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Last Updated: Tuesday, 20 March 2007, 23:15 GMT
Extra council tax bands proposed
Council tax form
Current valuations were finalised in 1991
The Lyons review of local government funding is to call for two extra council tax bands at either end of the price spectrum, the BBC has learned.

The report will recommend adding a new band for the most expensive homes and one for the cheapest properties.

It will also say that people entitled to council tax benefit should gain it automatically instead of claiming it.

But the review will call for council tax revaluation before any changes, which means they could be years away.

Speaking to the BBC on Tuesday, the report's author, Sir Michael Lyons said the government must press ahead quickly with revaluing homes to make things fairer.

1m 'top band'

He added: "Every time people worry about who's going to pay a bit more, I would like them to just spend as much time worrying about who deserves to pay a bit less - because their house price hasn't gone up."

BBC local government correspondent John Andrew said that there was speculation that homes worth around 1m would be included in the new top band.

However he said that these proposed changes could be years away, as revaluation would definitely not happen in the life of the current parliament.

All that now needs to happen is that government picks up and runs with this agenda
Chairman Dave Wilcox

Other recommendations include allowing people to hold more in savings before losing the right to council tax help.

A tourist or bed tax is also recommended as an extra source of local authority income, although it would be up to councils whether they adopt one or not.

The report, which only applies to England, will not suggest returning the business rate to local control.

Currently, the top-priced homes pay three times as much as the cheapest.

The news was welcomed by the Local Government Information Unit.

Chairman Dave Wilcox said: "All that now needs to happen is that government picks up and runs with this agenda which will make council tax fairer, and importantly also be seen as being fairer too."

Tony Travers, of the London School of Economics, said small changes recommended in the report, could still prove controversial.

"The interesting thing about council tax and other local taxes and charges is that people tend to feel them, unlike national taxes that they don't really sense in the same way," he said.

"So in that sense, any small change can have a big, big impact on millions of people."

The report's author on the need for band changes

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