Decision to delay council tax shake-up in Wales is 'absurd', says IFS

Wales' finance minister has announced the Welsh government wants to delay a revaluation of homes for council tax to 2032.

Elin Jones said the decision was made because she could not afford the kind of financial relief she would want to put in place if she went ahead with a planned revaluation in two years' time.

But the respected Institute for Fiscal Studies (IFS) think tank said the explanation given by Jones was "nonsensical" and "absurd".

It would mean that the values used to decide how much households pay will remain based on house prices from 23 years ago.

A majority of the Senedd will need to agree to the delay - meaning Plaid Cymru will need opposition parties help to pass it.

Reform welcomed the decision, but the Welsh Conservatives called the decision "cynical" and said ministers should scrap it altogether.

Welsh Labour accused Plaid Cymru of failing to throw its weight behind progressive policies.

Plaid Cymru had promised to make council tax fairer at the last election, and Jones said Wales' governing party was not abandoning the pledge.

Council tax has been controversial since it was set up by the Conservative UK government of the early 1990s, because it is based on the value of homes rather than what people can pay.

Wales had one revaluation exercise in the early 2000s - in England and Scotland the tax is based on values from 1991.

Jones told the Senedd that estimates showed a quarter of households could see their council tax band increase, a quarter could see it decrease, and half would see minimal change.

"We are in government at a time when our public services face significant pressures, and when communities across Wales rightly expect us to focus our resources on the priorities that matter most to them," she said.

Jones said she could not risk "new unfairness" to the tax system at a time when household budgets are under significant pressure - but it would be "extremely challenging" to put in place the kind of support she wanted.

Temporary relief could cost up to £80m in the first year if the planned revaluation went ahead in 2028-29, she said.

Jones said she wanted to explore other ideas, including adding further bands for the most expensive properties.

The Institute for Fiscal Studies (IFS) said the decision to delay revaluations was "incredibly disappointing".

Stuart Adam from the IFS said: "There is no principled argument for allowing council tax to become even more out-of-date.

"Failing to go ahead with revaluation means that people living in properties that are equally valuable will continue to face very different tax bills just because their homes were worth different amounts in 2003."

He described it as "simply unfair", and said the reasoning was "nonsensical" and "absurd logic".

"In effect, the Welsh government says that, because it doesn't want to gradually phase in cuts to council tax bills for those who would gain from revaluation in order to pay for phasing in increases in bills, it will instead stick with the current, outdated system – and not cut those households' bills at all," he added.

People who pay council tax do so according to the band they are in, and Wales is the only UK nation to have added an extra council tax band.

The previous Welsh Labour government planned a revaluation to make the tax fairer, although ministers at the time also delayed bringing one in from 2025 to 2028.

Plaid Cymru politicians had criticised the decision at the time, and it was cited as a reason that the party pulled out of a co-operation agreement in 2024.

There are nine council tax bands - based on house valuations from 2003.

The cheapest homes are at Band A and the most expensive Band I. The lower the valuation, the cheaper the council tax.

The bands are:

• Band A: up to £44,000
• Band B: £44,001 to £65,000
• Band C: £65,001 to £91,000
• Band D: £91,001 to £123,000
• Band E: £123,001 to £162,000
• Band F: £162,001 to £223,000
• Band G: £223,001 to £324,000
• Band H: £324,001 to £424,000
• Band I: Over £424,000

In the Senedd, Welsh Labour finance spokesperson Huw Thomas accused Plaid of failing to back progressive policies in government.

Thomas said: "In opposition, Plaid claimed the moral high ground on this issue; in their manifesto they promised action.

"This retreat today isn't just hypocritical, it shows political and moral cowardice."

Reform UK Wales' finance spokesman Cai-Parry Jones said he welcomed the pause, but said: "Kicking this into the long grass and breaking their manifesto pledge provides no certainty for households worried about rising council tax bills.

"Reform cannot support measures that could leave hard-working people facing higher bills," he added, and called for referendums for increases more than 4.99%.

Sam Rowlands, Welsh Conservative finance spokesman, said: "It is clear that another revaluation would increase council tax bills at a time when household budgets are under significant strain.

"Instead of this cynical decision to simply delay this council tax bombshell, Plaid Cymru ministers should scrap it altogether.

"Council tax bills are already out of control in many parts of Wales. Instead of pushing households into higher bands, we need a cap on council tax bills at 5% and force a local referendum if any council attempts to breach the cap."

Councillor Anthony Hunt, leader of the Welsh Local Government Association and leader of Torfaen council, said: "Everyone agrees that we must look for ways to make council tax fairer."

He added: "Local government needs time to properly consider the announcement and what it means for the future of council tax in Wales."