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Monday, December 01, 2008, 10:00
The New Local Government Network said the money generated from the Prime Minister's planned 45 per cent tax band for high-earners should be directly channelled into cutting town hall costs.
It follows growing political focus on the council tax which was recently voted Britain's most unpopular tax, with two-thirds of people believing it to be unfair.
The plea to cut bills comes after ministers ordered councils to find extra savings while also keeping bills down. Westcountry councillors have already warned services could be at risk without increased grants from Whitehall. In the Pre-Budget Report plans were announced to increase the amount of income tax for those with incomes over £100,000 from April 2010.
And a new additional higher rate of income tax of 45 per cent will be introduced for those with incomes above £150,000 from April 2011.
NLGN director Chris Leslie, who last year masterminded Mr Brown's leadership bid, said the money generated should be used to cut council tax bills.
"While the Government's response to the credit crunch has rightly focused on stabilising the economy, the current environment also offers the opportunity to implement a fairer taxation system."
The planned tax rises should be used to reduce the council tax before "finally tackling the much-needed reforms to our creaking system of local taxation".
He added: "The Government is right to identify that the super-rich could and should pay a little bit extra, particularly given how much they have benefited from a buoyant economy over the past decade.
"We hope that this tax reform will, in time, bring benefits to millions of hardworking local residents, perhaps through a change to our council tax system."
This week, the Department for Communities and Local Government confirmed its level of grants to councils – and warned bills should be "substantially below" five per cent in future years. But Local Government minister John Healey said councils would also have to find more than £1.5 billion in new savings every year, up from a planned £1 billion.
Falmouth and Camborne MP Julia Goldsworthy, the Liberal Democrat local government spokesman, warned that council tax payers would be left with a "painful New Year hangover".
"Thanks to poor forward planning by the Government, councils will be faced with a choice between damaging service cuts and tax increases," she said.
"Instead of putting more money into people's pockets, this settlement will mean more large bills landing on overstretched families' doormats."
Councillor Brian Greenslade, leader of Devon County Council, said the county was still short-changed by the grant: "Devon this year will receive £40 per person less than the average for similar two-tier shire counties, which amounts to £30 million less funding for public services across the county."
He said rises in fuel duty and National Insurance contributions, announced in the Pre-Budget Report, would also increase the authority's costs.
The Conservatives have pledged to freeze council tax bills for two years by cutting marketing costs in Whitehall and reducing waste in town halls.
The Lib-Dems, who have long argued for a total overhaul of council tax, have recently dampened their support for a local income tax instead.
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