Originally published November 2022.
In his quest to ensure that no pound is left circulating outside of the Treasury’s coffers, Jeremy Hunt is attempting to set out some £60bn in tax rises and spending cuts. This is quite a lot of money, even by the standards of the British state. It’s a little over a third of this year’s spending on the NHS. In other words, no matter how much your wallet might flinch at the prospect, the ‘tax rises’ part of that sentence will be doing serious work. The latest proposal doing the rounds in the media is the abolition of the 2.99% cap on council tax increases. This is not a terrible idea, but the Chancellor could do better.
“The core problem with council tax is that it doesn’t do what it’s meant to”
Council tax is not popular. It is also badly designed. And the Government could raise quite a lot of money by improving it. The core problem with council tax is that it doesn’t do what it’s meant to. In theory, houses which are worth more are taxed more. In practice, houses are taxed on what they were worth in 1991; there has been no effort to revalue houses since this date.
