14 March 2007

Bad Prognosis For Council Tax-payers

I was looking over an excellent post by Ross Cowling on Labour's tax rises with a view to analysing how many of their taxes could be classified as stealth when I noticed a pattern in the council tax rises. They say that a picture tells a thousand words, so here is a graph showing the council tax rises under Labour by year. I have helpfully marked the dates of the general elections.

Big picture, average council tax has nearly doubled under Labour whilst full-Time earnings have only increased by just over 50% since Labour have come to power (Source 1 and Source 2).

2007 is likely to be a very bad year for council tax payers. Of course, the timing in the electoral cycle makes it likely that they will take an unpleasant hit. I'd suggest that Blair's legacy aspirations may have depressed the 2006 rise so the required increase is probably likely to be even greater than is usual at this stage in the electoral cycle. Further, there is speculation that due to government-imposed single status agreements, back-dated liabilities of up to £3bn may be embedded - and that's before taking into account the inflationary impact of single status on current payroll expenditure. All in all, I predict a double-digit rise via rate increases and/or a council tax rebanding exercise. Expect things to get messy.

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