Local income tax must not be extra (From Durham Times)

Local income tax must not be extra

1:40pm Friday 29th May 2009

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AS if there hasn’t been enough nonsense from the House of Commons in recent weeks, the proposal of the Commons Communities and Local Government committee that a local income tax should be introduced will hardly go down well in most households.

There’s nothing wrong with a local income tax to fund local services. Indeed, it is probably the fairest way of funding local government, but has been shied away from by successive governments.

What really will stick in the craw for most people is the idea that that a local income tax be introduced in addition to the existing council tax.

The report suggests that the two taxes could complement each other through a local income tax generating the revenue previously provided by central government in the form of grants and, at the same time, the income tax payable to Whitehall would reduce.

It sounds simple but in the current climate taxpayers will simply not believe that the overall tax burden would remain the same, as the committee blithely suggests.

While appreciating the difficulties governments have had in the past in changing local taxation systems – most notably the infamous poll tax – the two main parties have to grasp this nettle in their policy statements before the next election.

The Liberal Democrats have nailed their colours to the mast unequivocally already, in supporting a local income tax.

It has a great many advantages in being easy to collect, progressive (it increases with the ability to pay) and, perhaps, most importantly, easy for the taxpayer to understand.

One of the greatest impediments to taxpayers’ understanding of local government, and their engagement with it, is the opacity of its funding arrangements with money coming from Whitehall under a fiendishly-complicated formula and the locally-levied council tax.

Many local councillors do not understand how it works and perhaps even some council officers, so it is hardly surprising electors struggle with it.

A local income tax is the only way to make local government more accountable through the ballot box.

How many times have local councils blamed their troubles on Central Government while hiking up their council tax rates and how many times have we heard Government ministers promise to get tough with profligate local councils?

A local income tax would end all that, but it has to be a substitution for the council tax – not an addition.

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