bands, with properties in London and the south the most likely to move up a band.

The new approach to council taxes, seen as a longer term goal, is only one of many proposals for the short and medium terms advocated by the report. Other, more short term proposals include an increased limit on how much savings pensioners can have and still be eligible for the council tax benefit, that the benefit be an automatic rebate for those entitled to it. The report also says that the tax system should be more transparent.

Besides new council tax bands, other longer term goals advocated by the report are reservation of a specific portion of income taxes to local governments, and a granting of power to local councils to levy a “tourist tax”. Such a tourist tax would probably come in the form of a “bed tax”.

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