The Tories are now getting into their stride and/or have finally discovered New Labour's manual 'How to keep a house price bubble going'. This is only the third throw on their watch and a fairly pathetic one at that, but hey:
There will be no revaluation of council tax bands in England during this Parliament, the government has pledged. It means there will be no rise in local taxes for householders based solely on the increased value of their homes.
The man who is so smug and fat it makes you sick to look at him said: "We have cancelled Labour's plans for a council tax revaluation which would have hiked up taxes on people's homes. Hefty council tax bills are a constant financial worry for many people. Today we are setting their minds at ease, and protecting the interests of the less well-off in particular who were the hardest-hit from Labour's council tax revaluation in Wales."
Nope.
Constant 'Financial worries' are things like losing your job, getting behind on debt or mortgage repayments, rocketing gas and electricity bills caused by green tomfoolery.
And as you can see he is - without a shred of evidence - playing a version of The Poor Widow Bogey - claiming that the cuddly caring Tories wouldn't do a revaluation because "the less well-off" would be hardest hit, for which there is not a shred of evidence. Funny how nobody mentions all the properties in Wales which moved down a band or two, isn't it? If they really wanted to help the 'less well-off' then what they could do is make Council Tax a teeny bit more proportional to property values, like cutting the tax in Band A by half and doubling it in Band H or something.
Friday, 24 September 2010
Another day, another reckless throw of the dice (37)
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13 comments:
Constant 'Financial worries' are things like losing your job, getting behind on debt or mortgage repayments, rocketing gas and electricity bills caused by green tomfoolery.
Agreed...
But so is Council Tax. Default on the generously-allowed monthly payment and the council come after you for the whole lot in one go - and remember, Council Tax is one of the few, possibly the only, debt that can carry a prison sentence.
Council Tax is a crap tax anyway. Taking the (I suppose laughably naieve) view that it is intended to pay for local services provided, it's not people not houses that use said services... One person in a large house makes far less demands on local services than half-a-dozen in a small one. The Poll Tax was a far fairer way of doing things but the Tories were totally inept in its introduction - allowing, for example, Birmingham to effectively introduce a 75+% "rate increase" whilst blaming it on the Government.
... And they got away with it!
I suppose, to be moderately logical for a moment, a "revaluation" shouldn't really have much effect - houses will move (generally up) a band-or-so, but in theory the bands should also move up to keep the proportions consistent. Unfortunately, government never works that way and the ever-useful doctrine of "fiscal drag" almost guarantees that the bands won't move as much as property values.
"The Poll Tax was a far fairer way of doing things".
Only if you believe in the Thatcherite "pay as you go" theory of taxation - as you use, so shall you pay. This idea places the largest tax burden on the poor, who "use" the services as much as the rich and have considerably less income with which to pay for them, which you may consider a Good Thing, despite the fact that it rather defeats the point in having any publicly provided services whatsoever.
The competing theory of taxation is that those who can afford to pay more, pay more. Under your system the Council Tax is "unfair" and the Poll Tax is "fair". Under the other system it's the other way around.
One person in a large house makes far less demands on local services than half-a-dozen in a small one.
But the main thing is that there is generally some relationship between house size and inhabitants, and that it's also quite effective as a way of taxing people based on ability to pay. It results in similar effects to giving people a tax threshold or tax credits. Oh, and as land is a reasonably scarce resource, encouraging people to live in smaller homes that suit their needs might not be an altogether bad thing.
The Poll Tax was a catastrophe because it was so complicated to collect. The number of staff in councils shot up and non-payment shot up. You had people lying about where they lived because if they claimed they lived with their aunt in Cirencester rather than central Bristol, then they paid a lot less Poll Tax (while enjoying the benefits of living in a city like Bristol).
Rates were, at the time, the least worst tax around.
Mark, perhaps you should have pointed out the economic illiteracy of this argument:
Revaluation without rebanding benefits the rich in favour of the poor: assuming the total tax take remains the same, although individual properties will move into a higher band, the percentage take represented by that band will decrease as the total tax base increases due to bubble-generated inflation of values. The rich are in the highest band anyway and so they will not move up a band so, with a smaller percentage take, they will pay less tax, subsidised by all those who moved up a band in the lower bandings.
Revaluation with rebanding keeps the status quo whilst ironing out anomalies and doing nothing means that the occupiers of new properties continue to subsidise those who live in properties built before 1991.
I wanted to explain this to John Humphries with a piece of 4x2, but of course, I couldn't.
Pogo, sort of agreed, but as B points out, a Poll Tax "rather defeats the point in having any publicly provided services whatsoever", and as JT points out, if you have an intellectually coherent and administratively simple Poll Tax, it would relate to the value of the services you receive rather than a simple cost ÷ people living in area formula. And the value of the benefits you receive from living at a particular location are easily measured by looking at land or property values :-)
B, good maths. In other words, if all houses ended up in Band H, that'd be terrible for those shuffled up from Band A but rather splendid for those already in Band G or Band H.
@Bayard: The competing theory of taxation is that those who can afford to pay more, pay more. Under your system the Council Tax is "unfair" and the Poll Tax is "fair". Under the other system it's the other way around.
Colour me "Thatcherite"... :-)
Bearing in mind that 75% or more of local expenditure is centrally-funded, you could say that those who pay more into the central coffers have already made their "fair" contribution.
@Mark: as for "cost" v "value" - I'm not sure. If I'm having money extorted from me under threat of imprisonment I want it spent defraying the costs of the services supposedly supplied and nothing more. I don't see any advantage (other than to those who wish to indulge their profligacy at the taxpayers' expense) of inventing a "value" of said services.
You can indulge yourself in buying "value" when it's discretionary spending.
Pogo, I'm an economist not a politician.
Like anybody else, there are things the state does where
a) value > cost (and these are worth doing, assuming these things would not be provided by the markets) and
b) things where cost > value (and the state shouldn't be doing these things, by definition).
It is far better for people to voluntarily pay for the value of what they'll get (by deciding where to live) than being forced to pay an aribtrary % of the cost of whatever the state deems worth doing.
Of course having a roof over your head is a necessity; but owning a five bed villa with a massive back garden near the centre of town is clearly a luxury. So a LVT/CI system would very neatly only tax the 'luxury' element.
And remember: land 'ownership' is merely a battle between private and public tax collection. If 'the state' (on behalf of society in general) doesn't charge for the value of what 'the state' or 'society in general' do (or are restrited from doing) which makes one location more desirable than another, then landowners will collect that value instead.
Admittedly, most people are owner-occupiers, so they are simultaneously creators and consumers of value; the income is non-cash income and the expense is a notional expense/opportunity cost, but like I said, I'm an economist.
Pogo, just as a PS, taxes on incomes or output are quite clearly state-sanctioned theft. LVT is not really a tax, it is a user charge on consumption of common resources.
"I don't see any advantage (other than to those who wish to indulge their profligacy at the taxpayers' expense) of inventing a "value" of said services."
The difference between cost and value: the cost of providing a bus service in Central London is only marginally higher than the cost of providing a bus service in, say, Milton Keynes. However, in Central London, it is expensive and difficult to keep a car and use it to drive to work. (congestion, lack of parking at both ends etc.) In MK it is much less so. Thus whilst the cost of the service (assuming a subsidised service) is slightly higher in CL, the value to the taxpayer is considerably greater.
Staying on economics, the other serious problem with a poll tax is its effect on employment. We've all heard the argument that income tax causes unemployment. And it's true enough. Well it goes in spades for the Poll tax. At least with the income tax there's a tax allowance which means that it doesn't affect low paying jobs quit so much as high paying jons. With a poll tax things are the other way round. Because it is a fixed amount, it actually causes unemployment preferentially for the low paid.
As I recall (and I may be misremembering), unemployment did indeed rise after the poll tax was introduced. So let's not try that again, please.
B, good example. There's a bit in the Barker Report or Lyons Report somewhere where it says exactly what the required population density for a viable bus service is, it's something like 12 people per hectare (from memory). These Australian public transport enthusiasts say it might be as little as 5.
D, I'd love to agree, but a) the economy was going down the toilet anyway; b) it might have been partly because unemployed people got a discount or exemption or something and c) a Poll Tax of (say) £1,000 per person is pretty much the same as scrapping the income tax free personal allowance.
"Constant 'Financial worries' are things like losing your job, getting behind on debt or mortgage repayments, rocketing gas and electricity bills caused by green tomfoolery."
Ah, Mr W, your list is incomplete. In your new world you must add "being unable to pay LVT through lack of income".
Your answer has always been: (i) they should sell and move to a cheaper property or (ii) LVT liability can be rolled-over and discharged on sale or death.
Why do you think the inability to discharge LVT out of current income is likely to be less of a worry than the inability to pay the gas bill?
TFB. Explain to me why "being unable to pay LVT through lack of income" is any more worrying that "being unable to pay rent or mortgage through lack of income"?
Another big Tory lie is that Council Tax is people's second or third biggest item of expenditure, it's not, the biggest item is probably income tax/VAT/NIC.
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