Would re-introducing the POL TAX be a fairer way of collecting local taxes?

[Mutant Lemming]

I’d happily go for poll tax.

I’ve never understood why people should pay for local services based on the value of their home. Why on earth should a single person in a high-value house pay more than a large family in a less valuable property?

Poll tax any day for me - in my view much fairer.

… and if you live in an area where there is a larger unemployed, elderly or low incomed population then you would be quite happy to make up the shortfall (as they would only be paying 20% of the tax) with a vastly increased contribution ? It was fatally flawed at the time as it would be today and almost led to the deployment of troops on the streets. The current system isn't perfect but whichever you have there are going to be winners and losers.
At the time I was living in a bedsit and yet paid the same as the guy who owned the house I was living in - where he had a nice house up the hill for him and his family his four kids education all subsidised by my council tax payments - and you wonder why there were riots ? It was Robin Hood in reverse - robbing the poor to subsidise the rich.

 

[R G NOW.]

Yes, I remember the poll tax, as at the time I was working in a factory on 2.93 per hour. The year it started left me penniless and was bad for my father as he was asked to pay for my mother. When the rates system was in my father paid 249.78 per year on a 3 bed detached house including garage. When the poll tax started my fathers bill doubled and he was like a caged animal. My mother did not work and was a housewife, whereas my sister worked for the council and she got hers exempted.

I feel the only way to sort this out. Is to keep council tax as it is and to fund councils properly and to tax the companies that are not paying enough, also to stop cutting taxes on the rich, What do you think?.

If they meddle again I think it would start more riots.

 

[DynamicSpirit]

You shouldn't use any tax system as a "punishment" for what could be regarded as bad behaviour from a social point of view.

I take it you'd therefore want to abolish duties on cigarettes?

It comes from the assumption that there are no reasons why such a couple stay in their large family home, so they need to be penalised to encourage them to move. Having spent a lifetime working in tax advice, I absolutely abhor the idea of using tax as a punishment or "behaviour changer" - quite simply because it usually backfires spectacularly. Just look at how the 62% marginal tax rate ("tax the rich till they squeak") has caused GPs and dentists to reduce their working hours to earn less and thus avoid it, thus worsening the shortgage and increasing waiting times.

""tax the rich till they squeak" wasn't really an attempt to modify bad behaviour though was it. It was more an attempt to reduce inequality (Having said that, the 'till they squeak' language was utterly appalling and dehumanising, and the highest marginal tax rates were massively too high and damaging. Thankfully, those old 80%+ top tax rates of the 1970s are now long since a thing of the past).

Personally I would say that there is absolutely nothing wrong with using tax to encourage behaviour changes. Used appropriately, doing so can be a very effective way to improve society by discouraging people from doing things that harm themselves and others. Taxes on cigarettes and on fuel are both excellent examples of that. But, as with all taxation, you need to really think through what the impact of the tax is, and whether the way you are designing the tax could have harmful side-effects.

 

[Modron]

There's many arguments about pros and cons of changing tax systems, which most people will never agree on.

What about making debt-free money? The central banks add debt to the money printed by them, which is surely part of the problem?

 

[AM9]

You shouldn't use any tax system as a "punishment" for what could be regarded as bad behaviour from a social point of view. It comes from the assumption that there are no reasons why such a couple stay in their large family home, so they need to be penalised to encourage them to move. Having spent a lifetime working in tax advice, I absolutely abhor the idea of using tax as a punishment or "behaviour changer" - quite simply because it usually backfires spectacularly. Just look at how the 62% marginal tax rate ("tax the rich till they squeak") has caused GPs and dentists to reduce their working hours to earn less and thus avoid it, thus worsening the shortgage and increasing waiting times.

A neutral persion would use the word 'nudge' to describe the intention of taxes, - 'punishment' sounds more like the voice of somebody who might have to pay more, and wants to make it sound unfair.

If older people "blocking" houses is a real problem (I have no view whether it is or isn't), then we should look at the reasons why they're doing it and solve those problems - perhaps it's a lack of suitable homes to move into (i.e. the shortage of bungalows), perhaps it's because they're too old to cope with the uphieval of moving (i.e. easier to leave all their stuff in the house/loft than clear it out), perhaps they don't have the disposable income to pay for the costs associated with moving. How about incentives to help them downsize, such as stamp duty exemption if you're buying a cheaper house than you're selling, how about building more bungalows, how about making it easier or providing help to get old furniture/possessions removed/recycled?

I did say that there would be a need for transitional arrangements: "Of course there would be the inevitable arguments of it being unfair on poor single persons who got lucky when council houses were sold off because they were occupying a large corner plot etc., so a transitional scheme could be devised to put a charge on the property that would be repaid when it was eventually sold." It would probably take somewhere near a generation to completely remove the losers from the scheme.
Older people 'blocking' houses suitable for younger families is a problem and I beleieve that there are two main reasons:
1) those in social housing are likely to be unable to easily move within their area to more appropriate rented property. Their needs to retain contact with the rest of their family if they are forced to move some distance away.
2) those in owner-occupied property are increasingly regarding their home as an investment that they can pass on to their descendants and keep the capital within the family. This is the main difference between the UK and most other similar countries in Europe and elsewhere, that homes are regarded more as an investment than a place to live in. Just as the law for funding care in later life is designed to prevent society in general paying for care of the wealthy to enable that wealth to be passed down to their children, so the taxation system should help to make better use of residential land as land itself is a finite commodity unless the UK goes on a Russian land-grab journey. In a district where land is in short supply and there are many homeless/overcrowding problems, it is antisocial for a house for two people to occupy a plot that could easily accommodate three or four houses, each suitable for four people.

Back to the thread. Other posters have pointed out the pros/cons of both main options, i.e. tax on the person or tax on the property. How about doing something radical and do both. I.e. a property based council tax charge, AND a personal based poll tax. So a household pays more if it's a bigger house, AND pays more if there are lots of people living there. Set it so that your "average" household of two adults living in an average house pay the same as they do today. So if there are 3 adults, they pay a little more than a house with 2. A house with 1 pays a little less. 2 adults in a big house pays more than 2 living in a small house. Avoids all the downsides of a local income tax and more proportional to local service usage, i.e. more people means more garbage, more use of local services, etc., but there's also the "wealth" element of the property based tax.

Local tax is based on the need to accomodate the local population within the boundary of the authority. Income tax is there to ensure an equal ability to contribute at a national level. The cost of servicing the community should be from both sources of public purse funding. If a local authority presides over a population with insufficient income, there is an established grant system to redress the balance.

 

[Basher]

Putting a tax on less energy efficient homes is against the governments policy. The government puts VAT on insulation

 

[Basher]

I think that if everyone contributed to the local tax collection system no matter what it is, a lot of people would re look at what is needed locally and not just for their own little interest. It's easy to shout and demand money for something that you do not have to pay for.

 

[londiscape]

I take it you'd therefore want to abolish duties on cigarettes?

""tax the rich till they squeak" wasn't really an attempt to modify bad behaviour though was it. It was more an attempt to reduce inequality (Having said that, the 'till they squeak' language was utterly appalling and dehumanising, and the highest marginal tax rates were massively too high and damaging. Thankfully, those old 80%+ top tax rates of the 1970s are now long since a thing of the past).

Personally I would say that there is absolutely nothing wrong with using tax to encourage behaviour changes. Used appropriately, doing so can be a very effective way to improve society by discouraging people from doing things that harm themselves and others. Taxes on cigarettes and on fuel are both excellent examples of that. But, as with all taxation, you need to really think through what the impact of the tax is, and whether the way you are designing the tax could have harmful side-effects.

Smoking is a good example - I would not agree with abolishing tobacco duties but there could be a case for reducing them.

Since the ban on smoking in public places, the effect of smokers on others has been negated (second-hand smoke inhalation etc no longer a problem - all right and good). These days smokers only affect their own health.

An article from 2017 estimates that smokers contribute approx £12bn pa in tax revenue. Also estimated is the cost to the NHS of treating smoking related diseases of between £2bn and £6bn pa. Instinctively I don't think the lower figure is reasonable, and there may be some reporting bias, so let's go with £6bn.

https://www.telegraph.co.uk/news/2017/10/18/comes-smokers-burden-nhs-may-contribute-tax-take/

So the remaining half of the £12bn can be categorised as "punitive". I'm very uncomfortable with the idea of the State deciding what is or is not "bad behaviour" if it is a completely legal activity.

 

[londiscape]

Older people 'blocking' houses suitable for younger families is a problem and I beleieve that there are two main reasons:
1) those in social housing are likely to be unable to easily move within their area to more appropriate rented property. Their needs to retain contact with the rest of their family if they are forced to move some distance away.
2) those in owner-occupied property are increasingly regarding their home as an investment that they can pass on to their descendants and keep the capital within the family. This is the main difference between the UK and most other similar countries in Europe and elsewhere, that homes are regarded more as an investment than a place to live in. Just as the law for funding care in later life is designed to prevent society in general paying for care of the wealthy to enable that wealth to be passed down to their children, so the taxation system should help to make better use of residential land as land itself is a finite commodity unless the UK goes on a Russian land-grab journey. In a district where land is in short supply and there are many homeless/overcrowding problems, it is antisocial for a house for two people to occupy a plot that could easily accommodate three or four houses, each suitable for four people.

But then again if one own's one's property and lives in it, why should the State decide that it's too big for you and you should move, and then employ nudges, punishments etc in the tax system? Buy to let may be an investment (the speculative elements of such I don't necessarily agree with in times of housing shortage) but if one lives in it, it's first and foremost one's home.

 

[mikeg]

@londiscape You seem to think that the NHS is the only external cost of smoking. Indeed tobacco duties probably are above the external costs and are therefore too high but I think by less than you state. But I agree with your general idea.

Taxation should be practical. It should not overburden the individual or nanny them but it should seek to make their choices more rational not for themselves but society as a whole (as well as providing funds for essential services, welfare , etc.)

 

[mikeg]

But then again if one own's one's property and lives in it, why should the State decide that it's too big for you and you should move, and then employ nudges, punishments etc in the tax system? Buy to let may be an investment (the speculative elements of such I don't necessarily agree with in times of housing shortage) but if one lives in it, it's first and foremost one's home.

I think this is where you and I have a fundamental disagreement but you have also failed to understand the argument . It is not about punishment but efficiency of the market on an allocative basis. You would be free to pay taxes and still live in that home. Therefore your choice is still individual but is made with greater reference to the cost to others.

 

[The Ham]

You know there is a tax on property rental income? Income Tax.

My suggestion was that the tax was on all the rent paid by the tenant rather than just that which left after expenses have been paid.

 

[Belperpete]

I think that if everyone contributed to the local tax collection system no matter what it is, a lot of people would re look at what is needed locally and not just for their own little interest. It's easy to shout and demand money for something that you do not have to pay for.

That was the whole idea of poll-tax. Unfortunately it suffered from two big draw-backs:
1) it encouraged selfishness. Why should I pay for schools when I have no children? Why should I have to pay for home-helps for the elderly and disabled? etc.
2) the people who use the services the most are inherently those who have little or no income. Making people with little or no income pay significantly more caused real hardship. It might have worked had the government increased benefit payments to those on low incomes to off-set their poll-tax payments, but that would have meant significant money from central government coffers. Unless they increased the taxes on the higher earners who saved from the introduction of poll-tax. But policy at the time was to reduce taxes, not increase them. So the end-result was a tax that caused real hardship for those on low incomes, while saving money for the rich. A real vote-winner!

 

[AM9]

I think this is where you and I have a fundamental disagreement but you have also failed to understand the argument . It is not about punishment but efficiency of the market on an allocative basis. You would be free to pay taxes and still live in that home. Therefore your choice is still individual but is made with greater reference to the cost to others.

I've only just come back on line but that's basically what my response to londiscape's post would have been. In addition, as I said above, the issue is land use, (well certainly in the south-east and many other areas in or near conurbations) because land is a finite resource. Without annexing territory that currently belongs to other countries, the amount of land available for residential use in the UK is subject to an absolute limit, - unless a free-for-all is allowed with all the environmental consequences that would result. So something that would make everybody aware of their denying land for others would be for a charges based on area alone. There would be no arguments about how much they would be liable for as the land area can very easily be measured.

 

[bramling]

I've only just come back on line but that's basically what my response to londiscape's post would have been. In addition, as I said above, the issue is land use, (well certainly in the south-east and many other areas in or near conurbations) because land is a finite resource. Without annexing territory that currently belongs to other countries, the amount of land available for residential use in the UK is subject to an absolute limit, - unless a free-for-all is allowed with all the environmental consequences that would result. So something that would make everybody aware of their denying land for others would be for a charges based on area alone. There would be no arguments about how much they would be liable for as the land area can very easily be measured.

Land is only finite in areas where lots of people want to be - like for example your example of the south-east. Finite or scarce resources are normally allocated by way of price, and I see no reason why any further rationing measure should apply.

Or, to put it a different way, I wouldn’t be giving up my 200ft-long garden in a south-east commuter town without a fight, no matter how finite land availability in the area!

 

[DynamicSpirit]

Land is only finite in areas where lots of people want to be - like for example your example of the south-east. Finite or scarce resources are normally allocated by way of price, and I see no reason why any further rationing measure should apply.

Or, to put it a different way, I wouldn’t be giving up my 200ft-long garden in a south-east commuter town without a fight, no matter how finite land availability in the area!

To be pedantic, land is finite everywhere. It's just that, in rural areas and places where there is no chance of getting planning permission for houses, demand for the land is not high enough to push the price up very much. And actually, just about everything you might choose to buy has a finite supply. The peculiarity of land is that the limit of supply is determined largely by nature, completely independent of demand, and there's little that any business can do (certainly, in urban areas that are already full of houses etc.) to increase supply. This contrasts with most goods, where the limit on supply is determined by how much businesses are prepared to supply at the price most people are willing to pay: The number of mobile phones in the World is finite. But if people were willing to pay more for mobile phones, then you can be certain that companies would find ways to increase the supply. By contrast, the amount of land in London is fixed, and that amount of land will remain (roughly) the same no matter how much people are willing to pay for it. (Yes I know there will be small effective increases because of, for example, building tower blocks, and securing planning permission to build on the tiny amount of unused land, but that's marginal: The amount of land is fixed to a reasonable approximation).

Throw into that mix that land is something that everyone needs at least some of it: Because everyone needs somewhere to live. And you have a problem that rationing by price generally leads to awful consequences - like people being homeless. Usually I'm a very strong supporter of free markets - because in general they are by far the most effective way anyone has devised to allocate resources so that we as a society derive maximum utility from them. But when you have a resource that is (a) fixed in supply, and (b) essential to life, then I think we should question whether price alone is the best way to allocate that resource.

In the case of land... it gets even worse because you have people owning the land and then renting it out to others who want to own the land but can't afford to. To some extent that means those people are making a profit, not by providing something useful, but by hogging a resource that other people need. Is that an ethical kind of business? Is it something that we should really be encouraging as a society? (And I say that as a landlord myself - although in my case, I let to students who probably don't want to buy their student residences, so I think that's ethical). Of course, on the other hand, like you, I have a garden which I'm quite attached to and would not wish to give up.

Lots of questions there and I don't really know the answers. But I certainly think there is a case for saying that, for something like land, who gets to use each plot of land ought to be determined by something related to social need, not just prices and market forces.

 

[whhistle]

The Tax system should be changed like some european countries.
While I haven't thought how it should be collected, the money goes from the people to the local council.
The local council pay a small portion of that to the county council.
The county council pay a small portion of that to the government.

That way, most of the money stays in the local area, where "the people" can see improvements in their own areas.

I understand it doesn't work this way in the UK, where most of the money goes to central government?

 

[Mojo]

As we see the council tax rise year on year, what do members think about re introducing the poll tax again with a couple of amendments to how it levied?

My council has frozen Council tax for the last ten years, and 12 years for over 65s.

The problem with the poll tax is, as Julian Cope said, that 'the man in Lambeth Palace pays the same rate as the man who has a flat in Acre Lane'.

Whilst that is possibly true, it is also worth pointing out that residents of Buckingham Palace pay less Council tax to the City of Westminster (Band H - £1,421) than a family living in a council flat in Hartlepool (Band B - £1,496.24).

 

[Senex]

My council has frozen Council tax for the last ten years, and 12 years for over 65s.

I wish mine had — here it's been increases every year, but with no improvements in services.

Whilst that is possibly true, it is also worth pointing out that residents of Buckingham Palace pay less Council tax to the City of Westminster (Band H - £1,421) than a family living in a council flat in Hartlepool (Band B - £1,496.24).

And doesn't that make the point why it's really such a bad tax? That's obviously an extreme example, but there are many, many more where despite being in a much lower band people can find themselves paying a lot more than those in a higher band in another authority. And when you then add in how capricious some of the banding can be ... At best, scrap it and find something better, but at the very least undertake the long-overdue re-valuation and introduce many more bands at the top end.

 

[R G NOW.]

I think perhaps a zone system should be brought in. London being A. And perhaps out as far as Cheshire with a zone P. I would keep the bandings as they are, but set the charge by zones for each area or county. That means cornwall and wales would have the lowest council tax rates. For example band A in London would be 2,755.00 and band a in cornwall would be 897.90. While a band A in reading would be 1,455.00. these are examples and mean people pay for area in which they live, and would have better services

 

[Mojo]

Why should London cost more?

 

[ainsworth74]

I wish mine had — here it's been increases every year, but with no improvements in services.

Though that will be because the increased take from Council Tax will still be less than the money lost due to the cut in funding from Central Government. Hard to improve services when you're budget is being cut!

 

[Modron]

Why should London cost more?

London and the Home Counties are perceived to be 'where the money is'.

The same is asked by people in Wales: 'Why should Cardiff cost more, and why should we pay more money?'

The simple answer is because the poor Valleys communities can't afford to.

 

[Mojo]

London and the Home Counties are perceived to be 'where the money is'.

However there are some very poor people in London; to be fair the cost of living in London if you discount houses is lower than elsewhere in the country. Obviously for many people you can’t discount the cost of housing, I reckon many people would be able to take a huge pay cut and still have an equal quality of life.

 

[Mojo]

I wish mine had — here it's been increases every year, but with no improvements in services.

I’ve not directly benefited due to only recently having moved house. My old (Labour) Council increased taxes as well as charged a Social care precept, plus the Mayor has also bumped up his precept by over five percent.

I’d find it hard to envisage how my old council could improve services to be fair. They did however introduce a new tax for being environmentally friendly and recycling garden waste. Their staff are vile though so I’m glad to not have any more dealings with them once they refund my Council tax.

 

[bspahh]

The biggest problem with the implementation of the poll tax was that it moved from taxing houses, which don't generally move much, to people, some of whom do.

When the poll tax was implmented, I lived in a big house with which was shared between 6 students. Students were exempt from poll tax, so there was no problem. Then someone graduated, and stayed on in the house whilst they looked for a job. They were on benefits, which gave them a contribution to their poll tax. However, this was nowhere near enough for the poll tax. It was a 4 bedroom house, but for the poll tax calculation, other 5 students were ignored, and he was treated as living there on his own. He had a 30% discount on the poll tax for the whole house, but 70% of the council tax for a band E property was a lot of cash, and he didn't have any.

After a couple of months, he got a job and moved away. The council then tried to get the rest of us in the house to pay his outstanding bill.

 

[Bletchleyite]

When the poll tax was implmented, I lived in a big house with which was shared between 6 students. Students were exempt from poll tax, so there was no problem. Then someone graduated, and stayed on in the house whilst they looked for a job. They were on benefits, which gave them a contribution to their poll tax. However, this was nowhere near enough for the poll tax. It was a 4 bedroom house, but for the poll tax calculation, other 5 students were ignored, and he was treated as living there on his own. He had a 30% discount on the poll tax for the whole house, but 70% of the council tax for a band E property was a lot of cash, and he didn't have any.

This is an issue with Council tax, not Poll Tax which is priced as a per head tax and so he wouldn't be paying anything like that.

 

[DynamicSpirit]

My council has frozen Council tax for the last ten years, and 12 years for over 65s.
Whilst that is possibly true, it is also worth pointing out that residents of Buckingham Palace pay less Council tax to the City of Westminster (Band H - £1,421) than a family living in a council flat in Hartlepool (Band B - £1,496.24).

To be fair, that's probably not the fault of the council tax per se. It'll be to do with Westminster having many more Band H houses than Hartlepool, which means that Westminster Council can get the same average revenue per house as Hartlepool by setting a lower notional council tax rate. There may also be something to do with the relative levels of Government support to the two authorities too.

 

[DynamicSpirit]

When the poll tax was implmented, I lived in a big house with which was shared between 6 students. Students were exempt from poll tax, so there was no problem. Then someone graduated, and stayed on in the house whilst they looked for a job. They were on benefits, which gave them a contribution to their poll tax. However, this was nowhere near enough for the poll tax. It was a 4 bedroom house, but for the poll tax calculation, other 5 students were ignored, and he was treated as living there on his own. He had a 30% discount on the poll tax for the whole house, but 70% of the council tax for a band E property was a lot of cash, and he didn't have any.

As Bletchleyite has pointed out, that must be the council tax you're describing there, not the poll tax. Also it's a 20% discount for only one council-taxpayer in the house, not 30%.

Having said that, that provides a perfect example of the need for Governments to think through the detailed consequences of the taxation rules they implement. As you experienced, the student discount has the unfortunate effect of penalising non-students for house-sharing with students, and therefore giving a strong incentive for students to share only with other students (or, for landlords to rigidly segregate their houses into student-only and no-student houses). I'm pretty sure that was entirely unintended, and would have arisen precisely because the Government of the day didn't think through the likely consequences of the council tax rules they were proposing.

 

[bspahh]

As Bletchleyite has pointed out, that must be the council tax you're describing there, not the poll tax. Also it's a 20% discount for only one council-taxpayer in the house, not 30%.

It was 20 years ago, so the details are a bit fuzzy. I still remember the hassle of dealing with it. It was a stupid implementation.