Rich 'will gain most from the council tax'

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The Independent Online
THE RICH will gain more than the poor under the council tax, the first detailed street-by-street comparison of the old rates system, the poll tax, and the new tax shows.

People living in large, expensive homes will benefit under the new scheme, based on property values, because the highest valuation band is pounds 240,000. The rates system, based on notional rental values, had no upper limit. Those in modest homes will lose because such properties often enjoyed low historical rateable values. The council tax replaces the poll tax next April. The poll tax replaced the rates in Scotland in 1989 and in England and Wales a year later.

The study, by geographers at Bristol, Southampton and Cardiff universities, compared rates charges, poll tax and council tax estimates for 50,000 properties in inner Cardiff which, the report says 'illustrates many of the classic characteristics' of traditional inner cities. The report says there is some evidence that after the Government introduced a pounds 1.7bn relief scheme and a pounds 140 blanket reduction in personal charges last year, the poll tax 'led to some evening out of the tax burden' with 'redistribution from the residents of the lowest-rated dwellings' to those in higher-rated homes. The new tax reverses the trend, the report's authors say.

Households in large homes, many of which are worth more than pounds 240,000, in the Llandaff, Roath and Riverside areas of Cardiff will gain.

Those in more modest homes in the city with low historical rateable values in parts of Cathays, Plasnewydd, Riverside and Splott will be relatively worse off.

Households in small homes in Butetown will gain since, after redevelopment in the 1960s, homes were assigned higher rateable values. Those in large homes in the less fashionable Grangetown area will also gain because the properties, with high historical rateable values, have become less attractive.

'Overall,' the report concludes, 'these results support the contention of previous research that residents of the most expensive dwellings will benefit from the change from open-ended rateable values to banded capital values.'

The authors used official figures and registers to examine rates and poll tax charges, taking into account relief for the poor and students.

Although they concede that their council tax predictions, using estate agents' valuations, may not be exact, they argue that the estimates are 'likely in most cases to be no more inaccurate' than the final, official figures because the 'beacon property' methods they used to value homes are similar to those used by the Government.

The Geographical Implications of Changing Local Taxation Regimes by Dr Paul Longley, Dr David Martin and Dr Gary Higgs. To be published later this year.