Inquiry to explore council tax options

20 July 2004

An independent inquiry is to look at ways of making the council tax system fairer.

Local Government Minister Nick Raynsford said that the inquiry's work will be informed by the Balance of Funding report which has been submitted to the government.

The report concluded that council tax should stay but should be reformed. It also says that there are strong arguments for shifting the balance of funding towards more local funding - but only if the methods for doing this were desirable and feasible.

The independent inquiry will now:

• Make recommendations for the reform of council tax, taking into account the revaluation of homes in 2007
• Assess the case for giving local authorities more flexibility to raise extra money (meaning more money would be raised locally, and less centrally)
• Analyse the options for shifting the balance of funding - including local income tax, reform of business rates and other possible local taxes and charges
• Consider the implications for the financing of possible Elected Regional Assemblies
• Consider any implications that its recommendations have for other parts of the UK

Mr Raynsford said:

"One thing is clear - there are no easy answers.

"This subject needs careful examination, not knee-jerk reactions. That is why we now look to the independent inquiry for detailed and impartial advice on how we should take forward the Review's findings."

Sir Michael Lyons will carry out the inquiry and will report to the Deputy Prime Minister and the Chancellor by the end of 2005.

Extra info

• Local government Balance of Funding Review (external link)