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'Scrap council tax altogether'

Larry Neild makes the case for taking the dosh out of income tax instead

Published on February 10th 2011.

'Scrap council tax altogether'

WITHIN weeks, Mersey councils will be holding their annual budget meetings to decide how much we should all pay them in the coming year. So Happy Christmas everyone , I’m playing Santa early by freeing everyone from the shackles of having to pay any Council Tax.

No more dreading that bill in March from the City Treasury, demanding around £1,500. Under my plan you can keep it, and blow the lot on a cruise or a shopping spree.

As there would be nothing to collect locally, City Treasury staff could be switched to front line services. Bailiffs would be made redundant and the benefits section would all but disappear

Sounds too good to be true? The problem with the current system of Council Tax is it’s so unfair. People pay according to the size of their homes which determines what pay band they fall into.

Council Tax replaced the hated Community Charge or Poll Tax, introduced by Margaret Thatcher as a way of replacing the equally unfair council rates.

Poll Tax imposed a fee on people over 18 to chip in to the cost of providing council services. It led to thousands of people disappearing from the electoral register as a way of hiding from the Poll Tax catchers.

So many people in Liverpool failed to pay and it led to the council imposing an extra £75 a year on the payers to compensate for the escapees. For all I know, Liverpool’s real population today could be a million compared to the official circa 450,000.

The rates were based on a notional fee your property would command in rent. Very archaic and most unfair.

After all, it costs the same to empty a bin in Calderstones as it does in the Dingle. Also in homes where there are a handful of wage-earners, just one fee is paid as the tax is on the property. Of course with the Council Tax there is a 25 percent discount for people living alone.

A few years ago the Government made attempts to revisit this funding mechanism . The inquiry no doubt cost millions of pounds and essentially came to nothing.

Here’s my logic. In Liverpool, 80 per cent of what the council costs to run (at least at the moment) comes from Central Government. Just under a fifth comes from Council Tax. The cost of collecting that 19 percent is colossal – a City Treasury, benefits section, debt collectors.

Why not get the Government to pay 100 percent and scrap Council Tax? Politicians claim it would end local democracy. I don’t think so. A Council Tax Commission could oversee what each authority receives – and as the Government already pays 80 percent they more or less know how much we are going to spend in any case.

Liverpool would be told how much it will receive for four years, based on inflation. In year one each political party would produce a spending manifesto explaining how it will spend the city’s dosh over four years. Then there would be elections. Four years later the whole council would be up for re-election and poorly performing councillors could be sacked.

How would all this be paid for? It would be added on to basic tax, perhaps paying a few pence in the pound extra, the same across the country. It would mean people earning a living would finally contribute to paying for local services. As there would be nothing to collect locally, City Treasury staff could be switched to front line services. Bailiffs would finally be made redundant (hooray) and the benefits section would all but disappear.

Finally, unemployed and people on very low incomes would no longer be subjected to having to fill in intrusive forms. Everyone’s a winner.

*Based on an article Council Tax Who Needs It? By Larry Neild in the latest edition of Merseyside and North Wales Business Prospects, published jointly by the University of Liverpool and Cardiff University.

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6 comments so far, continue the conversation, write a comment.

AnonymousFebruary 7th 2011.

Sounds too good to be true, but I'll vote for this.

RatepayerFebruary 7th 2011.

The Lib Dems have supported the idea of a Local Income Tax as a way of paying for local services. Under their model, local councillors would set the amount of tax to be levied, and it would vary from area to area. The drawbaack with that scheme is it would put people off reas with a higher level of council tax and attract more to low tax areas. Until the start of the current century Liverpool had the highest level of council tax in the country and it must have been an influencing factor for investors. The idea of a universal local tax seems fairer as better off areas with, presumably, less expensive social services, would be helping areas like Liverpool with major social issues. That may seem unfair, but it works exactly the same with national income tax. I don't think many local politicians will support Mr Nield's suggestion as they like the power and the kick of setting a local council tax. Pity, this could be a good idea, depending on how much we'd pay in extra PAYE.

Council Tax PayerFebruary 8th 2011.

A good idea that would simplify public funding and would render it clear and transparent, but a Tory government (backed up by their Illiberal Dimbocrat lickspittles) likes to keep the water muddy in order to blame others for their own nastiness and plain, short-sighted stupidity.

See how they are currently trying to put the blame on local authorities for the mass redundancies, closures of services and collapse of charitable group funding when the real cause is Tory government cuts to local councils so that bankers can continue to collect fat bonuses.

atheneFebruary 8th 2011.

I quote below

"How would all this be paid for? It would be added on to basic tax, perhaps paying a few pence in the pound extra,"

Hurrah! just another name for a "Poll Tax"
Lets face it the majority rejected spreading local tax over the "living".

The Poll Tax made much sense but Merseyside like all labour controlled councils did as they were told to reject.

I remember a friend Winnie who had ended up in her large house after her husband died. (No children) She was excited and DELIGHTED WITH THE POLL TAX.

Sadly Winnie didn't stand a chance in enjoying a better life via a much lower Local Tax, the labour party grabbed this proposal and distorted the detail. Its supporters cow tailed in agreement.

Hard-Working TaxpayerFebruary 9th 2011.

I'm sure she did!

She needed to "downsize" like all the trendy, well-off folk to maximise her assets.

Why should working families sleeping five to a room in small flats and houses (most likely rented) have to stump up full Poll Tax each to subsidise selfish loafers in huge houses they have inherited?

One of the few good things Blair did was to redress the unfairness in Council Tax formulae that meant the poor in deprived areas were subsidising the rich in affluent areas.

Ragged-Trousered PhilatelistFebruary 18th 2011.

At least income tax is roughly progressive - a footballer pays more than a nurse.

The reason a poll tax is bad is that the low-paid nurse would be effectively be working twelve-hour shifts to subsidise the millionaire footballer's playboy lifestyle.

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