council tax consultation(87 Posts)
we've just had a questionnaire through about council tax.
basically saying do you want to cut council tax benefits and keep tax your paying the same or do you want a 1.7% increase and keep everything the same for people on discounts.
I don't want an increase, it would mean we have to pay more than the 2.5k were already paying which will mean sacrifices.
Outraged youve hit the nail on the head about increasing the personal allowance and flat taxing everything above that. I'd like that flat tax to treat dividend payments and interest as income too (with, perhaps, a higher personal allowance for company founders to reflect the fact that they are gambling their prosperity for the benefit of our society). I'd like to see most of the current taxes abolished but would give priority to abolishing taxes on business in the hope of attracting multinationals to these shores (as Ireland did prior to the crash). This could turn Britain into a huge tax haven with all of the benefits for jobs and tax receipts that would bring.
So, what is a fair share of tax? I'm generally in favour of people taking as much responsibility for their actions as possible (with exceptions made for the elderly and disabled) and loathe irresponsible behaviour being bailed out with responsible peoples money. Similarly I think that government, where intervention is unavoidable, should look to providing funds to a competitive free market and buy in services - for this reason, I support widespread privatisation of schools and hospitals and have services provided free at the point of use through the voucher system.
What I'm trying to say is that I believe taxes can and should be slashed across the board. The taxes that will have to be raised should be raised through the income tax mechanism that you suggested, albeit a revised mechanism where the definition of income is broader than that used today.
One benefit of having a single tax rate that kicks in above a personal allowance is transparency. If the percentage of tax that an individual pays over and above the personal allowance varies it is easier to hold the government to account. Knowing just what the buggers are taking off us each month focuses minds like nothing else.
I can't remember what I wrote on that thread, so not sure how this will relate.
Its hard to define a fair share, and I don't think the system exists that would be perfectly fair for everyone. I dont think i can give a definative answer to that question. I think the council tax system as I know it in my area is completely fair. It is based on property size, and I think it's fair to assume that the majority of people live in a property suitable for their needs.
I used to live in a huge 4 bed house which I owned outright thanks to an inheritance, but when I split with my ex I couldn't afford it anymore, even with the council tax single person discount, so I moved to a smaller cheaper property. That is perfectly fair IMO. I bought a very small studio flat with the remainder of the house sale money which I rent out to give my income a little boost so that I can afford to work term time only to be able to be around for my dc.
I am one of those asset rich and cash poor people you were on about. Unsurprisingly, this is one reason I think a tax on second properties would be very unfair.
Income tax is, I feel, a lot less fair. I think the 50% tax rate was a joke, and 45% not much better. I would prefer a higher personal tax allowance and a flat rate for all. Although I know bugger all about economics so I'm not sure how this would work in reality, but it made sense to me when I read someone else's explanation.
So, what would you define as a fair share of tax?
Outraged Following on from the 'Does Inequality Matter' thread, what would you define as a fair share of tax?
outraged - you used the arguement that young families use more local resource ought to pay more tax
Err, no. I didn't say that at all.
I agreed with another posters point that young families use resources, which came in response to your point about families subsidising older people!
I think everyone should pay a fair share of tax, that includes families as well as older, or single people.
Please don't misrepresent me.
The only stable solution is a low tax one.
dreaming It should be pointed out that National Insurance is exactly what it says it is - it is an insurance against being out of pocket. It exists so that the individual who falls ill, loses their job or lives long enough to get a state pension doesn't end up impoverished and starving. The whole point of the system is that the average taxpayer will, on average, get back more or less what they put in (they will on average get a lot less due to inefficiency but that is a different post on a different topic).
With other services provided by government through taxation, the principle of what-you-put-in-you-get-out evaporates. The inefficiency is still endemic, but now we are looking at providing many services that we don't want (non-jobs), don't need (HS2), would benefit from open competition (refuse management) or actively glue up the economy (renewables obligations). Factor in that many of these vanity projects are the brainchild of a politician whose only experience of the real world is three years at Oxbridge reading PPE and it's not surprising that tax is high yet value for money is so bad.
outraged - you used the argument that young families use more local resource ought to pay more tax. Older people use more healthcare which comes out of national taxation - so extending your argument to its logical conclusion they should pay more income tax - if you are saying tax paid=useage of services.
currently older people are not necessarily subsidising younger families as rates are based on the size of a house. People knew this would be the case when they purchased a place. if you suddenly change the way its calculated - ie replace rates with local income tax - then this will cause problems for certain groups of people namely income rich/asset poor/high cost base people and these tend to be younger 2 income people with families.
i'm sure younger people would love to save for their pensions and i agree this is a great principle. but if they are paying out vast sums in local income tax, plus massive mortgages and childcare they are not going to be able to do that.
as i've explained before, i was just using the property example as a justification for why i thought they were rich. this was not the main thrust of my argument
Why would retired peoples tax have to rise but not that of young families? You asked where families were supposed to find the extra money to subsidise older people from, but where do you think older people are supposed to find money to subsidise families from? It works both ways.
That's why it is fair that each pays council tax according to the property they live in.
As has been said, it is very possible to be asset rich and cash poor. Having more than one property does not automatically make someone wealthy, no matter how much you want to believe that. We need to ensure that government policies don't penalise people for trying to be self sufficient without relying heavily on the state, otherwise no one woudo bother to save for their retirement. No one would bother to maintain that extra property to fund their retirement and then the state woudo have to pay out even more in welfare. People shouldn't be expected to sell something that have worked for to pay tax when they already pay their fair share.
i wasn't picking on 2nd home owners per se - but using this to indicate that they are wealthy.
mrjudgey - tax is not based on useage. if that were to be the case the unemployed would pay a lot more. Retired people use a lot of medical services so their income tax would have to rise if you use your argument.
Very good point MrJudgey.
People, especilally elderly people, who have more than one property are usually renting it out to supplement their income. They aren't doing it to be greedy and make things harder for other people, they are just doing what they can to improve their own standard of living. The same as anyone else would. I think it's unfair the way second home owners are seen as some kind of enemy.
"My retired neighbours all have several properties. why should a struggling younger family subsidise their local tax"
Who uses the local council's services?
talkin - agreed talkin. But at least with the current one everyone knew where they stood. where are young high earning/high expense families suppossed to find all the extra money from to subsidise low income/possibly asset rich older people?
mrjudgey - but at least that way you can sell/release some of your assets. My retired neighbours all have several properties. why should a struggling younger family subsidise their local tax - the younger family probably don't have massive savings to draw on either.
One problem with the current system is that it is possible to be asset rich and cash poor. Unfortunately, when it comes to paying council tax, the council want paying in cash. I'd be happier to see council tax subsumed within income tax but the truth of the matter is that governments, both local and national, need to cut back on spending wherever possible. No more non-jobs.
I'm confused. NO income tax takes account of expenses. Why are you picking up on local ones.
jolly - local income tax does not taken any account of someone's ability to pay. It assumes everyone's essential costs are the same which they clearly are not. A young family is likely to have a massive mortgage, and childcare costs to enable 2 people to work. they would also have to run 2 cars in this area.
older people will earn a lot less but have minimal outgoings - no children at home, low/no mortgage and probably only have to have one car.
we earn a lot more than our neighbours, but they are financially a lot better off than we will ever be, and until recently we were tight on money each month.
why should the financially poor subsidise the well off via local income tax?
An interesting question, outraged and one I'll think about. (I don't know )
Scot Govt Local Govt Finance page
5. Total revenue funding is distributed between Scotland's local authorities using a "needs-based" grant distribution system. In addition, to ensure a stable and fair distribution of grant, the grant distribution system includes a minimum grant "floor" within the settlement calculation, to ensure that all councils receive at least a minimum guaranteed increase in revenue funding for each year when there is an overall increase in revenue funding or a maximum guaranteed decrease in those years where overall revenue funding decreases.
Total revenue grants fund around 85% of Scottish local authority net revenue expenditure with the remaining 15% funded largely from the council tax.
23. The total revenue funding is distributed between Scotland's 32 local authorities using a "needs-based" grant distribution system developed over many years through consultation between central and local government. The system recognises key factors which impact on councils' relative revenue expenditure needs. Grant distribution is calculated on the basis of councils' Total Estimated Expenditure (TEE) funded from both grant and local taxation. Councils' expenditure needs are split between expenditure on services and debt servicing (loan & leasing charges).
I don't know what the percentage is in Scotland of what goes in and comes back though.
Maybe my confusion about the system is because of the differences between the english and scottish systems?
The idea of a local income tax is interesting, but I think I would prefer to stick to the way it's done now. Council tax is at least fair. Too much, but fair.
We already have tax on income, so it's right that we have a tax based on where we live. Let's face it, the vast majority of people who have a high income will also live in the biggest properties.
Would you have local tax based on household income or personal income?
I'm a public sector Auditor.
funds local authorities through a formula based on LA need
you are clearly too young to remember militant
"need" has never truly been the issue
political expediency is all
only 80% of what goes in comes back ....
you are sadly very naive about how the tax system operates
Local authorities get funding from council tax and central government at the moment.
Currently, folk pay council tax to the local authority. Businesses pay business rates to central govt. Other taxes like VAT go to central govt.
From these taxes, central govt funds health boards, benefits etc and also funds local authorities through a formula based on LA need.
Local income tax wouldn't be any less 'local' than council tax as LAs could vary it on the basis of incomes in their area and the level that the LA requires to balance the budget after the central govt funding has come through.
It would also be fairer for those paying it - those on low incomes would still pay little or none, those on high incomes would pay lots, whether they live in a £40k flat or a £3million mansion.
I'm arguing for a fairer tax for the people paying it.
But the point of justifying a local tax is that it stays local - otherwise its national - cannot have both ways
the current consultation is working towards keeping the money where it is raised
I'm suggesting it would be fairer for those paying the tax.
Surely not if central govt funding to LAs was worked out on a basis of redistribution? E.g those with low local income tax incomes would get high levels of govt funding.
There also seems to be a business rates retention scheme in those consultation documents although it is heavily caveated so no LA gets (Westminster's idea) of too much or too little.
but a local income tax would leave Kensington with free champagne and Toxteth with no schools
Presumably some portion of govt income that comes from/goes to LAs has to be redistributed, otherwise you end up with areas of poverty getting very little funding as they take in little council tax and would take in little business rates if they got them directly. And some of those areas need the most LA services.
Sorry, I don't know enough about where council tax relief comes from yet, but will read that link. It'd be interesting also to see what the situation is in Scotland about where CT relief comes from and whether there are plans to change this. Seeing as Scotland has frozen CT.
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