The Communities Secretary Eric Pickles has announced local people would have "final say" on council tax hikes by 2012.
Any local authority that increases its council tax, beyond what the Parliament has approved each year, would face an automatic referendum of residents in the local area. If the council loses the referendum, then the local authority would have to refund any additional money to the voters or give a credit for the next fiscal year. In a local referenda, the voters would be given a choice to either approve the proposed increase or a "shadow budget" which would most likely have reduced council services.
"Hard-working families and pensioners were left feeling powerless and frustrated under the previous government, as council tax bills doubled while their frontline services like weekly bin collections were halved," said Mr. Pickles.
"If councils want to increase council tax further, they will have to prove the case to the electorate. Let the people decide," he added.
The Communities Secretary has pledged to replace the top down council tax cap which is imposed by Whitehall currently and give local communities the power to decide. The Coalition Government has repeatedly pledged devolution of powers - but the powers should not only be devolved to council but it should be "devolved further down to neighbourhoods and citizens".
The average council tax on an Band D property increased from £688 a year in 1997/98 to £1,439 this year.
Between 1996/97 and 2004/5, the annual increases in the tax were never less than 5.9 per cent, hitting 12.9 per cent in 2003/4. The previous Labour Government enforced cap against 36 authorities during its tenure.
“It is great news that local taxpayers will be given the final say over whether council tax hikes are acceptable." said Matthew Elliott, Chief Executive of the TaxPayers' Alliance.
If we are going to get the fiscal decentralisation that is vital to improve efficiency in the public sector, then it has to be local voters who have the power to block massive rises in council tax and not central government.
“With council tax rates almost doubled over the last decade and too much money being wasted on bloated bureaucracies in town halls across the country, campaigners will use this new power to stop further impositions on overtaxed British families.”
Councils are worried about the extra costs that would be incurred to organise local referenda.
“We will need to make sure these proposals from Government do not add significant costs for councils in these difficult financial times,” said Cllr. Baroness Margaret Eaton, The Chair Of the Local Government Association.
