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Council Tax

Discussion in 'SC Archive' started by anarchist, 20 Apr 2005.

  1. anarchist

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    I was thinking about this on the way home (yes, I AM that sad) and wondering what the best system would be.

    The way I see it, I can think of four options...

    1) Council tax
    2) Poll tax
    3) Local income tax
    4) Local sales tax

    I can see good and bad points for all of the above and can't really say I can think of any system that seems totally fair and doesn't penalise anybody.

    Also, the other point is, what exactly is the council tax trying to achieve? If it's simply a way of paying for local services, then the fact that some local stuff is paid for by national taxation seems wrong because people who live in some rural community in the middle of nowhere are basically partly subsidising London which has enormously expensive public services.

    Anybody have any views on this?
     
  2. Dolph

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    Depends how you want to work it.

    Council tax is just about the stupidest system anyone could come up with, because the value of your home doesn't have anything to do either with your means or what services you use. I think just about any alternative system would be better.

    The Poll tax was a fundamentally good idea in many ways, but was levied too high. It said, quite correctly, that everyone uses the same services, so therefore everyone pays the same amount. If the amount was reasonable, this isn't too bad an idea, and is easy to administrate.

    Local income tax is a fair taxation in some ways, as it goes based on an easily measurable quantity that is fairly representative to your means. It does have the issue of making a significant number of familys worse off though, especially as the Lib Dems have got it planned. There are people with high earnings who live in small houses, for example, and they will be worse off under local income tax than either poll tax or council tax.

    Local sales taxes are a nice idea, but our locales are too small for it to work effectively. State sales taxes work in the US because it's not easy for most of the state population to drive to another one to escape it or pay a different rate. Can you imagine the same thing over here, especially if run on the local authority lines we have now. It would either end up as a blanket tax that didn't vary (so just another VAT) or people would move about and the sales tax would fail to raise enough money.

    Personally, given the type of services these local taxes are supposed to provide, I'd go for a sensibly levelled Poll tax coupled with fiscal responsibility on behalf of our local councils. Something which is seriously lacking at the moment.
     
  3. dirtydog

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    Why not just abolish council tax and don't replace it with anything. Simply fund all local services from national taxation; most local funding comes from central taxation anyway. Just make it 100% and do away with an entire level of bureacracy in one fell swoop, and everyone is charged on the basis of ability to pay.
     
  4. Bear

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    As Dolph has pretty much covered what I have thought I dont have much to add.

    Local Income tax is a complete sham. We already pay tax related to our incomes why we should have another one is beyond me. Myself and my other half have not long graduated (4 years ago), we live in a small 2 up 2 down Victorian town house and as it stands we pay £1175. Under the Local Income tax we would have to pay more because both of us earn a reasonable wage despite having to still pay our student loans.

    I would prefer a poll tax where people pay for what they use. I dont see why I should have to subsidise people that decide they want huge families. We do enough of that already.
     
  5. Bear

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    I would go along with that, and the savings in administration would probably mean a pretty small increase in overal income tax.
     
  6. Dolph

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    That would also work.

    A simple "You have this many people in your authority, so you get this much money, spend it how you like" would do me.
     
  7. Rich_L

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    Personally I'd be happy with a local income tax coming straight out of my wages, my flatmate and I would in all likelihood be worse off, but that doesn't really bother me as long as we were getting good services.
     
  8. Dolph

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    That's a very big IF Rich.

    So far the huge increase in the tax burden hasn't led to improved services....
     
  9. marin

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    I would probably prefer a Poll Tax, or another idea would be to pay for the services that I actually use:-

    Services I use

    Bins
    Grass Cutting
    Street Lighting
    Roads
    etc

    Services I do not use

    Library
    Parks
    Schools
    Socal
    etc

    Only problem is that it would be a nightmare to administer, but I get fed up paying for services for other people to use (I'm sure that a lot of people who use a lot of council services probably do not even pay for them), that I do not need or use.

    Or I could take my bin to the local tip (pass it every day on my way to work) and pay them, cut the grass myself, pay for my street lighting via a percentage on my electric bill, pay for the roads through a fuel charge or by road tax, so why not just scrap the council - then Schools, Libraries, Parks, Socal etc could then be paid for by central goverment.

    We most have some of the worst Local Councils in the world, do we put people in charge of them who have run muti-million pound business - no we put people in charge of them who used to work on bin trucks!
     
  10. Rich_L

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    Heh well I guess that depends on your viewpoint, I very much doubt there will ever be a set of figures released under a Labour government that convince you that services are improving, regardless of whether they are or not... ;) All I know is that I've had good services with the NHS, good service with the police, good service with council maintenance. Though maybe that's just where I live :)

    I'm against the idea of only paying for services I personally use, just seems a bit selfish to me really, if the services are providing a benefit to others who would otherwise not be able to afford them then I don't mind paying for it, if my contribution of the equivalent of a few pints a week results in the maintenance of a library or a school for other people that are living on the breadline and couldn't fund it themselves then it's money well spent.
     
  11. Dolph

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    Well, certainly where I live we have a crap NHS, an Awful police service and a council who seemingly can't be bothered with anything unless they can fine people for it... I guess it does depend where you live :)

    I'm against this too, that's why a Poll tax would be ideal, everyone pays equally for the service and has the choice to use them, rather than the current system where those who pay the most are least likely to use the services.......

    And council tax isn't a few pints a week (especially for me as I don't drink). It's more like £100 a month, which is money I begrudge paying when there's very little benefit to be had from doing it
     
  12. AJUK

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    Poll Tax

    It is the fairest because it levies an equal tax on each adult. The only thing I get for my council tax is my bins emptied once a week, a box for recycling (and the council not being able o make up their mind what can be recycled) and street lights. Oh, and don't forget all of the leaflets printed in 30 different languages telling me how well they are spending my money. :rolleyes:
     
  13. Bear

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    Im glad someone does. I live an a town called Chesham in Bucks, where as I said, we pay £1175 for a 2 up 2 down town house.

    For the money we pay, we get part time police (open 9am-5pm), in the 4 years Ive been living here, Ive never seen any police patrolling on foot anywhere. The only time I ever saw police on foot walking through the town I was amazed, only when I got closer, I saw both of them carrying McDonalds and were obviously walking back to their car. We have a part time fire station where firemen get called up and have to drop what they are doing to go to the fire station, get into their truck and drive to the fire, by which time you're either burnt to death or your house is burnt down.

    The closest hospital with an A&E is 30mins away in High Wycombe, there is a closer one in Hemel Hempstead but as its in another county they dont come from there, so a round trip of close to an hour and you're probably dead.

    Roads in Chesham are unbelievablely poor and the bin men dont collect your rubbish from your bins. You have to drag your rubbish to the boundary of the front of your property as we dont get wheelie bins and they wont go round the back of your house.

    For the money we pay, the service is pathetic and I begrudge paying a penny more.
     
  14. VIRII

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    The sheer cost of administering all therse different types of taxation must be enormous.
    Surely a single income tax would be the simplest way to raise the revenue with monies being divvied up from there.
     
  15. starscream

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    Add another penny or two on income tax
     
  16. csmager

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    I have to say that this seems the most logical and efficient solution - so why has it never been done? Why has no one suggested it?

    Other countries have similar systems to us, apparently. So is there any reason behind the council tax?
     
  17. dirtydog

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    And while we're at it, why not abolish N.I. contributions and add those to income tax as well. NICs are an income tax after all. Have the threshold for the 'new' income tax at the same level NICs cut in now, and have a starting rate of 11% for the first few thousand of taxable income, rising to 33% for the next £40k or whatever it is.

    There seems to me to be a lot of scope to dramatically simplify the tax system, which would probably save billions a year.
     
  18. Harley

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    Do you realise the effect that will have - it'll sigificantly increase the tax higher earners pay. Imagine the squeals. :)

    Not many people, especially Labour voters, realise that NI is a far more regressive form of taxation than Income tax. Why? Because with Income tax, the marginal rate goes up as income goes up. With NI, it goes down as income goes up.

    NI drops to a 1% marginal rate at more or less the same level that Income tax goes up to 40%. This nicely softens the blow for higher rate tax payers.

    See .... NI is charged at 11% between the Primary Threshold and the Upper Earnings Limit. That means on earnings below £94/week (£4888/year), you don't pay NI. You then pay 11% on earnings between that and £630/week (£32760). On earnings above the UEL, you only pay 1%. So if you earn £33760, you'll pay 11% on £32760-4888 = 11% on 27872 = £3065.92, and 1% on £1000 = £10, giving a total of £3065.92.

    That's what I mean about regressive. NI hits those with lower incomes harder as a proportion of income (otherwise known as ability to pay) than it does those on higher incomes.

    If you currently earn £40,000, your NI for the year will be £3155.48. Extends that to £80,000 and how much extra NI do you currently pay on that extra £40,000?

    1%. £400. £3555.48 in total. You pay £400 on the second £40,000, compared to >£3000 on the first £40,000. Nice if you earen £80,000 but not so nice for those on £40,000 ...... or less.

    I wonder how many Labour voters realise what their heroes, Blair and Brown, actually did to them when they promised not to increase the basic or higher rate of Income Tax, and then stuck 1% extra on the rates of NI instead? If, as they would have us believe, they represent the working Joe and the Tories are for the toffs, then using NI as a measure to increase revenue was an incredibly devious and cynical ploy, because it made naff-all difference to the relative tax paid by the higher earner.

    If you earn £32760 a year and I earn £132,760 a year, how much extra did we both pay when the 1% rise went on?

    At 10%, you paid 10% on £27872, which went up to 11%. i.e. from £2787 to £3066. So you paid £279 more. That is, NI represented 8.5% of gross pay to you, and went up to 9.35%.

    At 10%, I paid £27872 at 10% which is £2787. At 11%, I paid £27872 at 11%, and £100,000 at 1%. So I paid £4066. So I went from 2.1% to 3% of gross pay.

    If, however, that tax had been raised through the Income Tax system, the increasing marginal rates would have ensured that the higher paid picked up a relatively larger proportion, in relation to gross pay, than the poorer paid. The better paid you are, the less NI matters to you, relative to Income tax, precisely because of the existence of the UEL, and the rates levied above it. Look at those gross pay percentages. To you, it's 9% of gross pay, and to me it's 3%. There's regressive for you.
     
  19. dirtydog

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    Well what I was thinking of was something along these lines.

    Earnings of 0-£4888 no tax.
    £4888-£7000 (approx) 11% tax
    £7000-£33760 33% tax
    £33760+ 40% tax

    Would that hit higher earners harder than now? I don't think so, but I'm not remotely an expert especially on the higher rates of tax as I don't quite fit into that band :D


    I realise! I realised what it meant the moment they did it, and I was sickened. NI hits the very lowest paid disproportionately hard. John Major's government did it too (raised it from 9% to 10%) but it's the sort of thing you expect the Conservatives to do. Not Labour though. A cynical way of increasing income tax without technically breaking their promise not to raise Income Tax.

    One difference with NI of course is that you do not recoup any overpayments, like you do with Income Tax. eg. say someone in a part-time job earns £80 a week or £4160 a year. If they did some overtime and earned £200 in one week, they would pay a load of extra NI and Income Tax. They would eventually receive an Income Tax refund, but they would never get the NI back even though they hadn't earned enough in the whole year to pay any NI at all. Very unfair if you ask me.
     
  20. memphisto

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    COuncil tax is a joke, it wasnt too bad pre 1997 MY mam and dad payed about £500 they now pay close to £900 I dont think many people would be that bothered about CT the reason people are getting so annoyed is not really because of the tax its because of the ridiculous increases we have had to pay a 70% rise in 7-8 years is nothing short of a scandal.

    The one thing I would do would be to abolish free council tax for those on benefits that currently recieve it, the revenue for this would then be moved onto reduced rates for pensioners, also I think the increase in council tax should be linked to inflation not because a council decides it needs a 15% increase.

    Interesting info on NI Harley I never realised that, the current system punishes low earners and rewards high earners then ?

    Surely a fairer system would simply be to set NI at the same level for everyone maybe something like 6-7% with the extra revenue from higher earners should offset the reduction for lower earners ?


    Question in this regards though, does that mean that the contribution from companies is reduced for earners over the threshold as well ?
     
    Last edited: 21 Apr 2005