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Council Tax

Volume 467: debated on Wednesday 7 November 2007

The Petition of residents of the Taunton constituency and others,

Declares that the Petitioners are extremely concerned that the determination of Council Tax levels in Taunton Deane and nationally do not fairly reflect the ability of citizens to pay.

Further notes that pensioners and those on a low income are especially disadvantaged as they have to pay a larger proportion of their income towards Council Tax than those with higher incomes.

The Petitioners therefore request that the House of Commons urges the Government to abolish the Council Tax and replace it with a system that reflects the ability to pay.

And the Petitioners remain, etc.—[Presented by Mr. Jeremy Browne, Official Report, 18 July 2007; Vol. 463, c. 396.] [P000047]

Observation from the Secretary of State for Communities and Local Government:

The Government recognises that council tax provokes strong feelings amongst pensioners and those on low incomes. The extensive public consultation that Sir Michael Lyons carried out as part of his independent inquiry showed that clearly. Sir Michael's careful and in-depth examination of the funding of local government nonetheless concluded that council tax is not broken and recommended that it should be retained. The Government supports that conclusion.

As Sir Michael confirmed, there is a strong economic case for retaining a local property tax and council tax itself has a number of significant practical advantages. For example, its yield is predictable and stable and it is relatively easy to collect because properties (unlike people) cannot disappear. It also strongly reinforces the accountability of local authorities to their communities, and helps provide a link between the tax people pay and the benefits they take from local services.

The local authority sets the overall council tax level for their area. However, the tax system does reflect individuals' ability to pay by providing, through council tax benefit, reductions of up to 100 per cent on bills for those on low incomes.

More specifically for pensioners, the Government has done a great deal to improve pension incomes since 1997, spending around £11 billion more on pensioners in 2007-08 than if 1997 policies had continued. The average pensioner household will be around £1,500 per year, or £29 per week, better off in real terms in 2007-08 due to the Government's personal tax and benefit changes than they would have been under the 1997 system.