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Last Updated: Sunday, 18 January, 2004, 15:47 GMT
'Council tax to stay home-based'
Protesters want the tax replaced by one based on their ability to pay
Campaigners for council tax to be scrapped are likely to be thwarted, the local government minister has hinted.

Nick Raynsford said the way local councils raised money was likely to stay linked to the value of people's homes - but possibly with changes.

He expressed sympathy for the hundreds of pensioners who took to London's streets on Saturday to protest against rising council tax bills.

But there was "enormous scope" for councils to become more efficient.


Saturday's demonstration was organised by the campaign group Is It Fair, which claims, on average, the cost of council tax has risen by up to 70% since 1997.

Council tax rose on average by a record 12.9% last year.

The government is now looking at ways in which the system might be changed.

Asked if the council tax could be scrapped, Mr Raynsford told BBC One's Politics Show: "I think it's unlikely that we would wholly do away with a property based tax...

"But whether there should be additional revenue sources for local government, whether there should be some changes in the balance between the different elements that contribute to the cost of local spending, those are the key issues we're looking at."

Local income tax

Many of the pensioners want a tax based not on the size of people's homes but on their ability to pay.

The Liberal Democrats are pushing for a local income tax.

And the Local Government Association, which represents councillors from all parties, has put forward a range of proposals, including more of national income tax going to local councils.

But Mr Raynsford said a local income tax would leave some of the wealthiest people, directors who pay corporation tax and not income tax, contributing nothing to local services.

He has already written to 31 councils thought to be planning council tax rises of above 5% warning them ministers are prepared to use their capping powers.

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