Britain’s poorest households are dedicating a larger proportion of their income to council tax, a burden reminiscent of the controversial poll tax that played a role in Margaret Thatcher’s political demise.
According to the Resolution Foundation’s latest research, the lowest income quintile in England, Wales, Scotland, and Northern Ireland saw their council tax or domestic rates payments rise to 4.8% of their income in the 2020-21 financial year, up from 2.9% in 2002-03.
Council tax, one of the UK’s few wealth-related levies, varies across the four nations, with systems reflecting property valuations that are increasingly seen as outdated and unfair.
England and Scotland base their tax on 1991 property values, failing to account for substantial shifts in wealth distribution over the past three decades.
While Wales updated its valuations to 2003, and Scotland increased rates for higher-banded properties in 2017, Northern Ireland still operates on a domestic rates system that predates the council tax.
The thinktank highlighted the regressive nature of the tax, where poorer households contribute a higher percentage of their income compared to wealthier ones, with the poorest fifth paying 4.8% compared to just 1.5% by the richest fifth.
This disparity has worsened due to the abolition of the council tax benefit in 2013 by the Conservative-Liberal Democrat coalition, and the phased elimination of rebates.
The rising financial burden on less affluent families is seen as mirroring the challenges posed by the poll tax in the late 1980s.
Introduced by Thatcher as a flat-rate community charge to fund local governments, the poll tax was deeply unpopular, leading to widespread protests and ultimately contributing to her resignation in 1990.
The subsequent introduction of council tax in 1993 by John Major’s government sought to offer a more equitable solution, yet current trends suggest that old disparities are resurfacing.
