Sarah Coles of broker Hargreaves Lansdown said: “When Rishi Sunak announced the rebate it highlighted huge problems in the current system.
“Those in bands E and above aren’t necessarily better off, they just live in houses that were relatively more expensive in the early 1990s. A retired couple, on a low income living in their family home, could be paying far more council tax than a wealthy London professional whose million-pound home was put in one of the lower bands three decades ago, but has since soared in value.”
Ms Coles said households were being taxed based on values that bear “no resemblance to the reality of the modern day”.
She added: “The poll tax was so hated, it sparked riots in the streets and effectively ended Margaret Thatcher’s tenure as prime minister. Taxpayers were furious because the structure of the tax felt so unfair. But the local levies are in fact worse and more costly today than the poll tax ever was,” she said.
The 1989 “community charge”, as it was formally known, meant everyone was forced to pay the same flat rate regardless of their income or value of their home. Before this, homes were charged “domestic rates”, based on their property’s rental value, similar to business rates today.
Couples living in modest homes saw their bills rise dramatically, as their taxes were brought in line with those with far more wealth.
In the first year of the new system, the charges were so unpopular that millions of people refused to pay. They averaged £357 per person.
In the second year, it was reduced to £252, or £504 for two people, before the charge was scrapped altogether and replaced with the council tax system.