FIRST minister Mark Drakeford has said his government is “very committed” to reforming council tax but warned doing so will be complicated. 

The Labour leader said the tax, based on the value of a home, is “regressive” as the burden of paying the bill, that helps fund local authorities, falls hardest on the lowest earners. 

According to the Welsh Government the average band D council tax bill in Wales for 2021-22 is £1,731. This includes £1,403 for county councils, £290 for police and £39 for community councils. 

That is an increase of £64, for the full bill, on the previous year. 

The Welsh Government could replace council tax with a land value tax which would, the first minister told BBC Wales, also replace business rates. 

Business rates are currently determined based on the market value of properties from which businesses operate from and many businesses complain do not reflect their income or trading conditions. 

A land value tax would see charges issued based on the current use of the land, whether for residential or commercial, and is usually based on the annual rental value of a site. 

“It is difficult to reform the council tax. I’m very committed to reform because the current form of council tax is highly regressive. It falls far more heavily on the people who have the least and not so heavily on people who have more,” Mr Drakeford told the Politics Wales programme. 

He insisted he is committed to reform after being asked why his programme for government, published this week, said it would “seek” to change council tax when the party’s manifesto had given a commitment to reform. 

Before becoming first minister Drakeford had been a supporter of a land value tax but he said the government would have to look carefully at how it would operate and it would likely have to be phased in for different sectors. If a new tax isn’t feasible he said there are also options to reform how council tax currently operates. 

He said: “The basic choice is whether you find a system to replace council tax, and we’ve done a lot of work on land value tax – whether that is the better way to do things. 

“Whether it is one of those ideas that looks good on paper, and is just defeated by the complexities of making it happen, if that were to be the case then we have a report from the IFS (Institute for Fiscal Studies) on how you can make the council tax itself a fairer tax and there’s quite radical reform that would be needed to do that as well.” 

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Council tax is charged and collected by local authorities and typically amounts for just over 20 per cent of council budgets with authorities reliant on the Welsh Government for the majority of their funding. 

The Welsh Government has had increasing powers of taxation since 2017 but Labour ruled out using income tax powers during the last Senedd term. 

In the programme for government Labour has suggested it could introduce a tourism tax, paid by holidaymakers, which Mr Drakeford said would be used to fund services and facilities in tourist area. 

Political opponents and the tourism industry have objected to the potential tax though such charges are common in Europe and there may be potential support from residents in areas that see large numbers of visitors. 

The first minister said his proposal isn’t to introduce a “new, national tax” but give local authorities the power to introduce a “tourism levy” if they chose. 

He said: “We would be keen to see any money raised used to create the conditions in which the tourism industry locally could go on thriving. You’d invest it in the sort of facilities and resources that draw people to those areas in the first place.” 

He said cash could be collected by operators such as campsites and hoteliers and held in a fund by local authorities. 

“It couldn’t be used just for anything. It would have to be used in the broadest sense to support the industry.” 

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