New levy to replace council tax

Sunday, 15 February 2004 3:09 AM

Council tax could be replaced by a mix of property tax and income tax, according to The Sunday Telegraph.

With taxpayers up in arms over the steep rise of the levy, the Government is reviewing all options ahead of the next general election.

A recent survey carried out by the Local Government Chronicle found many councils intended to increase tax by more than five per cent.

Local Government Minister Nick Raynsford is expected to set out the new strategy in the coming weeks when the interim review of the local levy is published.

Mr Raynsford's plans would cover England and Wales, with the Scottish Executive likely to come on board.

One anonymous minister told the Sunday Telegraph that Tony Blair 'fears that the council tax could become another fuel-tax protest unless something radical is done.

'It would be madness to go into the (general) election with council tax as it is. It is already unsustainable.

On the new levy's format, he added: 'It cannot be solely a property tax, but property valuation will be part of it.

'We recognised that 18 months ago, and we set up a review to look at what share local government should carry and central government should carry. Even so, we don't think property tax is enough. You have to look at other measures.'

A spokesman for the Office of the Deputy Prime Minister said the story was 'pure speculation.'

Last week, Mr Raynsford said council tax capping appeared 'almost inevitable' as the Government got to task with local councils who were adjudged to have imposed disproportionate tax increases.

Sixty-five authority leaders were written to requesting they delimit increases to "low single figures."

Many responded positively, Mr Raynsford told MPs, but some had held back.

Stephen Byers, former cabinet minister and close ally to Mr Blair, this week will consult on a policy to give Britain's three million pensioners the choice of deferring payment of their council-tax bills until they die.

Mr Byers is expected to say in a speech: 'This will provide all pensioner owner-occupiers with a choice - either to pay the tax as it falls due or to defer payment until the family home is sold or otherwise transferred. Such a scheme is simple, not means-tested and uses the value of the home as security for the tax liability.'

Tags: