Council tax – alternatives which should be non-starters
- rpwills
- Jul 19
- 4 min read
One of the many features of the United Kingdom is its strange persistence in looking to the past to provide policy. Perhaps not so odd when you consider that we still have a House of Lords for an upper chamber, which includes clerics! It still has an hereditary head of state with all the pomp and circumstance that entails. Traces of the past linger on in other ways particularly when it comes to taxes to fund local services and alternatives to the current system.
The previous post outlined the defects of the current system. So what alternatives are there? Lets look at possible options.
Updating current house valuations for properties from the 1991 valuation.
Rates.
Introducing a land value tax.
Revisiting the poll tax.
Updating current house valuations for the council tax
“Council tax was introduced into England, Scotland and Wales by the Local Government Finance Act 1992. It came into effect as of 1 April 1993, replacing the community charge or ‘poll tax’. It was consciously designed as a blend of the community charge and the system of domestic rates, which the community charge had itself replaced in 1990 (1989 in Scotland).”
Some commentators have suggested that all that is required is to carry out a revaluation and based council tax rates on the new figures.
Response
The deficiencies of this system have already been noted, primarily that council taxes are regressive, taking no account of income.
Rates
Rates trace their origin to the Pool Relief act (Statute of Elizabeth) 1601. This Act created liability for poor rates in the following terms: “to raise weekly or otherwise by taxation of every inhabitant parson vicar and other, and of every occupier of lands, houses, tithes impropriate, or propriations of tithes, coal mines or saleable underwoods in the said parish … competent sums of money for … the necessary relief of the poor…” [ Landmark Chambers].
“The rateable value of domestic properties was defined as their net annual value, which broadly speaking, was the rent they might reasonably expected to be let for in a given year, minus the costs of repair and maintenance.
[Institute for Fiscal Studies, 1990].
Response
The deficiencies of this system are similar to those of council tax, primarily that they are regressive, taking no account of income.
A land value tax
A number of commentators and lobby groups have argued that the answer to house prices, housing problems and also a fairer system of tax revenue is to introduce a Land Value Tax. This policy was first put forward by Henry George in ‘Progress and Poverty’ published in 1879 in the United States.
The aim would be to replace the existing council tax with the LVT. It is suggested this would be a fairer system.
Response
Both council tax and LVT take no account of earnings and are regressive. A paradox of LVT is that the affluent on high incomes would be able to afford any tax. Land Value Tax is a policy well past its sell by date, yet it keeps being resurrected. It is based on incorrect assumptions about the housing market and how the economy operates. Its appeal is that appears to offer a simple solution to a complex issue.
Taxes based on values
These options could be regarded as proxies of affluence. Higher value properties being linked to higher earnings. They all suffer from the basic problem that they take no account of the earnings of the household. Currently, a household with one earner and one non-earner pay the same as a household with two high-income earners. They are regressive. If we were unable to assess the earnings of the members of a household then using value might be applicable . Yet since income tax was introduced in 1799, using income as the basis for taxation has existed. Systems, which focus on values, discriminate against those on lower incomes and result in a greater segregation of households according to income levels exacerbating other inequalities.
Revisiting the poll tax
The first Poll tax was introduced in England in 1377. In 1381 the injustice of the tax led to the peasants revolt. The latest iteration was introduced in 1990.
“For the Conservative government who introduced the poll tax it was a point of principle that everyone should contribute to funding council services on an equal basis. “Why should a duke pay more than a dustman? It is only because we have been subjected to socialist ideas for fifty years that people think this is fair” opined Conservative minister Nicholas Ridley MP in 1988.” [Peoples History Museum, 2025].
Response
Again this is an approach, which takes no account of earnings and discriminates against low-income households.
Conclusion
Tax systems based on property/land values or the number of adults in a household are clearly inappropriate. They hark back to an age when assessing the ability of people to pay based on earnings was problematical. The scope to base taxes on the ability to pay is now both achievable and desirable. As with other relics of a past age these outdated approaches should be consigned to the rubbish bin of history.
Notes
Sources
Kolinsky, D, Landmark Chambers.
Peoples History Museum, (3 March 2025), Can’t pay, won’t pay! The Poll Tax 35 years on.
Ridge, M., & Smith, S., (April 1990), Local Government Finance, the 1990 reforms, Institute for Fiscal Studies.
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