Council tax is set to be reviewed and reformed in Wales, in a move which could see some residents moved to new bands.

The Welsh Government proposals include a revaluation exercise to ensure people are paying the right level of tax, and new bands being created.

Council tax pays for around a fifth of spending by councils, but the current system is nearly twenty years old and, the Government says, contributes to wealth inequality, as homes in the highest band pay only three and a half times the lowest, despite a discrepancy in values of up to nine times.

Proposals include completing a revaluation of all 1.5 million properties in Wales to ensure valuations are up-to-date and people are paying the appropriate amount. This would enable different bands to be created with new tax rates chosen for each band.

The last revaluation in Wales was in 2003. While the value of homes has increased significantly since then, the system remain relative, so increasing property values would not necessarily lead to increasing council tax.

An initial consultation on the reforms has opened and is open for 12 weeks.

Rebecca Evans, Minister for Finance and Local Government, said: “Council tax pays for essential local services we all rely on, but the way it is currently charged has a disproportionate impact on less affluent people.

“These reforms will bring the council tax system up to date while making it fairer, meaning council tax is less of a worry for people with tighter household budgets. The reforms are not intended to raise more revenue from council taxpayers overall as, while some people could pay more, many others would pay less, and we will consider the need for transitional arrangements for any changes.

“We recognise this is a significant exercise and that we have a great deal of work to do before any changes can be introduced. These proposals are at an early stage so I encourage people to have their say through the consultation.”

Council tax reform is a commitment in the Co-operation Agreement between the Welsh Government and Plaid Cymru.

Plaid Cymru Designated Member Cefin Campbell said: “Council tax is one of the most outdated and regressive forms of taxation which places a heavier burden on some of our lower income households, and disproportionately impacts poorer areas of Wales. It is time to make it fairer and the proposals we have jointly agreed offer a chance to do just that.

“These proposals are the first step in changing the council tax system which could make a real difference, by making the system fairer and more progressive while still supporting the services delivered by local authorities.”

WLGA Leader, Cllr Andrew Morgan said: “Any proposal will have to be carefully considered given the quirks of the local housing market, and we will work with ministers to ensure that we can deliver this important reform.”