Council tax should be revised and updated and a proportion of income tax should go directly to local government, former audit commission chairman Sir Michael Lyons today advised the government.
In his much anticipated report - Place shaping: a shared ambition for the future of local government - Lyons said local authorities need greater flexibility and improved fairness, transparency and economic incentives. In the medium term government should re-value council tax to make the system more fair by adding new bands to reduce bills for those in the lowest value properties, paid for by increased bills for those in higher value properties. Lyons said there should be no increase in average council tax bills as a result of this. It should also consider assigning a fixed proportion of income tax to local government. The report adds that in the longer term, future governments could consider more radical reform options such as local income tax or re-localisation of the business rate, but these reforms may require greater public support and understanding than currently exists.