Council tax freeze is a tax cut for the rich

Pete Challis explains how much more the rich benefit from a council tax freeze than the poor do.

Pete Challis is a former Greenwich councillor and chaired the Association of Local Government housing committee from 1990-99

Today’s Guardian says George Osborne will announce another £800m for councils in England to pay for a second ‘council tax freeze’.

A council tax freeze is simply a tax cut for the rich.

For 5,701,353 band A households the saving is just £23.98 a year. But for the 129,663 band H households the saving is three times as much – £71.95. They live in homes valued at more than £320,000 – at 1991 prices – it is the reverse of the ‘mansion tax’.

But it also disproportionately benefits London and the South East.

The average band D council tax is £1,439.

But there are big regional differences in the distribution of properties between bands, as the table below illustrates:

   
Properties (000s) Band
A B C D E F G H
   
North East 659 175 160 93 47 20 12 1
North West 1,322 621 550 317 183 89 60 6
Yorkshire & the Humber 1,019 461 384 214 133 64 37 3
East Midlands 741 441 353 210 123 60 34 3
West Midlands 739 595 456 261 164 89 54 5
East of England 362 538 660 439 266 145 98 12
London 117 455 908 855 507 254 203 58
South East 325 612 950 738 486 294 235 33
South West 418 582 548 376 250 127 73 7

Looking at the effect of the 2011/12 council tax freeze, the 261,000 households in London in bands G and H benefited more than the 659,000 households in the North East in Band A.

   
In 000s Band
A B C D E F G H
   
North East £15,805 £4,888 £5,471 £3,345 £2,060 £1,064 £708 £95
North West £31,694 £17,383 £17,571 £11,389 £8,037 £4,638 £3,580 £458
Yorks & the Humber £24,435 £12,907 £12,269 £7,716 £5,853 £3,329 £2,198 £230
East Midlands £17,781 £12,344 £11,290 £7,542 £5,424 £3,106 £2,042 £215
West Midlands £17,712 £16,645 £14,580 £9,403 £7,224 £4,606 £3,245 £384
East of England £8,681 £15,053 £21,105 £15,799 £11,714 £7,516 £5,861 £876
London £2,812 £12,701 £29,028 £30,758 £22,307 £13,180 £12,144 £4,145
South East £7,787 £17,123 £30,377 £26,542 £21,375 £15,266 £14,077 £2,400
South West £10,025 £16,282 £17,513 £13,511 £11,004 £6,593 £4,366 £520

See also:

Crazy Taxpayers’ Alliance attack on council that’s saving moneyDaniel Elton, August 30th 2011

How Pickles’s brutal council tax benefit reforms will pulverise the working-age poorEd Turner, August 4th 2011

Eric Pickles uses council tax map to lead us astrayKatie Schmuecker, April 15th 2011

Local authorities face much higher cuts than Pickles claimedRosanna Singler, December 17th 2010

Tory cheek on council tax risesShamik Das, March 25th 2010

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