Labour planning secret tax on ‘nice houses’

Millions of middle-class home owners living in desirable neighbourhoods are facing higher council tax bills after the next election following a secret Government exercise to assess the “niceness” of different areas.

Labour planning secret tax on 'nice houses'. (Pictured: Holland Park, London)
Cities are being divided up under the new tax plans, with desirable neighbourhoods being charged higher rates. Tories plan to publish a dossier on the system today.

Tax inspectors have divided England into 10,000 new “localities” with each neighbourhood ranked on the socio-economic class of its residents and environmental factors such as crime and traffic levels.

The inspectors have even purchased demographic data disclosing how many company executives, pensioners or students live in particular streets, The Daily Telegraph has learned.

This has been collated on a secret database which is being used to assess the desirability of neighbourhoods to help determine council tax bills if Labour wins power again at the next election. (It really does not matter who you vote for, because those politicians are all puppets.)

The Conservatives have branded the proposal “a nice neighbourhood tax” which will penalise middle class families struggling to cope with the economic downturn. It is feared the revaluation will quickly be implemented if Labour wins the next election to help fund the growing deficit in Britain’s public finances.

A revaluation of council tax bills is considered politically explosive and has already been delayed once amid widespread fears that it would be used to increase taxes.

Each of the 22 million properties in England is currently placed into one of eight council tax bands, depending on its value. These valuations are based on property prices of the early 1990s, long before the property market boom. Council tax bills for each band are then set by individual local authorities.

Although house prices have dipped during the recession, even the most pessimistic forecasts has them returning only to the levels of 2004 before they start to rise again.

A revaluation was due to be conducted in 2007, but was postponed until after the next election over fears that millions of families would see a significant hike in their bills. The average annual council tax bill is already almost £1,400 a year and a recent study suggested most town hall leaders were expecting above inflation increases next year.

The information seen by The Daily Telegraph however, suggests middle class home owners could be facing even more punitive council tax rises if Labour wins a fourth term.

Under the new scheme, each “locality” has been assigned a six-digit ID – known within Whitehall as a “value significant code”.

The size and type of every property is then entered into the database along with its new “locality code”. Each local authority is understood to have ranked the desirability of each locality within its area. This ranking is then used to help determine a property’s new council tax banding.

The typical local authority has been divided into 28 different localities, with each locality covering an area of about five square miles. The new database can also be easily updated making it far more easy to conduct regular council tax revaluations.

Ministers have refused to reveal which neighbourhoods form the new localities or how they are ranked – claiming the information is “commercially sensitive”. John Healey, the Local Government minister said it is “not appropriate to place this in the public domain”.

The existence of the secret database has however, been uncovered by the Conservatives following a series of detailed Parliamentary questions and Freedom of Information law requests.

The Tories have obtained details of the scheme from presentations made by Government officials to interested foreign tax authorities at overseas seminars. These include maps which reveal how cities are being divided up under the new tax plans. The Tories are planning to publish a dossier on the system today.

The database is the culmination of more than six years work being conducted by the Valuation Office Agency, an arm of HM Revenue and Customs.

Last night, Eric Pickles, the Shadow Local Government Secretary, said: “The cat is out of the bag that Gordon Brown’s tax inspectors are preparing for a council tax revaluation after the general election. Labour Ministers have developed a 21st century Domesday Book – carving up England’s towns and villages into anonymous ‘localities’ for taxation.

“Family homes in middle England which enjoy lower rates of crime, less traffic or a friendly community now face the prospect of another tax bombshell. Given the chance, there is nothing that Gordon Brown will not tax.”

The secret database is markedly different from the last council tax valuation when surveyors and estate agents conducted “drive-by” valuations on individual properties.

Pressure groups last night called on the Government to release full details of the new system so that home owners are able to assess the implications for their properties.

Susie Squire, Campaign Manager at the TaxPayers’ Alliance said: “What has the government got to hide? It is only fair for them to be open with taxpayers about any impending increases or reclassifications.

“Council tax has already increased by 50% over the last ten years, and any further tax hikes would be a disgrace, particularly as ordinary people continue to struggle in the credit crunch. Many pensioners and others who have owned their property over a long period may find themselves suddenly footing an unexpectedly large bill, through no fault or action of their own. It’s time council tax came down, for everyone.”

A spokesman for the Communities and Local Government said that there were currently no plans to change the council tax system.

“We have repeatedly made clear there will be no council tax revaluation during the lifetime of this Parliament and would not expect to consider it during the current three-year settlement for local government, even after that there would need to be clear benefits,” he said.

“The Valuation Office Agency is responsible for the valuation of homes for council tax purposes and has a duty to maintain an accurate council tax valuation list. The VOA’s powers have not changed since the introduction of council tax, by the previous Government, in 1993.”

By Robert Winnett, Deputy Political Editor
Last Updated: 11:33AM GMT 26 Dec 2008

Source: The Telegraph

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