Would a Local Income Tax be fairer than the Council Tax?
In my November 2007 consultation I asked:
Would a Local Income Tax be fairer than the Council Tax?
Over 230 people responded and the results were as follows:
- 68% of those surveyed answered YES
- 32% of those surveyed answered NO
Some common reasons in favour of a Local Income Tax were:
- It makes sense that people are taxed based on their ability to pay and not by the value or size of their house
- A Local Income Tax would take local issues into account and is not controlled by central government
- A Local Income Tax would not rely on the housing market for stability and would therefore be a fairer and simpler tax.
Respondents also suggested that a Local Income Tax would be less rigid and cumbersome, and would be a genuine alternative to a Council Tax which was labelled by many as unfair. Some respondents also pointed out that a Local Income Tax would not force retired people to move to a smaller house because they were not earning as much. Under the Council Tax scheme, many people felt the upkeep of a larger home would be too expensive once their earnings decrease.
Some common reasons against a Local Income Tax were:
- A Local Income Tax would benefit only the very poor and very rich, leaving those on middle incomes to pay more
- A Local Income Tax would disadvantage people living alone who could possibly pay the same rate of tax as a multi-person household with only one earner
- A Local Income Tax means those who work pay for those who are not it work
A number of respondents also raised concerns over the implementation of a Local Income Tax, worrying that it would lead to more levels of local government bureaucracy. Concerns were also raised about tax evasion, with some respondents arguing that earnings can easily be hidden and therefore not taken into consideration for tax deduction purposes.
Overall, the consultation proved to be a good indicator of public opinion regarding this issue, with many thoughtful and considered arguments submitted for and against the proposition.
With regards to my own personal opinion, I believe that a Local Income Tax would be a fairer alternative to Council Tax. The present system of taxation penalises those on low and middle incomes, does not reflect earnings and is costly and complex to administer. Council Tax simply does not work. One third of those entitled to claim for Council Tax benefit do not do so and are paying more than they should have to. Under the current system, those least able to pay the Council Tax are being burdened with the heaviest tax penalties.
There were some concerns raised in the e-consultation over the implementation of a Local Income Tax. I agree that changing the tax system will be a challenging process. However, with careful planning and good management, there is no reason why a Local Income Tax would not be successful. As many of your responses indicated, the current system is seen as laborious, inflexible and outdated, it is about time for a fresh approach.
What would you like to do next?
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