Council Tax discounts for second homes to be hit

With another tight budget settlement for councils it comes as no surprise that many will use the power they have been given to reduce the discounts for Council Tax payments on second homes.

The Financial Times reports:

Hundreds of thousands of people who own second homes face a rise in their council tax bills within months as local authorities tackle a looming financial crunch.

Some 255,000 properties have been eligible for a lower rate because they are classed as “second homes”, with discounts varying from 10 to 50 per cent.

But owners in many parts of the country will have to pay the full rate from April 2013, after the government gave councils the flexibility to scrap the concessions.

It adds:

Council tax changes have recently been adopted – or are under consideration – at many London councils including Kensington & Chelsea, Camden, Southwark and Westminster. Discounts are also likely to be scrapped in many popular rural areas such as Cornwall, North Devon, Waveney, Suffolk Coastal, South Hams, Teignbridge and the Cotswolds.

My prediction is that the list will be much longer.

As I have noted before there are arguments on both sides. If you leave a home empty (most or all of the time) then you are obviously not using council services as much. But most of us would not welcome the next door house being left empty for years on end. This is not something that should be given an incentive.

However the aspiration to a second home is nothing to be ashamed of.

On balance ending the discount is reasonable. The problem is that it comes on top of so many other tax hikes. Bashing the rich is not smart economics as it is constrains economic growth with the message that the UK punishes success. That means ultimately it is not smart politics either. The Government will be judged on the economy.

Contrary to lazy assertions the rich are already being bashed more than under Labour - as Guido has pointed out. Hitting the rich on Council Tax changes should be balanced.