Council tax revaluation will lead to massive increase, warn Lib Dems

Seven million families will be hit by council tax increases of up to 20 per cent after the general election, the Liberal Democrats claimed as they launched plans to replace the charge with a local income tax.

Seven million families will be hit by council tax increases of up to 20 per cent after the general election, the Liberal Democrats claimed as they launched plans to replace the charge with a local income tax.

Edward Davey, the party's local government spokesman, attacked plans for council tax revaluation as a "ticking time bomb" yesterday, warning that bills increased by up to 22 per cent after homes in Wales were placed in new council tax bands. He said Labour and the Conservatives were committed to revalue millions of homes to take account of house price inflation, and claimed this would lead to "spiralling" council tax rates.

Mr Davey insisted that Liberal Democrat proposals for a local income tax would save the average family £450 a year. He said: "The impact is going to be possibly seven million households losing. There is a hidden agenda of the Conservative and Labour parties to revalue everyone's homes for council tax.

"Labour and the Conservatives will go into these elections with some of the biggest council tax rises, but they are not telling people about it. It is the big tax issue of the election."

He added: "The whole council tax system is bust and it is time to scrap it. Liberal Democrat plans to replace it with a fair system based on ability to pay would cut the typical family's bill by around £450 a year."

Labour and the Conservatives criticised the plans, arguing that they would leave families worse off.

Mr Davey accepted that around a quarter of households would have to pay more under the party's proposals. Double income households earning the "early £40,000s" and single income households with earnings in the "late £30,000s" were likely to be hit, he said.

He said, however, that revaluing homes would lead to even greater tax rises. In Wales, he said, a third of homes moved into higher bands of council tax. Only 8 per cent had moved into lower bands.

Nick Raynsford, the local government minister, criticised the plans. He said: "Far from offering tax cuts, the Lib-Dem plans for a local income tax would hit hard-working families the hardest."

He added: "The Lib Dems always fail to say that their plans would lead to huge increases for lower paid workers and those who do not currently pay any council tax at all."

The Conservatives attacked the Liberal Democrat proposals, saying they heralded a return to "1970s-style" tax rates. Caroline Spelman, the party's local government spokesman, also criticised the Liberal Democrat attacks on council tax revaluation, claiming that they had voted for the change in Parliament.

She said: "The Liberal Democrat plans for a local income tax would mean a return to a 1970s-style rates of income tax, with a typical working family ending up worse off and hit by the 19 other local taxes Mr Kennedy proposes. This isn't fairness - this means punishing families and pensioners who have saved hard for their security."

She added: "It is clear that if Mr Blair gains a third term, Labour will hike up council tax through fiddling revaluation and introducing new higher council tax bands. The Liberal Democrats actually joined Labour in voting for revaluation - it was only the Conservatives who warned that the Government would use it to snatch extra millions from the wallets of hard-pressed taxpayers."