Council tax freeze is a tax cut for the rich

Green Politics

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 money – Daniel Elton, August 30th 2011

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

• Eric Pickles uses council tax map to lead us astray – Katie Schmuecker, April 15th 2011

• Local authorities face much higher cuts than Pickles claimed – Rosanna Singler, December 17th 2010

• Tory cheek on council tax rises – Shamik Das, March 25th 2010

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17 Responses to “Council tax freeze is a tax cut for the rich”

  1. Mr. Sensible

    Quite apart from how fare or otherwise this is, one has to ask where the money is coming from? If there are underspends in other departments, then the savings should be used to lesson the impact on services, not things like this.

    In the last few days, this government, which told us it was so committed to localism, has committed over £1 billion to councils if they do what Eric Pickles wants.

  2. mayadesouza

    Council Tax freeze is a tax cut for the rich: http://t.co/gpBtlySQ writes Pete Challis #ToryCon #CPC11

  3. Anon E Mouse

    Mr.Sensible – Why do the left constantly want to take our money in taxes and spend it on moats and duck houses?

    Less tax please….

  4. Christine Melsom

    Once again the conclusion reached by this website is that everyone in ‘the South’ is rich and everyone in the ‘North’ is poor. I live in a small two bedroomed house in Hampshire which attracts council tax Band E,if it were in West Sussex it would fall into a ben G, stick it up in most northern areas and it would fall into a band A,B or possibly C. We are pensioners and we are not rich and this freeze comes as a bit of a godsend to us. Because of the unfair Government grants the grant per head here is under £200 one of the lowest in the country. Some councils in ‘the North’ receive more than three times that amount. The system really does need to be changed to make it fairer for all.
    If you look at some fairly recent Government figures, you will find (yes its true) that the median income of someone living in Wakefield is similar to that of someone living in West Dorset – and yet the council tax in West Dorset is nearly twice as much. Yes our houses are more expensive but that means nothing to us as we have to live somewhere – and being born and bred in ‘the South’ we want, in our old age, to stay here with our family and friends.

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