Arguments in Favour of the Council Tax

The following are excerpts from the Speech by Michael Heseltine in proposing the Council Tax in the 1992 Local Government Finance Act:

It is fair and straightforward:

“The council tax is a fair and straightforward method of raising local government revenue. It is based on the market value of property ; it takes account of the number of people in households ; it provides generous rebates for those on low incomes ; it offers special protection for students, student nurses, those on youth training schemes and apprentices. The tax requires no register, and the discount and rebate provisions are simple and straightforward.

"There are eight council tax bands. The tax rates are arranged so that a property in the highest band pays three times as much as a property in the lowest. This limited range of tax bills ensures that the high-value properties do not face excessive tax bills and it damps the effect of regional variations in house prices. They ensure that regional bands—which would bring many anomalies--are not therefore necessary."

It offers a discount for certain groups:

"There are discounts of 25 per cent where there is one adult resident and 50 per cent. where there is none. Certain groups of people, are not counted when assessing the number of residents. Therefore, a single parent whose student daughter lives with her will still receive a 25 per cent. discount.

"The discount is set at 25 per cent. because the basic bill is half the property and half the personal element. It assumes two people, so that where there is only one adult resident he or she gets a discount equivalent to half the personal element, or 25 per cent.

"The council tax is, therefore, based on straightforward common-sense principles. It will provide a fair and stable basis for local government finance. It avoids the obvious faults of the old rating system. Under the rating system, the valuation based on notional rateable values was difficult to understand. The council tax uses market values which everyone understands and for which there is plenty of evidence."

It takes account of the number of adults in a household:

"The rates took no account of the number of people in a household. The council tax ensures that single adult households pay less. It also maintains accountability. Thirty-eight million of the 42 million adults in Great Britain--that is, more than 90 per cent.--are directly taken into account by the council tax. Many of the remainder are eligible for discount even if they are counted provisionally. Property is a sensible basis for a local tax but property does not pay tax. It is people who have to pay tax, and the council tax recognises the fact that, although there is not a perfect correlation between people's circumstances and the value of the property in which they live, there is a relationship.

"The council tax, is fair, it is cheap to administer and easier to collect. I commend it to the House."