The problem with the Council Tax

Iain Dale received his Council Tax bill today and has started a debate about local government tax reform.

There is no doubt that Council Tax is unpopular.

Other imposts with a similar political impact? The BBC licence fee and inheritance tax. There is a pattern - these are all paid in cash, in lumps.

The dilemma for those of us who want lower tax is simple - do we prefer tax to be collected in unpopular ways (thus increasing tax resistance and the strength of lower tax parties) or in easier ways (thus reducing the psychological impact on hard working people).

The problem with the Council Tax is that in addition to the unpopular nature of its method of collection, it is hard to hold those truly responsible to account. Why? Because we are not sure who they are - central government or local councils.

So low tax believers should either press for clearer accountability (by ensuring closer correspondence between local spending and local tax) so that bills can be forced down through the ballot box or a less psycologically burdensome way of collecting the tax.

The Council Tax falls uncomfortably between the two.

Comments

[Margaret on the Guillotine]

I can see the right-wing logic on this. Put on a "local sales tax" instead of the council tax. Brilliant vote winner for the Tories. Why not? Nobody would count the X% they pay on a bottle of bleach and a tin of spaghetti hoops and a leg of lamb, whereas when the council tax bill for a whole year lands on the doormat - well, it can engender reactions like Iain Dale's.

Net effect: start-of-term jubilation and "Con gain Coventry South", at least at first.

The only problem is that it means the poor paying just as much in absolute terms in local sales tax on a weekly shop as the rich - thus far more as a proportion of income. How does that sit with social justice, unless it means a much greater focussing of state resources on the poor? I thought "social justice" was meant to be about "you can stand on your own two feet" and "setting you free of the dead hand of the state".

[adam]

I don't think it's because you have to pay in a lump. You can pay both Council Tax and TV Licence monthly.

Also, it's pretty clear that your council tax is going to your local authority. It's their name you write on the cheque. In London you even get a nice split between the mayor and the local authority (and of course the LA conviently get someone to blame for increases).

I think the unpopularity is caused because you get a bill. So you can see exactly how much to pay and you're told you have to pay it. Soon.

Contrast this with PAYE (taken off before you get it) and VAT (hidden in the price of things you pay for). Council Tax is unpopular because it isn't in any way stealthy.

IHT is a red herring here I think.