Lots of coverage today for the Government's announcement that it is cancelling Labour’s plans for a council tax revaluation in England, saving families up to £320 a year in local tax hikes. An independent review will also for the first time seek to rein in intrusive snooping by council tax inspectors, defending civil liberties.
- Tax hikes on homes cancelled: No council tax revaluation will take in place in England in this Parliament. The Labour Party was actively planning to use a revaluation to increase tax bills on England’s homes, with computer technology to target ‘nice neighbourhoods’, patios, gardens and scenic views. A revaluation would also be expensive to administer, costing up to £180 million.
- Less well-off to benefit most: In Labour’s 2005 council tax revaluation in Wales, four times as many homes moved up one or more bands as down. Labour politicians have admitted that it was used “hugely to increase the total [tax] take”. The less well-off were hit the hardest, with two-thirds of the hikes in homes that were originally in council tax Bands A to C (the lowest three bands).
- Reining in the snooper state: The intrusive ‘Big Brother’ council tax database and snooping activities that Labour had planned for the council tax revaluation will be scaled back. An independent data audit will be undertaken to take the necessary steps to protect privacy and
civil liberties. This is part of the new Government’s agenda of dismantling the ‘database state’, which includes scrapping Identity Cards.
- Stopping state intrusion in your home: The Welsh revaluation by Labour Ministers was followed by a revaluation in Northern Ireland under direct rule. The law was changed to allow tax inspectors to fine households £1,000 to they failed to ‘co-operate’ with tax inspectors, or if they attempted to hinder or obstruct tax officials from entering their home. In England, council tax inspectors have legal powers of entry into your home, on pain of a £500 fine.
Communities Secretary Eric Pickles says:
“We have cancelled Labour’s plans for a council tax revaluation which would have hiked up taxes on people’s homes. The new Government will protect the privacy of law-abiding citizens from intrusive spies-in-the-sky and halt state inspectors from barging into England’s bedrooms and gardens.
“We are standing up for the people who have pride in their home, and calling time on Labour’s state snoopers and surveillance state. Hefty council tax bills are a constant financial worry for many people. Today we are setting their minds at ease, and protecting the interests of the less well-off in particular who were the hardest hit from Labour’s council tax revaluation in Wales.”
Council Tax bills in England more than doubled under Labour, rising from £688 in 1997-98 to £1,439 on a Band D home. Under a council tax revaluation, an average Band D home which was pushed up a band would see their bill rise to £1,759 – an extra £320 on yearly bills. A move from Band C (£1,279) to Band D would cost an extra £160 a year. A local government resource review will also examine ways of making councils less vulnerable to the whims of Whitehall funding, which was a key driver in forcing up council tax in many local authorities under Labour due to so-called ‘gearing’ effects.
Here is some more background:
LABOUR’S WELSH AND NORTHERN IRELAND REVALUATIONS
Welsh revaluation a warning of tax rises to come.
The Labour Government conducted a council tax revaluation in Wales in 2005. Four times as many homes moved up one or more council tax bands as moved down and one in three homes moved up one or more bands (Hansard, 16 April 2007, Col. 4WA). A move from Band D to Band E, for example, means a sustained 22 per cent increase on yearly council tax bills.
At the time, Labour Ministers claimed that the Welsh revaluation was revenue-neutral, but this is not the case. In the first year of the revaluation alone, council tax income rose by 10 per cent, of which 4 per cent was due to the increase in Band D, and 6 per cent due to more properties moving up the banding system due to the revaluation (Welsh Assembly Government, Submission to the Lyons Inquiry into Local Government, Annex B: Council Tax Revaluation and Rebanding 2005 Chronology and Facts, March 2006).
The subsequent phasing out of revaluation transitional relief saw further hikes. The (then) Labour Chairman of the DCLG Select Committee, Phyllis Starkey, subsequently admitted: “The Welsh Assembly – I believe it was my party, but I am not making an excuse for it – took advantage of the revaluation hugely to increase the total [tax] take” (Hansard, 3 February 2010, col. 383).
Northern Ireland House Price Tax and Intrusive Inspections
Northern Ireland has been used as a testing ground for a new house price tax and revaluation technology. A revaluation and new system of taxation of ‘discrete capital values’ was introduced by the Labour Government under direct rule in 2007. Under this ‘son of rates’, homes are charged an average of 0.6 per cent of their house price (capital value) each year. Labour also legislated to introduce a new power of entry into people’s homes to undertake inspections with a ‘duty to cooperate’ with the inspectors, or else be fined £1,000 (Article 38 of the Rates (Amendment) (Northern Ireland) Order 2006).
LABOUR’S COUNCIL TAX REVALUATION PLANS
Stealth Revaluation Plans
At the end of last year, the Labour Party’s local government arm published its local government manifesto for a fourth term which committed itself to a council tax revaluation (LGA Labour Group,
Putting fairness first: Local Labour’s Manifesto for a new term, September 2009, p. 18). In preparation for the council tax revaluation under Labour, the property features of every home were being recorded, logged and digitised and entered into a revaluation database, called the ‘Automated Valuation Model’. The database was built with US technology and is run by the Valuation Office Agency. It has cost £14 million to date, half of which has been incurred since the supposed postponement of the revaluation in October 2005 (Hansard, 22 March 2010, Col. 71WA).
Using ‘Computer Assisted Mass Appraisal’ and complex mathematical techniques, the new tax bill of every home would have been be calculated based on features of the property like bedrooms, bathrooms, conservatories, garage and parking spaces. So-called ‘value significant codes’ will log, record and tax elements like living in a quiet road, nice patios, sea or hill views, or living near a field or golf course.
Revaluation is also expensive. The postponed 2007 revaluation in England was estimated to cost £178 million (Hansard, 5 July 2005, Col. 299WA).
‘Nice Neighbourhood’ Tax
Special codes have been given to ‘nice neighbourhoods’ – so-called ‘locality adjustment factors’ – to increase taxes on areas with low crime, good schools or peace and quiet. Labour’s tax inspectors divided England up into 10,000 neighbourhoods. These ‘localities’ have been covertly drawn up by inspectors using ‘geo-demographic’ lifestyle data. Each neighbourhood has been given an anonymous six digit ID number – but no name (Hansard, 7 May 2008, Col. 913WA; Hansard, 22 July 2008, Col. 1393WA).