Council tax increases muddle plans to level up

This briefing from UK think tank the Centre for Progressive Policy looks at proposed council tax increases.

New CPP analysis shows for the first time how the proposed rise in council tax is unfairly distributed between places. Reform is sorely overdue. The expectation of Chancellor Rishi Sunak for councils to increase council tax by up to 5% will mean very different things for households and local councils in different parts of the country. Whilst the proposed percentage increase in council tax is uniform across the country, the starting point in absolute terms is very different. This means that the same percentage rise will exacerbate gaps in the tax paid by residents and manifest England’s council tax postcode lottery.

For example, if we follow the Chancellor’s assumption that councils increase tax by the maximum allowed, Band D householders in Gateshead’s council tax could go up in April by £108 for 2021/22 compared to an increase of £54 in Westminster.

There is no clear geographic pattern to the variation in rates, nor do they correlate with socioeconomic indicators. Rates are low in Windsor and Maidenhead and high in nearby Woking, high in Liverpool and low in nearby Wigan. The lack of economic reasoning for why these rates differ between places means that raising it will not support the government’s twin aim of economic recovery and levelling up the country and, at worst, undermine it.

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