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The Potential Impact of Reforms to the Essential Parameters of the Council Tax *
Author(s) -
Jones Colin,
Leishman Chris,
Orr Allison M.
Publication year - 2006
Publication title -
fiscal studies
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.63
H-Index - 40
eISSN - 1475-5890
pISSN - 0143-5671
DOI - 10.1111/j.1475-5890.2006.00033.x
Subject(s) - economics , property tax , public economics , tax reform , multiplier (economics) , local government , value added tax , macroeconomics , law , political science
Council tax was introduced in Britain in 1993 and represents a unique international property tax. There is a growing belief that it is time to reform the number and structure of council tax bands, but such views have a minimal empirical base. This paper sets out to assess the impact of changing the bands on personal and local government finances, and extends the analysis to the role of the tax multipliers linked to each band. The research is based on the experience of a representative sample of local authorities in Scotland. A statistical revaluation for 2000 is estimated for the existing eight‐band system, and from this base a 10‐band system is calculated. Financial implications are then simulated for each local authority, taking account of central resource equalisation mechanisms. The results indicate that increases in the number of bands will have little impact on the burden of the council tax compared with regular revaluations. Changing the tax multiplier range has the greatest impact on local authority finances and council tax payments.