Monday, April 04, 2005

Axe their tax

I'm not going to try and improve it, so I heartily recommend the dissection of the Liberal Democrat 'Local Income Tax' on Talk Politics. Bob Piper has also kickstarted a brief discussion and there's more over at Honourable Fiend.

There is no doubt that some people gain from the Local Income Tax, but if you are to maintain the income stream, that also means that some people will pay more. Playing with the Liberal Democrats own calculator, suggests that the tipping point is around £35,000 of household (not individual) income on an average property valuation. As an example - if you have a dual earning couple like a police officer and a nurse, both at the start of their careers and living in an average Band D property, they will end up paying £300 MORE each year, while a well-off pensioner will pay nothing.

The LIT has attractions - I'd be better off, for one thing - but the Liberal Democrats have been less than honest about the downside. I've got a fairly open mind about local taxation, so I'm happy to have a debate about the options.

One of my concerns about going to an income tax collected through a central tax system is that it disconnects local residents from their council. The council tax system doesn't raise much of a local council's annual funding - the vast majority of that income is provided directly from central government through formula-based grants - but that tax is set and collected from local residents. While using the existing tax collection system has attractions on the grounds of simplicity, it nibbles away at that link (the article at Talk Politics also discusses some of the hidden complications of this 'simplicity' as well).

On the face of it, this policy appears a vote-winner for the Liberal Democrats, but the more I look at it, the more it looks like a Poll Tax for the 21st Century.

1 comment:

BB said...

Also at Hove Labour 2005 - sorry for the plug.