Property slump 'no basis' for tax pleas

THE COUNCIL TAX, which replaces the poll tax from next April, will be based on two-year-old house values and any appeal based on falling market prices will fail, the Department of the Environment said yesterday.

The disclosure could make the council tax as unpopular as the community charge, as some Tory MPs warned of a chorus of complaints from chargepayers already aggrieved at the loss in value of their homes. The eight property value bands were set in April 1991, when prices were higher, markedly so in the South, to allow time to value the 21 million properties around the country.

A Department of the Environment leaflet to be sent to all householders says: 'Changes in the value of your home because of the movement of house prices over the years will not generally affect its banding.'

Appeals will generally only take account of physical changes in properties, or planning changes such as the construction of a nearby motorway. A rise in house prices will not lead to rebanding either, although values will be subject to a general revaluation every five years.

The Treasury and the Department of the Environment defend the decision on the footing that valuations were never intended to be based on market prices and that householders' contributions to local authority budgets will still reflect the relative financial positions of chargepayers.

John Butterfill, MP for Bournemouth West and vice-chairman of the Tory backbench finance committee, said other MPs' concerns were based on misunderstandings of the valuation process.

Mr Butterfill, a chartered surveyor, said: 'Under the rating system valuations were always retrospective in their effect. It has to be done on a specific date. The only purpose is to place properties in a relative position one to the other. At one time we operated on a 1939 basis. But relative values remained constant. It does not matter that valuations are now 'out of date'.'

Actual bills will depend on local authority spending and the level of revenue support grant from the Government. Single households will get a 25 per cent discount.

The Department of Environment pamplet says: 'The dearer your home the more you will pay. If your home is in band H (properties valued at more than pounds 320,000), you will pay three times as much as someone who home is in band A (up to pounds 40,000).

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