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South will pay for shake-up
Daily Mail - 13 January
2004
JANE MERRICK
MIDDLECLASS families in the South will be the biggest losers under a
planned overhaul of the council tax.
Ministers are considering replacing the current eightband system with
a scheme linking council tax to property prices by region.
The system would create a top rate for the most expensive properties
mainly in London and the South-East and a lower band for cheaper homes
in Labour's northern strongholds.
An alternative plan to introduce a local income tax, punishing those
who earn more, has also not been ruled out.
The Government is under pressure to reform council tax because of widespread
anger at inflation-busting increases averaging 12.9 per cent this year.
Deputy Prime Minister John Prescott's handling of local government funding
has been attacked by Whitehall's spending watchdog as 'fundamentally flawed'.
The plan revealed by the Daily Mail last September could see council
tax bills soar to Pounds 3,000 a year.
Bills could double for taxpayers with homes valued for the tax at Pounds
320,000 or more.
The Tories condemned the idea as nonsensical because local authorities
covering poor areas would suffer a drop in revenue.
Downing Street said yesterday that 'all things are being looked at' in
the review.
Tony Blair's spokesman said: 'There is a balance of funding review which
was set up by the Government last year to look at problems of unfairness
within the existing system.
'That is going to report later this year. Obviously there will be a whole
range of suggestions that will come up as a result of this before the
final decisions are reached.' The review, being conducted by Nick Raynsford,
a minister in Mr Prescott's office, is due to be published later this
year.
It is intended that the changes will be made in 2007, when the Government
completes its controversial revaluation of properties.
But Tory local government spokesman David Curry warned: 'Millions in
London, the South-East and the South-West will be hit by this new tax.
'Meanwhile the proposals have no remedy for poor areas, which will suffer
a huge drop in revenue if the majority of houses fall into the new low
band.'
The Liberal Democrats put forward their own plans for local income tax
which would hit the middle classes hardest.
Charles Kennedy's party attempted to play on the fears of homeowners
by promising to scrap council tax.
In its place it would introduce a local income tax of 3.75p in the pound
on earnings above Pounds 5,000, capped at Pounds 100,000.
The LibDems argued that low earners would pay less on average than they
do under the existing council tax system.
But an individual earning, for example, Pounds 40,000 a year would be
hit with a local income tax bill for Pounds 1,312.50.
Someone on Pounds 75,000 a year would have to pay Pounds 2,625.
It would be added to national rates of income tax and collected by the
Inland Revenue through the PAYE system.
The Inland Revenue would then pass the money on to councils.
Mr Curry condemned the LibDem plans as 'an Exocet straight at the heart
of young couples starting out in life who are struggling to get on the
property ladder'.
© Daily Mail
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