Council tax 'will not penalise better-off'

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The Independent Online
LOCAL GOVERNMENT finance experts yesterday dismissed claims by some MPs and newspapers that the Government's new council tax would penalise middle- class home-owners.

The past month has seen a concerted campaign against the charge - the property-based replacement for the poll tax. Rhodes Boyson, the Conservative MP, and the Sunday Times newspaper have argued that the collapse in house prices has meant that the new system's valuations of flats and houses - made last year - were out of date. As a result, they claimed, many home-owners would be forced to pay too much when the charge was introduced next April.

But yesterday, the Royal Institution of Chartered Surveyors said that the new tax would be far less burdensome than predicted.

Figures from the Department of the Environment and the Valuation Office showed there were almost one-third more properties in the lowest council tax bands than the Government estimated in 1991, the institution said. Many people would pay less than predicted. Also the total number of taxable houses had proved to be far higher than estimated. Because many more people would be paying the charge next year's average council tax demand should be lower, the institution added.

Christopher Jones, its president, said: 'The public should remember that council tax valuations are an assessment against which each local authority will raise its tax. The bands form the basis for apportioning tax between households.

'Provided that each property has been correctly valued in April 1991, any general change in local house values, be it a rise or fall, will make no difference.'

Experts agree there are only two circumstances in which individual home-owners could lose. First, if the property depression has affected some types of homes more than others. For example, if previously expensive new homes have fallen in value faster than Victorian homes, the owners of modern houses will suffer.

Second, because government grants, which make up the bulk of a council's finance, are proportionate to the value of properties in each area, the switch back to a property-based tax could hurt the South, where house prices are highest. Councils would have to demand more from its council taxpayers to compensate.