Potential massive council tax rises

Sapphire

I've just read with alarm that it is possible that council tax will rise by thousands of pounds a year in some areas.

Does anyone have any information about this? Would each household be means tested to take into account its earnings potential? In some 'wealthy' London boroughs, for example, there are many affluent people, but also many poor people living in a variety of properties. Someone may, for example, have inherited a small house in an area like Richmond, but is past the age when they can earn a high salary. Are they supposed to forced out of their homes to go and live a lonely life somewhere in the sticks?

It seems to me that if council tax rises by large amounts, the potential for a massive house crash and bankruptcies, especially in London, would be huge, given how over-stretched and over-borrowed many people are. (Of course, there are people in London who could easily afford such huge rises, but they must be a relatively small proportion of the population.)

noyk

Well if people (property owners) hadn't been so god damn stupid/greedy and joined in with banks, builders and EA's and encouraged massive price rises then this would never have been a problem would it.
If does happen, which i doubt it will, then people deserve quite frankly because we've brought it on ourselves.
As far as i know it'll either be wealth tax or property price tax or possibly a combination of the two.

Sapphire

noyk wrote:

Well if people (property owners) hadn't been so god damn stupid/greedy and joined in with banks, builders and EA's and encouraged massive price rises then this would never have been a problem would it.
If does happen, which i doubt it will, then people deserve quite frankly because we've brought it on ourselves.
As far as i know it'll either be wealth tax or property price tax or possibly a combination of the two.

Yes, but not everyone has been stupid and greedy - and those that haven't should not be penalized for it with having to make payments they can't afford.

Wealth tax, on the other hand, i.e. making the wealthy pay more than the less affluent people, would be a good thing.

liz545

noyk wrote:

Well if people (property owners) hadn't been so god damn stupid/greedy and joined in with banks, builders and EA's and encouraged massive price rises then this would never have been a problem would it.
If does happen, which i doubt it will, then people deserve quite frankly because we've brought it on ourselves.
As far as i know it'll either be wealth tax or property price tax or possibly a combination of the two.

What about people who rent their homes? The house I live in may have risen in value quite substantially, but as it's not mine, I don't benefit from it. Why should I have to pay massive council tax bills, if it's my landlord who's reaping all the benefit?

Altarf

There is a lot of (deliberate) misinformation being given about the proposed changes. The scheme that is being introduced in Northern Ireland is to replace rates with a percentage charge on the value of the property (0.78% in NI) - Northern Ireland never had Council Tax.

What is being reported is people making 'assumptions' and applying the 0.78% to the whole of the England. Although there are price variations in NI, they are nothing like as extreme as in the UK. So if a flat percentage was being applied to the whole of the UK, then councils in London would be collecting way too much money, which would have to be distributed to other parts of the UK, which would be under-collecting. Although there will be an aspect of this, as there is now (the councils receiving part of their funding from council tax and part from government grants), I canot see any possibility of a London council collecting 5 times more than they do now and being allowed to keep it. So there would have to be some element of setting a local percentage.

What the big difference will be, and funnily enough is not being shouted about as loudly, is that there will be no cap on the amount you will pay. Now this sounds bad, but unless you are *way* beyond band H, then it will not afect you. At the moment all properties over £320,001 (a 1991 prices, not todays prices) are in band H and pay the same (double the 'standard' band D rate). So someone with a house which was worth £350k in 1991 (not the value today) pays the same as someone with a house which was worth £3.5 million in 1991. Under the proposed rules the £3.5 million (in 1991) would pay 10 times more. So the big losers would be people who are in band H, and who's properties were worth *way* more than £350k in 1991. However there is also a bottom cap with council tax. All houses worth less than £40k (at 1991 prices remember) pay the same (1/2 of the 'standard' D rate), under the proposed rules those in the cheapest places such as static mobile homes would pay less. Funny that is not being mentioned very loudly.

LizEstelle

Sapphire wrote:

I've just read with alarm that it is possible that council tax will rise by thousands of pounds a year in some areas.

Does anyone have any information about this? Would each household be means tested to take into account its earnings potential? In some 'wealthy' London boroughs, for example, there are many affluent people, but also many poor people living in a variety of properties. Someone may, for example, have inherited a small house in an area like Richmond, but is past the age when they can earn a high salary. Are they supposed to forced out of their homes to go and live a lonely life somewhere in the sticks?

It seems to me that if council tax rises by large amounts, the potential for a massive house crash and bankruptcies, especially in London, would be huge, given how over-stretched and over-borrowed many people are. (Of course, there are people in London who could easily afford such huge rises, but they must be a relatively small proportion of the population.)

Political suicide for any government which might try to do it, at least in a hurry. A sudden and large hike in local taxation is partly what blew the Thatcher government out of the water.

If it does come in, you can bet your life it will be for top-banded properties first and then trickle down - AND it will be incremental rather than an abrupt, politically damaging jump.

mystic_trev

LizEstelle wrote:

Political suicide for any government which might try to do it, at least in a hurry. A sudden and large hike in local taxation is partly what blew the Thatcher government out of the water.

If it does come in, you can bet your life it will be for top-banded properties first and then trickle down - AND it will be incremental rather than an abrupt, politically damaging jump.

Why? They've already more than doubled under the Labour govt!

dunstonh

There is a bit of SPIN every year with council tax. Leak that it could rise by very large amounts. People get worried and then when the amounts are announced, they are still large but not as large as was being talked about and people are relieved. Anything better than the worst is good news is the approach.

ManAtHome

Good point(s) Altarf - we already have a "more it's worth, more you pay" system, but this is heavily compressed and certainly favours the top end.

In the reasonably near future ALL taxes will need to rise - try rummaging around the web for UK public sector pensions commitment (would very very scary if they had to account for it the same as private sector funds), PFI commitments (similar story), and government borrowing (only 1 very, but we have been having a boomy/strong ecenomy haven't we...). It will be (national) politically expedient to shift some of this to local councils...

mrsS_2

council tax is supposed to pay for council services isnt it? so if you own a very expensive house you are more likely to have private health care, send your kids to private school and dont use the bus because you take the kiddies to school in a 4x4!

so are we agueing that these people who dont actaully use the services (how much can we get away with charging for a fortnightly bin collection?) should pay massive amounts more?

this is where we get away from property taxes to pay for local services and actully admit to it being a local income tax.

I dont have a problem with this as long as the money collected is used in the local authority that collects it and is not centrally collected by government and sent to other burroughs.

noyk

liz545 wrote:

What about people who rent their homes? The house I live in may have risen in value quite substantially, but as it's not mine, I don't benefit from it. Why should I have to pay massive council tax bills, if it's my landlord who's reaping all the benefit?

I agree, but the majority rules (or technically the voting minority) and i'm in the same situation as you and can do absolutely nothing about it other than complain to my MP (who does nothing) etc. Is there anything i can do beyond this, not really which is why i'm seriously considering leaving the country in a few years - i don't really want to but what choice do i have - my vote is never likely to be represented and as renters we'll suffer as we pay other peoples (landlords) wealth taxes!