A stealth tax is a tax where the costs are hidden. That is to say that unlike council tax – where a bill is presented each year and what it costs, along with any increases are, is immediately apparent – with a stealth tax the costs are not obvious.
A good example of a stealth tax is the removal of dividend tax credits on pensions. This was a subtle change to tax legislation which meant people's private pensions returned less growth than they did before. While the impact on consumers was strong, the tax rise was hidden from direct view.