Tax payers could see bill increases with biggest shake-up and redesign of tax system in the works

Hundreds of thousands of council tax payers could see their bills increase under plans for the biggest shake-up of the system in decades.

The Welsh Government has launched a consultation on proposals to redesign council tax, which raises more than £2bn a year, with the goal of making it fairer.

While bills for 70% of people would fall or stay the same, 30% of council tax paying households – approximately 450,000 homes – could face higher taxes.

Ministers have stressed that any redesign would raise the same overall amount of council tax across Wales as the current system.

The consultation includes three proposals:

Minimal reform: a revaluation of properties but keeping the current nine bands and tax rates.
Modest reform: a revaluation plus further reforms to the tax rates for each band. This would mean bills for households in lower-band properties would fall while bills for those in higher bands would increase.
Expanded reform: a revaluation plus further reforms including three new tax bands – one at the bottom for the lowest value properties and two more at the top for properties valued at more than £1.2 million.

Rebecca Evans, the finance and local government minister, said: “We are asking people to help us shape the future of council tax in Wales.

“Achieving a fairer council tax will be one of the single most beneficial actions this government can take towards making Wales a more equal nation.

“The benefits will be felt in the pockets of many households.

“This is not about raising more money from taxes and changes are not going to happen overnight.

“We see this very much as being a gradual process and that is why we are also asking for views on the pace of change.”

Nearly half of households in Wales currently receive a discount or reduction on their council tax bill.

The Welsh Government is reviewing all 53 categories of council tax discounts and exemptions, including whether there should be new discounts.

However, the 25% council tax discount for single-person households will remain.

The proposals are being brought forward as part of the co-operation agreement between the Welsh Government and Plaid Cymru.

“It is widely recognised that council tax is outdated and long overdue for reform,” said Cefin Campbell, for Plaid Cymru.

“This consultation is asking for the views of people across Wales on what a council tax could look like in the future and how we can make it fairer.

“While change is needed, it will take time – meaning bills will not change immediately.

“We are consulting not only on what needs to change, but when the changes could come into place.”

Under the proposals, the Valuation Office Agency (VOA) would revalue all 1.5m homes in Wales – the first revaluation since 2003.

The VOA would then revalue homes every five years to ensure they are up-to-date.

Sam Rowlands, the Conservatives’ shadow local government minister, criticised plans for a council tax re-evaluation.

“Since 1999 council tax in Wales has gone up by nearly 200%,” said the former leader of Conwy Council.

“The Labour Government, in the typical spirit of wanting to make taxation more ‘progressive’, is stealthily planning on hiking up council tax for hard-working people.

“The last time a revaluation took place in Wales one in three families were hit with higher bills – we can’t allow this to happen in the current cost-of-living challenge.

“It’s vitally important that any council tax revaluation is fair and justified and doesn’t hit hard working people across Wales.”

Ministers are also consulting on scrapping the 50% empty property discount and changing the exemption for properties unoccupied since the former resident’s death.

Jane Dodds, leader of the Lib Dems in Wales, said: “People across the country have seen their council tax increase over recent years, and as one of the most unfair taxes we have, change is long overdue.

“These plans from the Welsh Labour Government and Plaid Cymru come at a time when house prices are incredibly inflated.

“If the revaluation is done at the wrong time, plans designed to ease the burden on rate payers could cause further harm.

“We also can’t escape the fact that councils are under huge financial pressure too, and any impact on council funds could put more pressure on services and staff.

“It is also disappointing that the plans fall far short of the fundamental overhaul of the system we need.”

The earliest the reforms could come into force is April 2025 but they could be deferred until the next Senedd term after the 2026 election or introduced in stages.

Readers can have their say by responding to the Welsh Government’s consultation which closes on February 6, 2024.