Lib Dems Warn Revaluation Will Lead to Council Tax Rises

12.00.00am GMT Sun 10th Apr 2005

Liberal Democrat Parliamentary Candidate for North East Milton Keynes, Jane Carr, warns that Government plans to reform council tax will hit Milton Keynes pensioners and city residents on low and fixed incomes the hardest.

Labour plans to revalue council tax bands for England in 2007. They are currently based on 1991 property prices: the revaluation will be based on property prices on 1 April 2005.

This revaluation has already taken place in Wales, with households receiving their new council tax bands this month. 1.3 million domestic properties were revalued in Wales: one-third (33%) have gone up one band or more, 58% have stayed the same and 8% have gone down. But there are huge regional differences: in Cardiff, for example, where house prices have risen faster and higher than the average for Wales, nearly two-thirds of homes have gone up by one band or more.

Jane says: "The Cardiff experience is a warning to households in Milton Keynes about what to expect. House prices in our city, as in Cardiff, have increased by more than the national average of 175% since 1991, so we can expect to see a similar number of Milton Keynes houses being moved up one band or more after the Government's planned revaluation."

Applying the results of council tax revaluation in Cardiff to Milton Keynes reveals the potential scale of the increases. The average house price in Milton Keynes in 1991 was £65,116 which would have put it into Band D (based on the old Wales model). The average house price in Milton Keynes in 2004 was £197,335, which would have put it into Band F (based on the new Wales model). The average Milton Keynes householder would therefore have seen his or her council tax rise from £1,153 (Band D 2005-06 MKC) to £1,666 (Band F 2005-06 MKC), an increase of over £500.

Jane points out: "The Liberal Democrats are the only main party committed to scrapping council tax and bringing in a much fairer local income tax. At the general election, the people of Milton Keynes have a straightforward choice: vote for council tax to continue by supporting Labour or the Conservatives (both of whom will keep the current tax system) or vote for a change to a fairer, local tax by supporting the Liberal Democrats."

The independent Institute of Fiscal Studies has confirmed that the Liberal Democrats' proposed new local income tax would mean that 25% of people (the highest earners) would be worse off than under the current council tax system, 50% would be neutral and 25% (those on lower incomes and pensioners) would be better off. The effects of the council tax revaluation scheduled to take effect in 2007 is likely to increase further the number of people who would be better off under the LibDem proposals.