European calls for UK Council Tax reforms

The European yesterday announced a raft of measures that the UK should make in order to quell the UK property market. With the London market having risen so quickly over the last couple of years the commission said that in order to rein in prices the government should consider raising council taxes that are linked to house price increases.

The argument is that the way council tax is collected is unfair because taxes on higher value homes are lower that lower valued property in relative terms. According to the report overhauling the way council tax is calculated would make it fairer and in theory higher council tax payments for higher valued homes should put people off paying more for a home. It could be argued that the types of buyers that purchase these homes are hardly likely to be put off of buying a mansion because the council tax is high.

The main reason there is a problem with the way council tax is calculated is because the council tax system is still working on valuations that were carried out back in 1991 and prices have increased considerably since then. In 1991 the average house price across Britain was just under £55,000.

This compares to the average price of a home in May 2014 which was £186,512. Does this mean that everyone will be facing a huge hike in council taxes or that the government will look to target the more expensive homes? I think it is fair to say that as long as the Tories are in government it is unlikely hey will be heeding the advice of the European Union.