Axeing the Council Tax Will Lead to Big Tax Cuts for most Eastleigh Households: Typical Savings Would be £691 a year

4.23.00pm UTC (GMT +0000) Wed 20th Apr 2005

The abolition of the council tax would particularly benefit households in Eastleigh thanks to the prospect of rebanding of many homes following new valuations, according to the local Liberal Democrats.

"The Eastleigh household on an average income of £22,900 a year stands to benefit by £691 a year from the abolition of the council tax and its replacement by local income tax" said Chris Huhne, the Liberal Democrats' candidate for Eastleigh.

"This is £191 more each year than the rebate promised by the Conservatives to pensioners, and £491 a year more than the one-off cut offered by Labour" said Mr Huhne.

Mr Huhne, a member of the Lib Dems' Treasury team, said that the same Eastleigh household on average incomes would gain £952 a year if its home were revalued from band D to band E shortly after the election.

"A rebanding of just one band - which affected a third of all households in Wales when revaluation took place there - could raise Council Tax by 22 per cent even though people's incomes would be the same" said Mr Huhne.

"Typically, you have to earn more than £55,350 before you pay a little more rather than less " said Mr Huhne. "And even that will depend on whether your home is put up a band. If it moves from band F to band G, then you would have to earn £62,700 before you pay more. This is nearly treble average household incomes in the area."

Mr Huhne said that any Eastleigh resident could go on to a special website called www.axethetax.org to calculate the effects on their household of replacing the Council Tax with a Local Income Tax.

"Because of the particular threat of rebanding to Eastleigh, more than 95 per cent of households would be better off by abolishing the council tax and replacing it with local income tax" said Mr Huhne. There are far more gainers in Eastleigh than nationally, where Institute of Fiscal Studies figures show that three quarters of households would be better off or be left unaffected by the shift to local income tax, Mr Huhne said.

"This would be a big shot in the arm to the local economy as it would direct increased spending power into local shops and services" said Mr Huhne. "It is just what we need when the local economy is facing big job losses at Manor Bakeries and Alstom".