Help shape the future of council tax in Wales

The Welsh Government has launched a consultation today to gather public opinion on possible approaches to redesigning the council tax system to make it fairer.

Council tax plays a crucial role in funding essential services provided by local councils, such as schools, libraries, social care, and street cleaning.

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A key goal of the proposed redesign is to ensure that the changes do not increase the overall amount of council tax raised. The current system, which is twenty years old, is deemed unfair as it disproportionately burdens individuals living in lower council tax bands.

These individuals pay a relatively higher amount compared to the value of their homes, while those in higher-value homes pay less.

The consultation includes various potential approaches to address this imbalance, such as introducing new council tax bands, adjusting tax rates for each band, and reviewing discounts and reductions. The Welsh Government also seeks input on the desired pace of change.

The earliest possible date for the implementation of any changes is April 1, 2025. However, changes could also be deferred until the next Senedd term or introduced incrementally.

In conjunction with this initiative, the Valuation Office Agency intends to conduct a revaluation of all 1.5 million homes in Wales. The goal is to ensure that property valuations are up-to-date and in line with current market values.

Under the Welsh Government's plans, revaluations would occur every five years to ensure that individuals pay the appropriate amount of council tax based on their property's value.

This process also offers an opportunity to reassess tax bands and rates every five years, further enhancing fairness. While property prices have generally increased, this does not necessarily signify automatic council tax hikes. Reforms may result in many individuals' bills remaining the same or even decreasing.

The Welsh Government has proposed three approaches: minimal reform, modest reform, and expanded reform.

The Institute for Fiscal Studies has concurrently released an independent report providing illustrative examples of how the three approaches could affect different households in various parts of Wales.

Currently, nearly half of households in Wales benefit from discounts or reductions on their council tax bills through various exemptions and the national Council Tax Reduction Scheme. This will not change as a result of the ongoing work.

Minister for Finance and Local Government, Rebecca Evans, said:

“We are asking people to help us shape the future of council tax in Wales. Achieving a fairer council tax will be one of the single most beneficial actions this government can take towards making Wales a more equal nation. The benefits will be felt in the pockets of many households.”

“This is not about raising more money from taxes and changes are not going to happen overnight. We see this very much as being a gradual process and that is why we are also asking for views on the pace of change.”

This work is being carried out in collaboration with Plaid Cymru, as a part of the Co-operation Agreement commitment between the Welsh Government and Plaid Cymru.

Plaid Cymru Designated Member Cefin Campbell said:

“It is widely recognised that council tax is outdated and long overdue for reform. This consultation is asking for the views of people across Wales on what a council tax could look like in the future and how we can make it fairer. While change is needed, it will take time meaning bills will not change immediately. We are consulting not only on what needs to change, but when the changes could come into place.”