Council Tax Shock in Store as Property Prices Soar

10.22.44am UTC (GMT +0000) Tue 8th Feb 2005

Lib Dems Would Scrap The Council Tax in Favour of the Fairer Local Income Tax

Eastleigh will be one of the worst hit areas in the south east when the Government's revaluation pushes many local homes into higher bands of the council tax, according to research by the Liberal Democrats.

Hampshire MEP and Eastleigh prospective parliamentary candidate Chris Huhne said that Eastleigh's property price rise of 209 per cent since homes were valued for council tax in April 1991 means that far more homes will be pushed into higher bands than in many other areas.

Eastleigh's property price rise is tenth out of all the towns across the South East. Its rise compares with a national average of 160 per cent, and is also far higher than Southampton, Fareham, Romsey or New Forest.

Families across the South East will be worst hit by the Government updating of its valuation figures, because house prices have risen so much faster in the region than in the rest of the country.

Analysis of the Halifax house price index by the Liberal Democrats shows that 82% of towns in London, the South East and the East of England have seen prices rise faster than the national average, meaning homes are likely to be moved into higher paying tax bands.

Commenting, Chris Huhne MEP said:

"Labour is set to turn the warm glow of house price rises into a post election tax timebomb.

"The government claims Council Tax revaluation will make the system fairer. But this research shows it will be arbitrary, random and unfair.

"The people of Eastleigh are about to be penalised for the market forces that have pushed up house prices in the region. In areas like Eastleigh where prices have risen the most, homes could be moved up two, three or even more bands, which could mean tax rises of 50% or more. The danger for Eastleigh is that it could follow Cardiff, where more than 60% of homes were moved into higher bands. One home was moved up six bands - more than doubling that family's tax.

"Revaluation is a typical Labour stealth tax. Millions of families will see their Council Tax bills rocket once the election is over, but ministers have refused to come clean about it. And the Tories are staying quiet because Michael Howard was the Environment minister responsible for introducing the Council tax."

Mr Huhne said that the only long-term solution was to abolish the Council Tax altogether, as the Lib Dems propose, and replace it with a Local Income tax that is related to ability to pay. He said that the Liberal Democrats would fight to stop the revaluation and replace the deeply flawed Council Tax. Council tax took 7 per cent of the income of the poorest groups but only 2 per cent of the richest.