16 March 2007
Sir Michael Lyons this week denied that his proposed overhaul of town hall funding would initiate massive hikes in council taxes on expensive homes, and revealed that a long-term plan would accompany next week's Budget.
Lyons told Public Finance that speculation about new council tax bands that reflect rises in house prices painted a 'distorted' picture of his recommendations, which he said would be published alongside Chancellor Gordon Brown's Budget on March 21.
It followed reports that Lyons will call for two new council tax bands for high-valued properties to reflect the substantial increases in property prices since the last valuation exercise in 1991. The Times suggested on March 14 that such a move would almost double taxes on homes worth more than £1m.
'Those reports are mere speculations on a small part of what will be a very wide-ranging report, not only in terms of the changes [recommended] but also in terms of the time frame,' Lyons told PF.
Lyons was unable to comment in detail on his proposals, but indicated that he has backed a transitional framework for the future tax system.
A phased change to the system would also stand a better chance of political support: ministers would be wary of any reforms that could alienate affluent voters.
The Department for Communities and Local Government, meanwhile, indicated that it backed phased reforms. A spokesman said: 'The government's position is clear — there will be no revaluation for the foreseeable future.
'And we have made clear on a number of occasions that we are not prepared to accept unreasonable increases in council tax.'
However, some town halls have already warned against new tax bands for high-valued homes.
Colin Barrow, Cabinet member for finance at Westminster City Council, said that it would have a heavy impact on residents in the Southeast who already subsidise the rest of England through centrally pooled business rates.
'This would represent yet another tax on London and the Southeast,' Barrow claimed.
PFmar2007
