On 15/10/12 09:23, Tony Bryer wrote:
On Sun, 14 Oct 2012 19:35:00 +0100 Hugh wrote :
Revaluation on a regular basis would simply hike the tax regardless of
the occupants income. Those on fixed income would suffer most. The
only time value relates to income is when you buy the house in the
first place. So the logical thing to do would be to revalue on sale.

Revaluations in themselves don't change the amount of tax paid. Assume a
mythical authority that spends £1m and has 1,000 houses each valued for
rates purposes at £100K each. Total value of property = £100m so rates
are at 1p in pound, 100,000 x 0.01 = £1000 per property. Revalue to
£125K, poundage is now 0.8p, £125,000 x 0.008 = £1000.

But only if the poundage is revalued also; it is possible but in
practice the opportunity to grab a little more tax is so hard to resist.
And unless the relative value of every property remains the same there
will be some winners and some losers. Which catches people out when the
revaluation is of a nominal value that bears no relation to actual income.
As Hugh suggests, revaluation on sale has the advantage of matching the
valuation to current circumstances. Although it may also create a
'wealth trap', akin to the realisation of capital gains.

--
djc