GREEN LIGHT FOR COUNCIL TAX INQUIRY

First published by: This is Money

AN INDEPENDENT inquiry has been ordered into proposed reforms of the Council Tax system and the possible introduction of a local income tax.

A Local Government Minister told MPs he had asked Sir Michael Lyons to report on the future of town hall funding by the end of the year. His announcement came as he disclosed details of an initial review of the system which found strong arguments for combining a reformed Council Tax with measures to raise more cash locally.

Mr Raynsford said the Government accepted the need for reform but dismissed press speculation that it would lead to massive tax rises as 'wholly misleading and inaccurate'. No decisions had been taken, he said, as there remained much detailed work to be done on the possible options. 

'Any suggestion that we have opted for any particular course of Council Tax reform is just plain wrong,' he told MPs in a statement. The Balance of Funding Review contained a number of suggestions. The one that has caused most alarm comes from a think-tank, the New Policy Institute, which calls for changes to the banding system and the amounts paid by each of them.

The Sunday Telegraph reported that under the NPI proposals, there would be three new bands one at the bottom and two at the top. Anyone with a property worth £170,000 or more would face higher bills. The new top rate band would see the average bill for properties worth more than £620,000 rise from £2,334 to £6,224.

Those with homes valued from £440,000 to £620,000 would pay £4,149 and those in the £310,000 to £440,000 bracket could see their average bills rise from £1,945 to £2,982. Only those with homes worth under £130,000 would see their bills fall. The review says the bands should be revamped when a nationwide property valuation takes place for the first time since 1991

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