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Plans dropped for tax on `super-rich'

MINISTERS yesterday abandoned plans to introduce a higher council tax band for the "super-rich" but denied they had backed down on Tony Blair's orders to avoid upsetting the middle classes.

Hilary Armstrong, local government minister, said the idea of introducing a J-band for council tax to impose a higher rate on houses worth more than pounds 320,000 had been studied, but turned down because it would be too expensive to administer. "To simply tinker with the top band would have cost as much as it would have brought in." The rate would have caught the "super rich" in mansions but there were fears it would also have increased bills for low-income pensioners, living alone in the family house.

Three consultation documents on local government finance also showed ministers appear to have watered down a commitment to introduce a local business rate by making it clear they will not act without "full consultation with business". There are also no immediate plans for a revaluation of council taxes, to take account of rising property values, which would have left many householders with much bigger bills in the run-up to the general election.

"There are certainly some who would say this is too timid. Some would say it is too radical. It is the job of government to listen to all sides and try and find ... the broadest consensus ... We discovered on the poll tax that people have their limits and it is our job to find a way through this," said Ms Armstrong. The uniform business rate will stay intact and councils will be allowed to levy a supplementary rate on top, subject to government limits.