Why I Want Rid Of Council Tax

SNP plans for a Local Income Tax (LIT) seems to have become the target of choice for the opposition now that the budget and council tax freeze have gone through. As if on cue, out is being wheeled by Labour and others the archetypal hard-working, 2-income family, whom we are being invited to believe will under LIT be left subsidising pensioners in big houses who live off bloated share portfolios.

First things first - comparatively few people are in a position to live off their investments, but presenting a more balanced picture wouldn’t have the desired effect in terms of trying to whip up opposition to LIT. However, as a strong supporter of LIT, I thought I’d throw two very real examples into the mix, which have resulted from my own domestic arrangements over the past few years, which help explain my complete disdain for the council tax, or for that matter any kind of property based tax.

I own a flat in Edinburgh, which when I lived there at first, I shared with my partner of the time. As a band ‘B’ property, our combined water and council tax bill came to about £1,200, or £600 each. However, after we split up, even with a 25% single person’s discount my bill shot up to £900 – or about 5% of my household income at the time. I hadn’t become any wealthier in the intervening period and made no more demands of local services than I had previously. However, purely as a result of a change in my personal circumstances, my Council Tax had increased overnight by 50%.

Fast forward a few years to the present. As work for the moment requires that I have somewhere to live in London, I rent a room in a 4 bedroom semi-detached house in Lewisham, in the south-east of the city. Nice as our bit of town is, Notting Hill or Hampstead or trendy north London it most certainly isn’t (actually, that’s probably a good thing). It’s a very diverse area, with a high proportion of young families and a large number of homes of multiple occupancy.

There are 5 of us living together in the house – myself (parliamentary researcher); an IT consultant; a banker who shares a room with his fiancée (who is also a parliamentary researcher); and another banker. Fortunately, we all get on very well, although this may be helped by our different work start times and the fact we have a big kitchen and 2 bathrooms, so it isn’t quite as cosy as it sounds!

Based on salary alone, the five of us probably have a combined annual income of between £250,000 - £300,000 (I should make clear that myself and the other researcher lag quite some distance behind the rest). However, as a band ‘E’ property, the bill for us all comes to just over £1,500 – or £300 a skull if we split it 5 ways – just 0.5% of the total household income. It’s quite a difference from the £900 I used to get stung with for living on my own in Edinburgh, and an obscenity when you consider the couple with two pre-school kids over the road who have to pay an identical bill out of just one income.

And that in the end is my beef. Council tax hits households with low incomes disproportionately. Since it is based on the value of the house, there is little correlation between this and one’s ability to pay. Worst of all, the eventual bill you end up paying hits those who live on their own the hardest.

While being young, professional and childless means we don’t make huge demands of the services of Lewisham Council, on balance, we’re happy that we’re making a contribution towards policing, parks, adult education, libraries, schools, trading standards, refuse collection, the fire brigade, social services etc in the area. Splitting the bill 5 ways makes us better off financially, but I don’t think any of us would object seriously to being asked to make a bigger contribution given that we’d all be more than capable of so doing.

There will be winners and there will be losers in any change to a tax system – something which those calling for council tax revaluations and extra bandings and additional rebates would be wise to remember. Instead of conjuring up grotesque, false spectres of families being downtrodden by the supposedly idle rich, Labour and the Conservatives should be honest enough to explain why they believe that the rich man in his castle should pay a lower marginal rate of tax than the poor man at his gate.

The LIT Hits The Fan

Imagine, for a moment, that rather than reheating the school dinners prepared in a distant central kitchen each lunchtime, your local authority decided instead to invite some local food shop owners to operate out of their school dinner halls. The idea behind this would be to sell a healthy choice of meals and sandwiches prepared locally, which would be of a higher standard than the usual canteen fare.

In order that no-one loses out, the council decides to put all the money spent funding free school meals into a new voucher system, so that all previous beneficiaries of free meals may continue to buy food of equivalent value. Despite some initial concerns, the idea turns out to be very popular with pupils and parents alike.

Whatever you think of the idea itself, it would at least swap one system for another, while making sure that all monies in the previous free school meals scheme continue to benefit those they were intended to. However, imagine then that in a fit of ideological pique, the Government decides that since this renegade local authority won’t be offering ‘school meals’ any more, it won’t if it goes ahead be getting the money it used to for the provision of free school meals. Seems a bit rough, doesn’t it?

OK, let’s do another one. Imagine every police force in the country receives an additional grant from central government to enforce a nightime curfew on the under-18s. The initiative is supported with great gusto by the senior officers in some forces. However, other forces are less keen, and are reluctant to be seen to be ‘victimising’ the law abiding young.

Together with their police boards, these forces decide instead that the grants they receive for the curfew would have a much better impact on youth disorder if they were spent instead on school visits and mounting extra patrols at weekends. Miffed at the rejection of their pet project, government then decides to punish these forces by withholding the additional funding.

Both of the situations I’ve described are, of course, entirely fictitious. However, they do resemble very closely the situation faced by the Scottish Government in its dealings with Westminster over the withdrawal of attendance allowance following the introduction of free personal care. More recently, they resemble the weekend’s sabre-rattling from James Purnell over the threatened forfeiture of council tax benefit if Scotland proceeds with the introduction of a Local Income Tax (LIT)

"When there is no council tax then there is no council tax benefit," Purnell told Scotland on Sunday (As an aside, does this mean that if the LIT were simply renamed as the Council Tax, the DWP would continue to cough up?). However, council tax benefit comes via the Department of Work and Pensions and is paid for through general taxation, which, judging by the last glance I took at a payslip, people in Scotland are expected to contribute towards as well. It is designed to cover the Council Tax liabilities of those on the lowest incomes, and as such, is part and parcel of the local government financial settlement.

If Westminster was to bring in an alternative to the unfair Council Tax in England, the benefit money currently available would surely remain so as part of the overall local funding arrangements. For that reason, it would be no skin off anyone’s nose in Whitehall to allow this money to continue to come to Scotland to help finance a different system of local taxation, since we’ve already paid our share towards it.

Together with the ubiquitous ‘source close to’ describing the Scottish Government of acting like ‘big babies’ over the whole thing (seriously!), I think we can safely put this little skirmish down to Gordon Brown taking the huff and trying to show us all who’s still boss in Scotland. The irony is that having died in the last ditch defending the hated council tax at the last election, Labour in London is basically forcing its Scottish comrades to fight on exactly the same ground next time round as well!

I always expected Labour to go around picking fights with the Edinburgh administration while trying to blame the SNP – I just thought they’d be smart enough to choose their ground a little more carefully. I’ve no doubt there’ll be disagreements in the future where the respective jurisdictions of Holyrood and Westminster overlap, when the public will decide that the SNP is chancing it. This, however, I don’t think is going to be one of those occasions.

Jack - 'Out Of All My Top Priorities, This Is The Top One'

So now we know. 'Education, education, education', the infamous pre-1997 Blairite mantra, is to have yet another comeback tour if Labour get back in (watch out Francis Rossi and Rick Parfitt). After jostling with a range of issues to be the 'top priority' for Labour over the past few years, it will now take pride of place, even ahead of health, with, according to McConnell, all other departments being forced to 'cut their cloth' in consequence.

But we've been hearing this for the past 9 years, so what is Labour planning to do that it couldn't have done earlier? What's that, Jack? Get more children to learn modern languages? That sounds like a good idea, but tell me Jack, wasn't it your Executive which removed the requirement for Scottish pupils to learn a language up to the age of 16, leading to a 13% reduction in the numbers presented for examination? So would that mean that your promises on education are a case of déjà vu, or when it comes to delivery, perhaps even jamais vu? Oh dear, Jack, and you a former maths teacher and all. Go to the bottom of the class...

But licking her wounds this morning must be Cathy Jamieson. Given the task of explaining how Labour's plans to introduce extra council tax bands might work on Newsnight Scotland, she turned in an excruciatingly abject performance. She couldn't give elementry answers on how many people would be affected at each end, or explain how the numbers would add up. As it happens, by introducing a new top band and a new bottom band, Labour are expecting 11,000 householders to bail out nearly 500,000 others.

In the Orkney Islands, for instance, there are only two homes in Band H, so the entire burden will fall on either one or two householders! Labour's position yesterday was a bit of a mess, but to describe it today as shambolic would be an act of irrational charity.

Newsnight Scotland clips only stay online for 24 hours. Get it while its hot, and marvel at how Cathy could ever have been let loose on the government of Scotland. Remember - she's one of the better ones!

UPDATE: Now that the Newsnight clip has disappeared into the ether, here's a transcript of the exchange between Cathy Jamieson and presenter Gordon Brewer. My commiserations to the poor SNP press officer who drew the short straw and had to type this out!

UPDATE 2: Thanks to the wonders of YouTube, her performance has been saved for posterity!

Taxing Times for Labour

The Labour Party has been scathing in recent weeks about the SNP’s proposals to scrap the Council Tax and replace it with an income based alternative. It’s been described variously by Labour spokespeople as a tax rise for low earners (Not so - 90% would pay the same or less); and as a tax against small businesses (Again, not so - businesses pay separate business rates, not council tax or the SNP’s proposed replacement).

The argument for a local income tax is a simple one. Essentially, the value of your property bears little or no relation to your ability to contribute towards meeting the costs of the local services we all use. And if you are on a low income or live on your own, despite the various ‘reliefs’ which exist, the tax can still represent a very large proportion of your overall income.

Labour knows this, which is why wee Jack is waffling at the moment about including ‘extra bands’ for the Council Tax, in order to make it fairer. The trouble is, including more bands would do no such thing, since the general rise in house prices since the last revaluation would move only a small number of homes up or down a band relative to where they sit currently. It would do nothing to counter the ability to pay argument which is currently driving the debate forward. And the killer for Labour is that as history shows, property tax revaluations are about as popular with the voters as a fart in a space-suit.

Labour’s arguments don’t seem to be cutting much ice just now, since according to SNP polling, 71% of voters want to see the Council Tax gone. This is most likely why the Edinburgh Labour Party has made a very welcome concession in its local manifesto, where with commendable candour, it states that:

“The other big expense for everyone is Council Tax… …we know that Council Tax, as it is organised at the moment, isn’t always fair, with poor people paying a larger proportion of their income than rich people.

Sounds like an argument for a local income tax to me. Trouble is, notwithstanding this display of local disquiet, Edinburgh Labour is running on the same commitment to keep the Council Tax as wee Jack and the rest of the Labour Party. Despite this plaintive plea for mercy from Labour’s Embra Cooncillors, the fact remains that the only way to get rid of the Council Tax is to get rid of Labour. Period.