Plaid Cymru pledge to shake-up 'regressive' council tax

Hundreds of thousands of households in Wales would pay less council tax under radical plans by Plaid Cymru.

The party said it would reform the tax, which is paid based on property values, if it wins May's assembly election.

Those in the lowest council tax bands would save up to £400 a year but the top 26% would pay more, Plaid said.

It pledged not to increase income tax, if powers to vary it are devolved within five years, but promised a small cut to the higher rate of the tax.

Announcing the policies in a speech in Cardiff, the party's Adam Price said creating a new "middle rate" of income tax would involve cutting the current higher rate.

'Injustice'

On council tax, Plaid said households in bands E to I would pay more to cover the cost of reduced bills for properties in lower bands.

The changes would be phased in over a number of years with exemptions for those who were "asset rich but income poor", mainly pensioners.

Mr Price, a former Plaid Cymru MP and a candidate in Carmarthen East and Dinefwr in May, said: "We have it in our power to radically reform the most regressive tax in these islands, a legacy of the Thatcher period, the grossly unfair council tax that levies four times as much as a proportion of wealth on the poorest as the richest," he said.

"That is not the Welsh way, and we will take steps to address that injustice."

He said 200,000 households would pay around half their current bill, with another 600,000 saving between £160 and £260 a year.

But the Conservatives said the plans were growing evidence of a challenge to the authority of Plaid Cymru leader Leanne Wood.

Shadow Local Government Minister Janet Finch-Saunders said: "It's quite a U-turn for Plaid to pledge to cut council tax bills when they have repeatedly voted against Welsh Conservative calls for a council tax freeze in Wales."

Chancellor George Osborne has announced plans to pass control over some income tax to the Welsh Government, but no date has been set for when this will happen.

The election, on 5 May, will be the first assembly poll in which all the main parties put income tax polices before voters:

• Plaid Cymru - No increases to income tax rates, but a new "middle rate" - meaning a small cut in the current higher rate

• Labour - No changes to income tax rates over the next assembly term

• Conservatives - would cut the higher rate from 40% to 35% and the basic rate from 20% to 19%

• Liberal Democrats - would cut the basic rate to 19%

• UKIP - want a referendum before the tax is devolved, UK ministers' previous policy

It is estimated cutting the basic rate of income tax by 1p would cost the Welsh Government around £180m a year.