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Britain's totally unfair tax system

136 replies

ivanhoe · 12/10/2010 10:58

Hi everybody, what im about to write maybe will surprise some of you, but nonetheless its all fact. So here goes.

Britain is a low income tax nation, hence increases in Council Tax.

Including Council tax, Britain has the most disproportionate tax system, compared to Western Europe.

The poor in Britain pay more "overall" taxation including Council tax and Income tax, in proportion to income, than the rich.

What do you think of that then ?

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PortoFangO · 12/10/2010 11:05

It's hardly news.

jackstarbright · 12/10/2010 11:33

Link?

ivanhoe · 12/10/2010 11:39

Dont need one.

Thatcher cut income tax for all British workers in 1980, because the Tory "right" are the low income tax Government, Blair and Brown continued her tax policy, among others, from 1997.

Hence increases in our local taxes todate beginning with Thatcher's poll tax which is now council tax.

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ivanhoe · 12/10/2010 11:40

//////PortoFangO Tue 12-Oct-10 11:05:04
It's hardly news.///////

Obviously it will be to those who have had their heads in the sand since the 80's.

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Alouiseg · 12/10/2010 11:40

Before Council tax and poll tax we had to pay Rates.

jackstarbright · 12/10/2010 11:48

The UK Household Income 2008/09.

The top fifth to bottom fifth ratio was 1 to 4 (after tax and benefits).

Anyone know how that compared internationally?

jackstarbright · 12/10/2010 11:51

I meant 4 to 1 - so the top fifth had 4 time income of bottom fifth (average final income of £53,900 compared to £13,600).

ivanhoe · 12/10/2010 12:16

///////Alouiseg Tue 12-Oct-10 11:40:55
Before Council tax and poll tax we had to pay Rates.//////

yaes, but when people brought their houses under the old rating system, they knew what the rates were, they didnt expect to poor to bail them out, which is what has been happening since the poll tax, and now the council tax.

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ivanhoe · 12/10/2010 12:17

To all those now tyrying to work out the tax.

European workers pay much higher levels of income tax than we do.

But they dont have our unjust council tax.

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earthworm · 12/10/2010 13:13

Are you after replacing the council tax with a sort of local income tax, based on ability to pay? I think that was an old lib dem policy.

Alouiseg · 12/10/2010 13:19

What do you mean about "expecting the poor to bail them out"? When you buy a house now you know which band it's in and how much you have to pay.

I don't see why council tax is any worse than rates.

longfingernails · 12/10/2010 13:22

Council tax is stupid.

The size of your house has nothing to do with either the volume of council services you use, or your ability to pay.

It therefore fails from all sides of the political spectrum. You don't pay for what you use (though better councils, like Hammersmith and Fulham, are going as far down this road as is possible). You also don't really pay what is affordable.

I have a lot of sympathy with the old Lib Dem proposal for a local income tax, as long as they don't try to make it redistributive (they would euphemistically call it "progressive"). A flat-rate local income tax would be an excellent replacement for council tax.

Alouiseg · 12/10/2010 13:35

A local income tax would mean that the wealthy areas would make lots more in revenue than the poorer areas.

The wealthy areas could then afford to have cheaper and cheaper local income tax which would drag in more wealthy people who could afford to live there. House prices would escalate until only the very wealthy could afford to live in a low tax area.

dreamingofsun · 12/10/2010 13:55

alouseg - don't thnk it would work like that - they would just adjust the perentages so that total amount generated was same.

my issue with a local income tax is that it takes no account of your fixed costs - ours are high - mortgage, cars, childcare, pensions, food for family, B&B for husband working away...add up to well over 3k.

our retired neighbours on the other hand have much less income than us but practically no outgoings - why should we subsidise them?

we live in an area where there are lots of well off retirees and we would pay vastly more tax than them, despite the fact that they have far more money than us.

longfingernails · 12/10/2010 14:03

Alouiseg I don't see a problem with people moving to areas with good councils with low taxes.

Take two inner-city councils. Wandsworth is fantastically run by the Tory council; Lambeth is appallingly run by the Labour council. At least a few years ago, they both had fairly similar demographics, social problems, etc - though Wandsworth has improved markedly, whilst Lambeth has languished. If that makes people want to move from Lambeth to Wandsworth, then all the better.

The problem, as ever, is those who pay nothing at all into the system. They have no incentive to make any sort of contribution to the community in the current system; they wouldn't under a local income tax system either. They also have no incentive to move.

Combined with welfare reform, I think a local income tax would be a great idea.

dreamingofsun · 12/10/2010 14:22

so longfingers what would happen where someones fixed costs + local income tax = less than their income? And what would happen if someone was self employed - would the tax vary each month?

PortoFangO · 12/10/2010 14:46

In Belgium you pay communual and regional taxes as part of your income tax. It varies from Region to region but is about 6% of the total tax payable. The max rate here though is 50% which starts at 34,000 euros. So by my calculation, on that salary you would pay about 1000 euros per year. And of course, each working person in the house would pay.

dreamingofsun · 12/10/2010 15:02

porto - under that system the rolling in it rich retirees would pay nothing and i guess working families would have to pay even more to subsidise the shortfall - 25% of people are retired in some areas here and christchurch had financial issues recently as a result of free bus fares - so goodness knows what this would do.

longfingernails · 12/10/2010 15:03

dreamingofsun Well, what happens at the moment, with council tax? What happens if fixed costs + council tax is less than income? Most people would pay roughly the same amount under a new system, otherwise it couldn't work.

As for fixed costs. All those things you mention: mortgages, cars, children and the costs which are associated with them etc are the results of choices that we make. We pay for the consequences of the choices, and we choose to do so.

longfingernails · 12/10/2010 15:04

dreamingofsun Rich pensioners presumably live off the interest on their savings; that would be taxed so I can't see the problem.

It is true that asset-rich cash-poor pensioners who bought their house cheaply many decades ago will benefit but I am not hugely bothered by that, to be honest.

dreamingofsun · 12/10/2010 15:11

longlife - i made those choices under the current tax regime and if you go to work paying for childcare is not really a choice. Neither are the other outgoings eg food, transport, housing.

pensioners would pay very little and in many areas this wouldn't be an issue. but if you live in a retirement area working people will have to pay comparably more tax - it has to come from somewhere. And younger people trying to buy houses with massive mortgages would be hit as well as working families.

longfingernails · 12/10/2010 15:19

Well, all this is hypothetical anyway. Nothing is going to change - the government has more than enough on its plate and this isn't a burning issue.

Council tax is a fudge that isn't going away any time soon, sadly.

dreamingofsun · 12/10/2010 15:26

well i say gladly as our local tax bill would go up by 7k under the belgium regime. not sure where we would find that amount of money.

i would also feel sorry for youngsters living in tiny flats subsidising old people living in mansions.

ivanhoe · 12/10/2010 15:30

//////earthworm Tue 12-Oct-10 13:13:04
Are you after replacing the council tax with a sort of local income tax, based on ability to pay? I think that was an old lib dem policy.///////

No, I believe our vital services at local level should be funded by higher income tax, or more revenue from central Government, and that we should return to the rating system where people who are able to afford to buy houses know what the rates are before they buy.

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ivanhoe · 12/10/2010 15:31

///////What do you mean about "expecting the poor to bail them out"? When you buy a house now you know which band it's in and how much you have to pay.

I don't see why council tax is any worse than rates.///////

Council tax is "NOT BASED ON ABILITY TO PAY"

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