A taxing matter

Jan 28 2008 by Larry Neild, Liverpool Daily Post

THE despised Poll Tax was an attempt, by the Conservatives, to iron out the anomalies of the old council rating system. The riots it sparked has meant no Prime Minister since has been eager to get his, or her, fingers burned.

Yet the prediction last week that householders face an inflation-busting 4% rise in their bills this spring makes depressing reading, coming as it does on top of the hefty gas and electricity costs.

Eventually, somebody will have to grapple with the ever-spiralling costs of running our town halls. Simply revaluing homes will cause more problems than it solves, because the basis of calculating the bill will remain the same.

Is it equitable that a lone occupant, say a pensioner, living in leafy Allerton, should potentially pay more than a large family living in Dovecot? The family will presumably generate more refuse and make more use of public services, but pay much less to the town hall.

The Liberal Democrats have favoured a local income tax, but that could see people migrating to lower taxed areas. My solution is to abolish the council tax system completely and fund the entire cost of local government through the Inland Revenue.

They already have one of the world’s finest collection systems.

Liverpool raises just a fifth of its money needs through council tax, which means the other four-fifths already comes from the national government.

The cost of gathering that one fifth is colossal.

Won’t that mean an end to local democracy (as if there is any, in any case), and hand control of every town hall to the national government?

That is the argument from those against central funding. Imagine, though, an arm’s length funding commission that will set a four- year budget for each authority.

The political parties will then go to battle with a four-year manifesto on how they will run things, and the electors will have the chance after four years to sack them or re-hire them for another stint, depending on their performance. Huge and costly elements of bureaucracy would disappear, saving a fortune. More importantly, people earning a living will contribute to local governance, unlike at the moment. There would be no need for benefit units.

It would also release into the local economy millions of pounds that could be spent in the shops. The funding body could have a contingency reserve for emergencies or unusual one-off events (such as Capital of Culture). I would go one step further. Introduce a Liverpool City Region lottery so local people could contribute towards the cost of providing extras such as tourism attractions.

Basing a form of local tax on property was fine when the rates bill did not blow a mighty hole into the family budget. Now the ever-rising cost is getting beyond a joke, particularly for the ever- increasing army of pensioners and retired people surviving on fixed incomes.

For a long time, there has been a unified business rate for the commercial world, so a system using PAYE for household rates would work – but will any politician have the guts to introduce a radical solution?