Wales continues to lead the way on council tax reform.
We’re very proud of our achievements over the years, working in partnership with local government.
Council tax is more up-to-date in Wales than elsewhere, and we have an additional tax-band for the highest value properties.
We’ve delivered local powers to help manage empty and second homes, removed the threat of imprisonment for non-payment, taken a citizen-focus on people struggling with debt, and created a new exemption for young care leavers.
We have maintained a national scheme of support for low-income households, an important lever for tackling poverty.
Despite the excellent ongoing work of local government, wealth inequality persists.
Even with our achievements, council tax is now 20 years out of date and unfair. A relatively higher share of council tax is being charged to households living in lower-value properties.
The evidence is clear – achieving a fairer council tax could be one of the most beneficial actions governments can take towards a more equal nation.
In November 2023, we launched our phase two consultation on the reforms.
This sets out our ideas for making the tax fairer and more progressive – a key commitment in our Programme for Government and the Co-operation Agreement between the Welsh Government and Plaid Cymru.
The consultation outlines three possible approaches to reform, although the options are endless, and we welcome all ideas in response to the consultation.
Each of the possible approaches in our consultation includes a revaluation of 1.5 million properties – a major exercise in itself – and two include other proposals such as additional council tax bands.
We’re pleased to have worked once again with the Institute for Fiscal Studies, which has released an independent report giving examples of how these approaches could look in different parts of Wales.
We’re also asking for views on how soon we should introduce these changes – whether that’s at our earliest opportunity in 2025, defer changes until the next Senedd term, or do it in stages.
The Welsh Government is also committed to regular updates to council tax in the future. We introduced a Local Government Finance (Wales) Bill into the Senedd on 20 November to provide that opportunity, making five-yearly revaluations a statutory requirement.
We are also reviewing the arrangements for discounts and reductions.
Nearly half of households in Wales currently receive a discount or reduction on their council tax bill, and this will not change as a result of this consultation. We are committed to retaining the one-adult discount and keeping the discount at 25 per cent.
It’s important to emphasise that this is not about raising more money from council tax and changes are not going to happen overnight.
Reform of the system could lead to different areas being affected in slightly different ways. We will consider mechanisms to address any such differences and how they may be mitigated.
There is no doubt that council tax reform is complex; it requires real collaborative effort, especially with local government. We’re particularly grateful to council leaders and practitioners for their contributions so far.
With the launch of the phase two consultation, we are one step closer to creating a fairer and more progressive council tax for the people of Wales. We encourage people to respond to the consultation by 6 February 2024.
The Welsh Government consultation on council tax reform is available at www.gov.wales/council-tax-reform. Visit www.ifs.org.uk/publications/assessing-welsh-governments-consultation-reforms-council-tax for the IFS’s report on the consultation.