Council tax set for overhaul

England’s council tax system is set for a major revamp in 2008, it has emerged.

But rich homeowners in London and the South East could be hit hardest by the overhaul.

Council tax payments have soared in recent years and the Office of the Deputy Prime Minister, faced with widespread bitterness to council tax rises, may introduce a regionally based system, with homeowners in the North set to reap the benefits as a lower band is introduced.

The current eight national bands could be abolished in 2007 when the next revaluation debate takes place. It could be replaced with regional bands, reflecting local property values, according to The Times.

Nick Raynsford, local government minister, said a report would be published in July but warned the Government was cautious about repeating the poll tax fiasco.

“We recognise the problems and unfairness within the existing council tax system and indeed set up our balance of funding review specifically to address these and explore improvements,” he said.

“As the sad history of bodged reform such as the poll tax tells us, it is very dangerous in this complex field to seek over-simplistic solutions and promise painless reform.”

Meanwhile, the Lib Dems today will reveal plans to replace levy with a local income tax.

The Lib Dems say seven out of ten people would pay less in local income tax compared to current council tax levies – three in ten would pay more.