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Rachel Reeves Reportedly considering bringing new higher bands Council tax To target owners of expensive homes.
There are a few weeks left before he gets into trouble BudgetThe chancellor hoping for a new higher Council tax the band will help him Plug the multibillion pound hole in the country’s finances.
No decisions have been made, but Ms Reeves said higher taxes on the wealthy would be “part of the story” in the November 26 budget.
Economists have repeatedly warned Ms. Reeves In recent months a combination of Labor U turn, Higher borrowing and sluggish economic growth mean it will have to raise taxes or eliminate its key borrowing rules.
The FT quoted a source as saying: “The idea of increased taxation on high-end homes is well established. The discussion is about how you do it.”
The move would raise several billion pounds, according to financial Times.
How much homeowners pay in council tax, levied on residential properties by local government, depends on the bands – with Band A being the lowest-value properties up to Band H. But the system has been heavily criticized because it is based on the value of assets in 1991, before the huge boom in recent decades.
Properties that are currently in Band H are those whose value in 1991 was more than £320,000.
The idea of creating new council tax bands for the most expensive homes in England was first mooted by the then Conservatives chancellor George Osborne in 2012.
He supported an additional council tax band, with money going to the Treasury, not local authorities. To deal with some of the expected problems arising from such a system, elderly and other “cash poor” owners would be allowed to defer their higher council tax bills until they die. However, in the end Prime Minister David Cameron blocked the plan.
Former Goldman Sachs executive Michael Sherwood told the FT that the council tax was “very unfair”, adding: “If you have more expensive homes, you should be paying more for them.”
Ruth Curtis, head of the Resolution Foundation think tank, said: “In itself it won’t solve the mess of property taxation, but we already pay council taxes and you’ll be asking the rich to pay a little more.”
Lucian Cook of estate agents Savills said: “The additional council tax band would potentially be less damaging than a pure mansion tax”.
Edward Troup, a former top civil servant at HM Revenue and Customs, said a higher tax on expensive homes could help Ms Reeves if she were also forced to tax those the government defines as “working people”.
He said: “The idea of an effective and painful mansion tax on the rich seems to be part of a coherent political package.”
The Scottish Government is also consulting on the idea of introducing additional council tax bands, as it looks to make its property tax system more progressive.
The Treasury has been contacted for comment.