Budget 2012: Council tax process ‘regressive’, IFS claims

First Published by: LocalGov

The Institute for Fiscal Studies (IFS) has urged ministers to overhaul the 'regressive' basis for setting Council Tax levels.

Addressing a post-Budget briefing, IFS director Paul Johnson today branded Chancellor George Osborne's Budget 'a hotchpotch of reforms (which) bears as many marks of political expediency as it does of strategic reform'.

 

Mr Johnson said: 'We must one day surely move away from basing council tax in England and Scotland on 1991 values and stop charging it in a way which is dramatically regressive.

'There is a strong case for charging more tax on expensive properties. Stamp duty is the wrong way to do it.'

Carl Emmerson, deputy director at the IFS said a £5.5bn under-spend by Whitehall departments was due to civil service mandarins looking ahead to future Budgets and seeking 'to get ahead of the game' and have less to do after April 2012.

To maintain the current annual 2.3% rate of central government spending cuts, Mr Emmerson said Government would have to enforce welfare cuts equivalent to £8bn in today's terms.

Such a reduction would be equivalent to 7.5% of non-pension welfare spending, he added, and could only come by reducing eligibility of certain social groups to entitlements such as tax credits, housing and council tax benefit.

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