What is the best way to make council tax fairer for everyone?

Original Article:

Source: Link

There are two caveats to Aditya Chakrabortty’s excellent critique of the inequities of council tax (One simple change could restore faith in local democracy. But nobody is talking about it, 1 March). First, it’s unfortunate that he included “council houses … rotting in disrepair” in his litany of decay in the public realm. They may well be but, by law, spending on council housing is supported by tenants’ rents, not council tax. The trope about “housing on the rates” should be avoided; the housing revenue account has been ringfenced for more than 40 years now. Second, a 3% tax on disposable income is not a good substitute for council tax. The latter is indeed ill-designed and regressive, but there is nothing wrong with the principle that property as well as income should be taxed. Rather than adding to the marginal rate of income tax, there are many suggestions for more progressive property taxes, for example from the Wealth Tax Commission, which would support a more resilient tax base and greater fiscal choice at local level. David Griffiths Huddersfield, West Yorkshire Thank you, Aditya Chakrabortty, for focusing on the plight of local government – and those it serves. Which is all of us. In many poorer areas, however fairly the council tax bill is divided up, there are not enough wealthy people to fund the many vital services that local government is statutorily required to provide. That is why central government used to redistribute funds to help level the playing field. These have now gone, leaving ever more threadbare safety nets in their wake. Local government – and everyone it serves – deserves better. Cllr Trish Marsh Leominster, Herefordshire The best suggestion I’ve heard for a fairer council tax is to base it on a property’s value when it last changed hands. So someone whose house has risen in value, but whose income hasn’t, wouldn’t be hit punitively. But someone who could afford, or who inherited, the house next door would pay accordingly. Bernard Lyall London Aditya Chakrabortty is right about the inequity of council tax. However, there is one area of research that he does not mention. The council tax reduction scheme means that many of those on the lowest incomes can get a discount of up to 100% on their bill. So although the poorest 10% of households may face bills of more than 8% of their income, most of them should not have to pay this amount, as long as they make a claim to their local authority. Chris Willers Letchworth, Hertfordshire Aditya Chakrabortty refers to the very richest and includes in that “the people who own our talk-TV channels and sit on the boards of our academy trusts”. I am one of the trustees of a medium-sized multi-academy trust; our role (apart from the CEO, who is an employee of the trust) is purely voluntary and we receive no payment. We believe wholly in the concept of public service. However, I can confirm that I do not own a talk-TV channel. Carol Carlsson Browne Alresford, Essex To make a real difference, local authorities should be able to levy local income taxes, or directly receive an appropriate share of national income tax levied on their residents. An alternative is a local sales tax, but a direct tax is better. Prof Roger Brown Former civil servant working on local government finance