I wonder if our LibDem friends might clarify something for me. Have the LibDems abandoned a local income tax as a replacement for council tax, or not? I ask because I received today one of their Focus leaflets which rambles on about replacing council tax with a fairer alternative, but doesn't quite have the guts to say what that alternative might be. The Axe the Tax website seems to be a little more equivocal on the subject than I seem to remember it used to be - or am I imagining things? What did Ming say about it during the leadership election? Or was it one of those domestic subjects he considered a little beneath him?! I think we should know.
Sunday, April 16, 2006
Are the LibDems Still Proposing a Local Income Tax?
I wonder if our LibDem friends might clarify something for me. Have the LibDems abandoned a local income tax as a replacement for council tax, or not? I ask because I received today one of their Focus leaflets which rambles on about replacing council tax with a fairer alternative, but doesn't quite have the guts to say what that alternative might be. The Axe the Tax website seems to be a little more equivocal on the subject than I seem to remember it used to be - or am I imagining things? What did Ming say about it during the leadership election? Or was it one of those domestic subjects he considered a little beneath him?! I think we should know.
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Hi Iain
It is not clear from your blog where you stand on the issue. I am not a Liberal Democrat but can you convince me of the fairness of a local tax based solely on the value of the property you own or rent?
There is no fair system. I am not in favour of an LIT for all the reasons you will be familiar with. Council Tax was never a problem until Labour used it as a cash cow in Conservative areas. It has doubled since 1997. No wonder people are against it.
Iain,
Are you becoming a Lib Dem? - your "I was in favour of council tax when we were in power but now I'm against it" is a classic.
And, how about some figures to justify your claim it has doubled since 1997? Or it's being used as a cash cow in Tory areas? i thought you were always claiming it was the highest in, errr, Sedgefield?
Oh dear. I said "people are against it". At a reasonable level Council Tax worked. There was no public outcry, no marches in the streets. people accepted they had to p[ay a local tax and they accepted council tax. It's a fact that central government grants to Tory areas have been slashed since 1997 and Labour areas have had had huge injections of money. And I apologise - it hasn't doubled, it's gone up 94%. Happy?
Just bring back the poll tax.
Actually the figure is 84%, or more reasonably (as this is a compound figure) of 7.9% pa, compared to an annual increase of 5% when the Tories were in power.
Anon, above, - assuming you are correct and the increase since '97 is "only" 84%, are you seriously trying to defend annual compound increases of 7.9% - clearly you are not a pensioner!
Local Income Tax is most definetly still policy.
I presume that it will therefore remain Conservative policy to gratuitously lie about it - last I heard the Conversative were claiming LIT would mean the 'average household' would have to pay £1,500 more, but a quick look at the figures revealed this so called 'average household' has an income of almost 80K! What a lovely world you all must live in.
Hi Iain
I beg to differ. For me Council Tax is a problem. It has nothing to do with how much but more to do with how the amount is worked out. How can the value of the property you live in have any relevance to how much you should pay? Two people living in a three-bedroomed house do not use local services any more than two people living in a one-bedroomed flat.
The party in sunny Birmingham are certainly pushing a tax 'based on the ability to pay.'
They don't explain how a HMRC system that consistently screws up tax coding under the current system would then cope with a tax code system of almost infinite variety. Nor do they point out that many people would pay more under their LIT proposals.
Naturally, none of this matters a jot as even if the LDs won every council seat in the country, Labour would still have control of the levers of government that control the tax system.
Murdo, sounds more like an argument for the polltax! I said in my first comment that there isn't a fair system of local tax - I guess a sales tax might be the closest you'd ever get, but that in turn has its own difficulties. I readily admit the Counciul tax system is far from perfect, but a LIT would be even more iniquitous in my view.
The only thing wrong with the poll tax was it made little allowance for those who could not afford to pay. Otherwise, it was a fair system and I was very disappointed that the government of the day rolled over in the face of protest from those who were, probably for the first time in their lives, asked to pay their way.
Why isn't Council Tax taken into account when setting the mythical "annual rate of inflation"? After all, those of us who are neither MPs nor John Prescott have to pay it.
Because then the rate of inflation would be in double figures - and not the lies the Government currently peddle!
When an 84 yr old lady in the West Country refused to pay more than the percentage increase she had received in her Pension and was threatened with jail, I seem to remember John Prescott sanctimoniously saying that everyone had to pay their share. It wasn't until rather later we all discovered he meant everyone had to pay HIS share, as he wasn't paying any at the time. No wonder he wasn't bothered about how high the tax rises.........
I currently live and work in the USA. I pay federal income tax and a state income tax. This isn't terribly complicated, as long as you live and work in the same state. If you live in a different state, it gets complicated. I rather suspect that lots of people work in a local authority that they don't live in in the UK.
A local sales tax is a reasonable way to go, as long as you keep it strictly local. When I buy a car from a dealer, I have to tell the dealer which county I live in, he looks up the correct rate of tax, and sends (at least some of) it off to the county in which I live. Once you start going down that route, it all goes horribly wrong. For goods, pay the sales tax to the LA in which the business is located. For services, you probably have to charge the tax in the place that the service is provided, although I'm open to persuasion the other way.
There are those of us in the party (I am secretary of Lib Dems ALTER - Action for Land-value Taxation and Economic Reform) who never really supported Local Income Tax (because we don't "believe" in taxing economically beneficial processes like "earning").
Since Charles Kennedy put the whole of taxation policy up for review in the Tax Commission whose report is just about to go out to external consultation before aiming to go to autumn conference this year, we have been trying to get the party to tone down enthusiastic promotion of any alternative (we all still favour "Axing the Tax" - there's no doubt about that as the council tax is appallingly regressive) until the Tax Commission has reported. Note - we're not especially saying that LIT is bad, just not the best we could have (LVT is already party policy for replacing the National Non-Domestic Rates - local business tax).
I can't say in detail how that's progressing as I'm not personally on the Tax Commission though we do have sympathetic voices on it. But there also strong voices in favour of retaining the Local Income Tax because in many areas it played very well in the General Election.
But the message is clear at the moment, we retain the policy to replace the Council Tax because it is very regressive and at the moment, were there to be a general election tomorrow the current replacement would be Local Income Tax, but I and others hope to change that...:) Though any change may be incremental through a mixture of land and income taxes such as they use in Scandinavian countries.
I can't personally see the benefit of a local sales tax. It's still a transaction tax on economic goods - sales. It's been promoted by the Adam Smith Institute (despite the great man himself believing that land value was a good base for tax) based I suspect on the American experience. But the IEA recently published a pamphlet promoting LVT ("Wheels of Fortune" by Fred Harrison) which made me subscribe to the IEA...:)
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