Millions of council tax payers are in line for increases of up to 5% in their annual bills from April, with those on low and middle incomes hit hardest by a sixth year of increases in England above the rate of inflation. Hundreds of councils must decide soon whether to raise the tax by the maximum allowed by government of 4.99%, or to make big cuts in services.
Manchester city council has told residents that without a 5% increase in bills it must make savings of £8.5m in addition to the £50m it is seeking to cut from current spending.
David Phillips, associate director at the Institute for Fiscal Studies, said council tax was a regressive tax that favoured wealthier people. “Council tax bills represent a larger share of income for low-to-middle income households than high-income households,” he said.
“This means increases in council tax will typically take up a larger share of their income too ..."
Figures show that a band D council payer in the lowest 20% of income earners last year paid £1,000 after extra government subsidies out of a disposable income of £16,776. A council tax payer in the top 20% of earners paid £1,823 out of a disposable income of £91,472.
Tony Travers, a local government expert at the London School of Economics, said: “It is the ‘not quite poor’ who suffer the most. Those who have enough income that means they don’t qualify for benefits. They get hammered by council tax increases as a proportion of their income.”
Middle-income households to be hit by ‘£2bn council tax bombshell’ | Council tax | The Guardian
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