Ministers are hoping to delay the announcement of payments until the last minute in order to avoid repeating the pitfalls of the poll tax.
To soften the impact of the introduction of the tax, Michael Howard, Secretary of State for the Environment, is seeking extra funds for transitional relief for council tax payers on low incomes. He will use capping powers to keep down the level of the council tax fixed by councils.
Householders will receive an explanatory leaflet from the Department of the Environment next month setting out the principles behind the new tax, which will replace the poll tax in April. It will explain the banding into which the property will fall, but it will not tell the householder how much they will pay.
The Department of the Environment insisted that it would be impossible to give an estimate until more information was known, including the level of grant support to local authorities and the size of the tax base.
However, Tory party sources said yesterday that ministers did not wish to repeat the mistakes of the introduction of the poll tax. Chris Patten, then Environment Secretary, estimated in 1989 the average poll tax bills in England would be pounds 278 - pounds 85 below the actual average figure when the tax was intrduced in April, 1990.
Ministers still blame Labour- controlled local authorities for inflating the poll tax to make the Tories unpopular before the general election. Ministers are convinced the higher-than-expected bills intensified the outcry against the poll tax, leading to its abolition. John Major, anxious to avoid the disastrous errors of his predecessor, is keen to avoid ministers giving any more hostages to fortune with predictions about the level of the council tax bills.
This emerged as the Government weathered a fresh storm over the realisation that the council tax will be assessed on a value of property which could be two years out of date by next April. With falling property values, Tory MPs are becoming alarmed that their constituents, particularly in the South, will feel the council tax, which is assessed on property values, is more unfair than the poll tax, which tended to benefit well- off couples.
John Redwood, the local government minister, said householders would be no worse off with the council tax because of the fluctuations in valuations. He said on BBC radio: 'Whatever the valuation ascribed to houses, enough money is going to have to be raised for all those services. And so if the values are lower, then the amount in the pound is higher.'
Conservative Party sources believe that many people will avoid making appeals against the valuation of their property once they understand the system, because they would prefer to see it remain high. 'The bandings are going to become a selling point for houses in the descriptions given by estate agents. Nobody will want to see their properties marked down in value,' one party source said.
The Government therefore may be gambling partly on the snob value of having homes in the H- band, the highest of the eight bands under the system.
Ministers are resisting demands for a kick-start to be given to the housing market. They ruled out the idea of reducing Value Added Tax from 17.5 per cent to 15 per cent because the money raised from the additional 2.5 per cent would go to ease the burden of the council tax.
But there are signs that Downing Street is growing impatient with estate agents who are advising their clients not to drop prices. 'Estate agents are blocking up the market,' one source close to Mr Major complained.Reuse content