A quarter of Welsh households face a council tax increase

The Welsh Assembly Government has announced changes to the bands properties are placed in, claiming the current bands are outdated.

Currently, householders pay council tax calculated by the value of their home in April 1991.

But a property boom in the ensuing decade has seen houses soar in value in some areas, while council tax bands have stayed the same.

NEW COUNCIL TAX BANDS Band A Up to �44,000 B �44,001-�65,000 C �65,001-�91,000 D �91,001-�123,000 E �123,001-�162,000 F �162,001-�223,000 G �223,001-�324,000 H �324,001-�424,000 I �424,001 and above

House prices in Wales have risen by 20% in the last year alone, with the average property now costing �103,669.

Every home in Wales will now be revalued and placed in a council tax band based on the value of their home on 1 April this year.

An extra tax band for properties valued above �424,000 will also be introduced when the new system is adopted in April 2005.

Welsh Minister for Local Government, Sue Essex, said the new system would be fairer to council tax payers.

"Obviously it's not sustainable to continue to raise tax on the basis of 1991 values indefinitely," she said.

CURRENT COUNCIL TAX BANDS Band A Up to �30,000 B �30,001- �39,000 C �39,001-�51,000 D �51,001-�66,000 E �66,001-�90,000 F �90,001-�120,000 G �120,001-�240,000 H �240,001 and above

"Replacing old values with 2003 values and carrying out a revaluation of all Welsh homes will bring the council tax system up to date and ensure the burden is redistributed more fairly across Wales.

"Revaluation is not a means of increasing the total amount of council tax raised, and it doesn't follow that all council tax bills will rise.

"We estimate that half of Welsh homes will remain in the same band, around a quarter will move down the banding system and a similar number will move up."

Council tax is essentially a tax on wealth and if your house has doubled in value, you should really expect to pay more Laurence Copeland, Cardiff Business School

In their party conference this week, the Liberal Democrats proposed scrapping council tax altogether and replacing it with a local income tax of up to 3%.

The Lib Dems claim that a new tax based on earnings would make 70% of people better off with high-earners paying more.

'Winners and losers'

The party's Welsh assembly spokesperson for local government, Kirsty Williams, said: "There will be winners and losers in the changes to the council tax bands.

"As before, the system is not geared to your ability to pay.

"A person may have lived in a house for years in an area such as Cardiff where values have gone up significantly.

"They will now be forced to pay more council tax without necessarily having a rise in income.

"A fairer system would be an income-based tax which is calculated according to your ability to pay rather than the value of your house."

Laurence Copeland, professor of finance at Cardiff Business School, said that new council tax bands were inevitable as property prices increased.

'Tax on wealth'

He added: "If you've got house prices going up all the time, fewer and fewer people are paying in the bottom bands.

"It also means that councils are not taking as much as they could from people at the very top, which is why the new band has been created.

"In 1991, there were very few people in Wales with property worth �240,000 - now there are quite a lot.

"A few years ago, newspapers were reporting that people were willing to pay more tax for better public services.

"I doubted it then, and I think you will see people protesting if they find themselves in a higher band.

"However, council tax is essentially a tax on wealth and if your house has doubled in value, you should really expect to pay more."

And a spokesman for the Welsh Local Government Association added: "It is common sense that people should be paying council tax bills based on up-to-date analysis."