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Report: Unfair council tax must be reformed

Council tax systems in England and Wales are unfair on local communities and must be urgently reformed, an influential report has concluded.The independent review of local government by Sir Michael Lyons, professor of public policy at Birmingham University, recommends that council tax bands be rebalanced to reflect changes in property prices.Ahead of today's Budget announcement from Gordon Brown, Sir Michael argues that new bands could be created for those in the lowest brackets in order to reduce bills by raising levies for people in higher-valued properties; therefore not increasing average council tax bills.In addition, the overall system should be automated so that £1.8 billion in unclaimed benefits goes directly to the poorest households, the report states, as well as raising the savings limit for pensioners to £50,000."Council tax is not 'broken' but is seen as unfair and has been put under too much pressure," he writes.Sir Michael says that in his vision of a "shared ambition for the future", central government should grant more powers to local authorities, while councils need to engage with their communities more."This package of reforms is designed to set out a developmental approach towards a more devolved and ambitious future for local government, based on improving relationships between central and local government, better local choices, more effective management of pressures, and greater public trust in the system as a whole," the review states.He claims that his report, commissioned by the government in 2004, is more "radical" than many may have expected, including as it does plans for a tourist tax for local government and the suggestion that council tax be ultimately replaced by a local income tax.But the review concludes that such a move would be an extremely long-term measure."I am looking at some changes to be made immediately but I leave open for the future and clearly beyond the life of this government the possibility that a local income tax or assignment taking a fixed proportion of national income tax could be used to take the pressure off council tax," he told the Today programme ahead of the report's publication.A spokesperson for the Department of Communities and Local Government (DCLG) said that a response to the Lyons inquiry report would be issued after Mr Brown's budget announcement later today.

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