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PROGRESSIVE REFORM OF TAX BENEFIT ESSENTIAL FOR LONG-TERM SUCCESS

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Council tax is fundamentally sound and should be retained, according to a leading think-tank. ...
Council tax is fundamentally sound and should be retained, according to a leading think-tank.

But it should be made more progressive by splitting the bands at the top and bottom ends, and action taken to tackle the 'appallingly low' take-up of council tax benefit, said Peter Kenway, director of the New Policy Institute.

Addressing a CIPFA seminar on the balance of funding review, Mr Kenway said: 'The council tax isn't that bad, and the more we worked on it, the more attractive we found it to be.

'At heart it is quite sound, but it needs to be reformed and it can be reformed.'

Both the size of and multipliers for bands B to F were regular, he said, and that regularity should be extended to the bands at both ends. Some regional variation would be needed to protect tax payers in cheaper homes in high price areas, especially key workers in London and the south-west.

Reform of council tax benefit was 'crucial' to making the system work, he said.

'Our strategy is to change the council tax benefit system into an income cap system under which a household pays a nationally applicable cap, which only goes up if income goes up.

'A cap is not a handout so the stigma of applying for relief is avoided, as well as the absurdity of a benefit for a tax.

'It looks very different from the council tax benefit system but algebraically it is the same.'

Mr Kenway, who produced a paper for the balance of funding review group on the reform of council tax, dismissed the argument that council tax is not linked to ability to pay, pointing out that tax paid was 'more or less' in line with income. But there was some evidence the south-west had been hit worse than other regions, he said.

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