Council Tax Reform By Norman Harris
INTRODUCTION In the recent Local Elections, the percentage turnout was in general in the 40s. Apathy is the worst enemy of a democracy. Also, there was considerable clamour from many quarters for more devolution. This essay explores these two issues. The clamour for regional devolution, which may be a good thing. But those who wish for it should recognise that it would suit this Government, which is a low tax party by nature, and faced with a massive deficit to devolve more revenue generation for local services. Central government would fund the glamourous, large, infrastructure projects. The route to more local funding should be the reform of Council Tax to be levied on the area of the land controlled by its owner and the use to which it is put. I favour the principle that more of what is spent locally should be decided and raised by local taxation. This has the advantage of stimulating the interest in local governance. Demands for more or different services can be put directly by local authorities to voters (or the reverse) and agreed or otherwise by the voters and local Council. Essential spending on Education, Health and Social Care would be under-pinned, as now, by Legislation. It is time to explore this, as the trend of central government policy, for reasons of ideology and to reduce their deficit, is to reduce the amount of financial support that they provide to local government. With the budget deficit as high as it is the cuts in local government support could be increasingly painful. This paper covers the replacement of Council Tax and Business Rates. I favour a tax based on the area of land controlled by the owner, rather Local Income Taxes. Local Sales Taxes would be counterproductive, as it would drive buyers and potentially business over a border to a lower tax regime. As was seen on the island of Ireland. 70
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This land area basis is fairer, as there is no subjective judgement of land value, just the area owned, which will leave little room for debate. The change should produce more local voter interest in the policies and decisions of their local councils. It will also release land for home building or other uses and make lease holding less attractive. Regrettably at this time of pandemic and the recovery from it, potential savings of Income and other Central Government taxes will go to reducing the large buildup of UK Government debt. So, the populace will not be paying less income tax, when called upon, in many instances, to pay more local tax. But in time this should reverse. THE ADVANTAGES The advantages of the reform are: • It frees up underutilised land for housing or other desired uses. • It forces badly used land back into line with local community wishes. • It encourages community living. • It encourages high rise living. • It allows Councils to encourage/discourage types of land use. • It makes it more likely that local communities will engage more with their Councils. • Councils and their voters can, over time, shape their area. THE PROPOSITION The reform of local Council Tax suggested is based upon LAND AREA. People or corporate entities controlling the use of a specific area of land should pay for that privilege. It is important that there is little room to for argument about the area of land controlled by the owner of the land. www.lancmag.com
