Gwynedd and South Wales valleys could be hit hardest by proposed Council Tax reform, says expert

  • Report by ITV News' National Correspondent Rob Osbourne, on Sharp End

Communities in rural Wales could see the highest price increases because of Welsh Government's Council Tax reforms according to an economics expert.

Dr Rhys ap Gwilym, a senior academic at Bangor University, told Sharp End that based on the current proposals, revaluation of properties will also benefit urban areas, like Wrexham and Cardiff.

Rebecca Evans, the Minister for Finance and Local Government, says the government is "doing the right thing".

Blaenau Gwent has the highest council tax rate in Wales. Credit: Sharp End - ITV Wales

The Welsh Government is consulting on three possible approaches to council tax. Under all three of the proposals, houses in Wales will be revalued.

At the moment, homes in Wales fall into council tax bands based on property values from 20 years ago - in April 2003.

Losers from changes would be people who have seen their house prices increase quickly over the last twenty years, meaning they might move up into a higher band.

Dr Rhys ap Gwilym said, "on that basis, the losers are going to be the South Wales Valleys, Gwynedd, Ceredigion and lots of more rural places in Wales, where property values have increased faster than the average over the last twenty years".

The winners, Dr ap Gwilym predicts, will be generally more urban Welsh areas, like Cardiff, Wrexham, and Swansea. This is because property values have generally "increased more slowly over the last twenty years".

What are the proposed changes to Council Tax?

The Government stresses the changes aren't aimed at making more money. It says it wants to stamp out unfairness - redesigning a system which will raise the same amount, whilst making it more fair.

The Institute for Fiscal Studies (IFS) says that some plans "represent the most radical reforms of council tax anywhere in the UK" since council tax was introduced.

However, the IFS admits the bar is very low! Since it was introduced in the early-90s, council tax has remained mostly unchanged.

The three approaches the government are looking into are:

  • Proposal 1: "Minimal Reform"

This is the mildest of the three proposals would mean a revaluation of all properties in Wales.

Working with the Valuation Office Agency, all 1.5 million houses in Wales would be revalued. They would then be reassigned into the nine bands based on their revised value.

The Welsh Government says this would "result in a small move in the direction of fairness".

  • Proposal 2: "Modest Reform"

This proposal would "address both the outdatedness of the current system and also its unfair, regressive nature", according to the Welsh Government.

It would mean a revaluation, just like Proposal 1. After revaluations, there would then be another step where the rates for the higher bands will increase and the rate for the lower bands will decrease.

People in the lowest bands (A to C) would see a reduction in their council tax rates. While those on the higher bands (E to I) would see an increase.

Rebecca Evans has launched the consultation aiming to make the Council Tax system fairer. Credit: ITV Wales - Sharp End
  • Proposal 3: "Expanded Reform"

Proposal three is as close as possible to that "radical reform" the Institute for Fiscal Studies describe.

It would mean the introduction of three new bands, one at the bottom (A1) and two at the top (J and K). The two new top bands would be for the most expensive properties in Wales, which are valued at more than £1.2 million.

Just like in Proposal 2, the bands would be reweighed with people in the lower bands having to pay less, and those in the higher bands paying more. There would also be a revaluation of all properties, which would dictate which house goes into which band.

The consultation is open until 6 February 2024. the Welsh Government will look at the results of this and announce the next steps around Easter.

Whatever is decided could come into effect as soon as 1 April 2025.

Speaking to ITV's National Correspondent, Rob Osbourne, on Sharp End, the minister in charge of the consultation said "it is important to recognise how unfair council tax is at the moment, and it's only right that we address it".

In response to the suggestions that the revaluations may hit some groups harder than others, the minister argued that "almost all properties have gone up in value in the last twenty years and we reflect that in the system that we have.

"What matters is where your property is compared to all other domestic properties in Wales rather than the actual value of your property and how that has changed over twenty years."

She said, "There are a whole host of considerations about the practical implications and the operational implications we've got to take into account and it will be a balance of all those things".

You can watch the full debate on Sharp End.

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