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Comment by shawabawa3 | Hacker News Reader

Council tax is even worse as the occupier pays, not the owner

That's actually quite reasonable since the council tax finances local services (hence the name). The person who benefits from local services is the occupier, who may or may not be the owner.

The issue with council tax is that it is extremely regressive: there are 8 bands with (very approximately) only a factor 4, from £1000 to £4000 a year, from lowest to highest. This means that a person in a crappy studio flat on a council estate pays £1000 and another person in a Buckingham Palace style mansion worth tens of millions with tennis, swimming pool, whatnot, pays no more than £4000 since that's the maximum.

This may explain why the wealthy in the UK never complain about council tax and tend to oppose land value tax...

This is so true. Many building companies own hundreds of low quality apartments in the cities and literally don't pay.

Who pays doesn't really matter too much. What matters the incidence of a tax, which is independent of who actually pays.

If the incidence falls on the owner, but the occupier pays, they'll pay a lower rent to account for the tax.

If the incidence falls on the occupier, but the owner pays, they'll charge a higher rent to account for the tax.

This why I don't really like public discussions of taxes; they completely ignore incidence. For example, there's a call to "tax corporations more", which is all fine and well, but a corporate tax is sufficient to do so. You also need to make sure that the incidence of the corporate tax falls on the corporation.

This is not really the case with the rental market. Since rental supply is almost completely inelastic in the short run rental prices are wholly determined by demand. Increasing property tax has marginal effect on demand so it doesn't lead to an increase in price.

> Since rental supply is almost completely inelastic in the short run rental prices are wholly determined by demand.

Yes, I fully agree with that. I don't see how that refutes my point though.

If the maximum renters will bear is $X/mo before they decide to move to somewhere cheaper, and landlords are currently charging $X/mo and you impose a tax on renters, they'll either ask for their rent to be reduced, or move away.

If landlords charging less than $X, and the tax is imposed on the renters, they'll stay as long as the total is still less than $X. If the tax is imposed on the landlords, they'll raise rents to $X.

Taxes don't change X. If landlords have to pay more taxes and try to raise prices they won't be able to rent the unit. If renters are forced to pay the tax they'll leave unless rent is lowered. Either way the incidence is completely on the landlord.

Oh okay, we're in complete agreement then. My point is that the incidence of the council tax and property tax should be the same, whether it falls on the landlord or the tenant. My belief was that it would fall on the landlord in either case, but I simply stated that the incidence would stay the same, to make the weakest claim necessary.

What happens when a property is unoccupied?

If it is unfurnished and no one is living in the property then no council tax is paid.

This is not necessarily true. In many parts of the country, you get a month free but otherwise the tax would need to be paid, which I guess is to cover landlords who are between tenants. (saves some effort setting it all up and tearing it down again when it was only empty for a week or so). Also, you may not be able to claim that month if it has been claimed in the last year.

It's actually up to the local council[0]. Oxford at least give you a month zero-rated, then start charging again (I'm in this position due to a messy move).

[0]: https://www.gov.uk/council-tax/second-homes-and-empty-proper...

Oh wow:

> You may pay less Council Tax for a property you own or rent that’s not your main home.

> Councils can give furnished second homes or holiday homes a discount of up to 50%. Contact your council to find out if you can get a discount - it’s up to them how much you can get.

I'm sympathetic to the messy-move case, but discounting the tax for holiday homes seems quite regressive.

I agree, FWIW. The case when a property is uninhabitable because it's being rebuilt seems fair. Getting a discount just for leaving something empty (or using it once a month) does seem regressive.

Fortunately(?), councils are basically all skirting bankruptcy, as a result of having their central grants slashed. So these discretionary discounts are becoming rare in actual practice.

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