Reforming council tax

October 8, 2008 at 8:22 pm | Posted in British Politics, Conservative Party, New Labour | 1 Comment

Wherein the blogger writes the most dry, wonkish thing he’s ever published in his life…

I suspect Sunder Katwala and Chris Leslie are doing the Labour Party a favour by trying to begin a conversation about council tax reform. Indeed, given just how totemic this issue is for low-tax populists on the right, I’m amazed the party hasn’t gotten around to it sooner.

In these two posts, Katwala & Leslie propose to trump the Tories’ short-term gimmick of a ‘council tax freeze’ by offering their own ‘reform discount’ of £200 for the average household, raised by taking an extra 10p in income tax from every pound earned over £250,000. In the longer term, they would replace the outdated 1991 property values we currently use with a biannual revaluation of properties, to ensure the amount paid by residents is a fair reflection of their property’s worth. In addition, they would broaden the narrow range of tax bands and try to do more for those with the least expensive properties.

Given the meat of the proposal is only about 300 words long, it’s not something you can critique too heavily, and indeed there’s yet to be any reform proposal that hasn’t proved in some way problematic. But there are several important questions that need to be asked here.

Firstly, if we were to base council tax on a twice yearly revaluation of a property’s value, wouldn’t this threaten to tie council funding to the fate of the housing market? Hypothetically, if we were to suffer a fall in house prices (as we see today), this would lead to a fall in council revenue and put important services at risk. Second, a “shift away from grant dependency and towards a broader basis for local revenues” is fair enough, but how would they ensure that regional inequalities are addressed and that poorer areas don’t receive significantly worse council services than you’ll find in a richer area? Finally, the proposal doesn’t seem to address the most widespread criticism of council tax; that basing it on the value of your home rather than your ability to pay is to the detriment of one of society’s fastest growing and most vulnerable groups – pensioners. If you really want a vote-winning reform, you’re going to have to do something about that.

But regardless of these problems, I think Katwala & Leslie’s intervention is a welcome one, and if Labour was smart, it would be thinking right now about how to produce a fairer, more equitable council tax. There’s plenty of votes in it should they succeed.

Well, at least I included a neat little picture to make it seem less dour. This is taken by Flickr user John-Morgan (Creative Commons)

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  1. PRESS RELEASE ISSUED BY THE ISITFAIR COUNCIL TAX PROTEST GROUP

    For further press information, please contact: Christine Melsom on 01428-712680 or E-mail c@isitfair.co.uk

    [start of press release]

    ISITFAIR CAMPAIGN Asks: Is there a light at the end of the tunnel?

    The Conservatives are the only party to have taken the bull by the horns and addressed the council tax problem during their party conference, and credit must be given for that. It is to be regretted that neither the Government nor the Lib Dems felt it necessary to throw any crumb of comfort to the hard pressed council taxpayer.

    The announcement that a Conservative government would freeze council tax for at least the first two years of office is a start, but in the meantime they should concentrate on the reform of the present system. They brought in this wretched tax, this Government has indecently exploited it, and it would be very good to see the next Government, (who ever it is)put things right as urgently as possible. They must bear in mind:

    a. A tax based wholly on property values and with unsustainable increases can never be fair. This tax is now less affordable year on year and hardship is now being felt by a much larger section of the community.

    b. Two years of static bills (as in Scotland) would alleviate some of the pain if we knew that there was a crock of gold at the end of the rainbow. However, it could be another eighteen months before the next general election, time enough for any party to be prepared to announce not just a freeze but also a solution. We would like to think that the two year period during which the Conservative Party proposes that CT is frozen, would be used to phase in a new, fairer way to fund local government.

    [end of press release]

    For further press information, please contact: Christine Melsom on 01428-712680 or E-mail c@isitfair.co.uk

    Issued by Isitfair Campaign, Headley, Hampshire GU35 8PJ

    NOTES TO EDITOR

    Isitfair is a UK-wide, non party-political campaign for the reform of the existing property-value based system of Council Tax.

    Isitfair wants a fairer system of taxation for local services that is related to everyone’s ability to pay.

    Isitfair represents people of all age groups (not only pensioners) who are unfairly affected by Council Tax.

    You can find more information about the Isitfair campaign at http://www.isitfair.co.uk


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