Local government taxation
When reading the excellent 'Politics of the Poll Tax' (one of the best books on the British political system I know) I realised just how difficult sensible reform of local government taxation is. It wasn't because Mrs Thatcher and the ministers involved were stupid evil idiots that we got the poll tax. Well ok, it wasn't just because Mrs Thatcher and the minsters involved were stupid evil idiots that we got the poll tax. It actually is quite difficult to come up with a fair, but locally accountable reform (assuming that's what you want -- Major and Heseltine almost scrapped the entire system of local government in 1991).I was reminded of this in reading James Graham's suggestion for reform of the council tax, which is:
"Better yet, a simple percentage on property values and more regular assessment would be more easy to understand. If person A owns a house that is worth ten times the house of person B, then they should pay ten times as much tax. The fact that they currently don't is a disgrace. "
This clearly would be an improvement, but I think particularly in London there is a major problem, which basically is that it leaves your council tax exposure up to the vagaries of the housing market. For example, in individual council areas property prices can diverge massively. It may be unfair than someone in street X sees their house rise by 20% compared to someone in street Y, but it's not very clear why they should pay more council tax, unless you can make the case that council provision has led to the increase. Or even more so, you don't need to be a late 1980s Kenneth Baker desperately running around the country trying to find an old woman in a mansion who had no income in order to justify the poll tax to realise that pensioners might get screwed.
In some areas of London houses that were worth very little in 1990 are now worth an enormous amount, particularly in 'gentrified' areas such as Hoxton, or Borough. Is it fair that a pensioner who has lived their for 20 years should suddendly see their bills double? Should they have to sell? One way around this would be to let pensioners defer paying council tax bills until they were dead, but this could create legal nightmares. Perhaps a better way would be it mortgage providers allowed people to swap some equity in their house for cash to pay the bills.
Either way it seems like given most people's wealth is in their houses, it's a wealth tax, which I'm in favour of, but it would be best to be upfront about it.
* Also what would happen to renters? At present one pays based on the value of your house, but if it was updated more frequently and accurately it would create the rather unpleasant reality of paying more tax merely because your landlord was getting richer.
posted by Matthew @ 2/16/2004 04:57:00 PM
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