A regressive tax is one where a poorer person would pay a higher proportion of their income than a richer one. For council tax, you pay more if you live in a more valuable house. I'll accept that there won't be an exact correlation between income and size of house, but I'm not sure how this works out as a regressive tax. Poll tax was regressive. Council tax would seem to me to at least be attempting to be proportional.
Of course a libertarian like me would argue that council tax is simply a way of paying for a certain level of services provided by your local council. And as poorer people may well use more of those services, I would argue that if they pay less tax and get more services in return (for example, looking at the Caradon District Council leaflet in front of me, 'community services', 'adult social care' and 'children, young people and families), then council tax in real terms is actually progressive.
Our council tax bill this year was a bit over £1,500 (and after the regrading of housing in the near future, I fear it will shoot up as I can't imagine that our house should really count as band E). In return for that, we get police (fair enough - although you almost never see a policeman in the village) and rubbish collection.
There is a long list of people who are unfairly hit by this tax, which we can all think of eg. pensioners, those who live alone, those who bought their homes a long time ago or inherited them and/or have seen them surge in value by doing nothing themselves (say, the area becomes up and coming).
The fact is, people don't just choose exactly what size of house to live in/buy and where, there are so many other factors that come into it. A lot of people find themselves having to buy/rent a house they can barely afford because that's all there is, or the travel to work would otherwise be prohibitive, or it's near the relatives they care for, etc. Then to get the double whammy of being charged more council tax on top of this is just ridiculous.
I quite liked the idea of "local income tax".
I agree it's not an entirely regressive tax (although how many exceptions to that rule does one need before it de facto IS one?) but it's certainly nowhere near a reasonable one.
I'm not convinced by the argument that it's "unfair" that pensioners, people who live alone etc are hit hard by council tax increases. There's a real housing problem in this country, and at least part of it is due to the ageing population and the fact that there are a lot of elderly widows rattling around in 4-bed houses while young families can't afford to get on the property ladder. Sad as it is for the individuals, it seems to me it may be a good idea to apply a bit of pressure to such people to downsize, and free up the resources.
That argument's all very well if they can afford to downsize (moving costs), and if there is somewhere for them to downsize to. Moving costs are higher if you are older, cos chances are you can't easily carry boxes and that sort of thing.
There are plenty of retired people who have already moved out of their family homes into much smaller accommodation: they are still being squeezed by council tax on their fixed incomes (because they didn't have their money in property, it hasn't grown as fast as property prices have done).
Short of moving to an inner city terrace totally inappropriate for aging residents (steps, stairs, steep walks to the shops etc) there is nowhere really left for them to go.
For those of us in continual employment, NI is just like tax and claiming it's not a tax is disingenuous. For people working only occasionally, NI is worse than tax, because it's not averaged out over the tax year, and it's not like they'd get much in the way of benefits related to paying NI unless they're paying continuously anyway.
I have no idea about other groups of people (self employed, businesses etc), I gather the NI situation is even more complicated, although not whether it is better or worse than taxing for such people. Care to enlighten me?
Narrow the tax base a bit. One good thing would be to bring buildings into the capital allowances regime, so you actually get some relief for the rather fundamental business expense of having somewhere to carry on your business. Not allowing a deduction for that is a travesty.
Rather than cutting here and pasting there, and just endlessly fiddling with everything, I think they should go home and have a nice cup of tea. Then in, Oooo, about 4 years time they can come back and they are allowed 6 months to prepare another budget and govern the country, then they have to go home again.
My guess would be that not constantly changing things and having to update all the advice and information and stuff would improve efficiency quite a bit all on its own.
Especially if after the 4 years they have to spend 2 more actually paying attention what what we professionals have to say about things, and only then can they make changes.
That sounds a very sensible suggestion, it does seem like they change their minds far too often. This time last year they announced all medical research would be combined into a 1 Billion pound fund. Which sounds great, but the MRC and the NHS already have approx £500 million each to play with. They then funded a study to see how they would do this (it not having been thought about before it was suggested). The conclusion they came to was that we would stay roughly as we are, as combining us with the NHS was be too problematic and mean that the government had full control of the direction medical research took. However we will now have a body above both of us to oversee what we do with the money they give us (this is in addition to all the returns we currently have to make to the treasury anyway). I fail to see what has been gained by this except a few people getting very well paid to tell the government to leave us as we are, along with the extra cost of funding another layer of bureaucracy :-(
IH IS one thing that there are lots of clever legal ways around though, it's just that a lot of people put off thinking about it in the same way that they don't write a will - they don't want to think about it.
If it can't be got rid of altogether, I think the IH band should be a bit higher though and/or the level of IH lower, and that there should be some way of paying it over time rather than having to sell the property that you have just inherited. (Likewise for other things that are inherited such as art works, racehorses etc). Otherwise, what is the point of saving things and money?
Nope, they got rid of it for earned income. It still exists for savings income and capital gains - so you're OK if you're living off a nest egg and selling off the family silver.
Not exactly a tax cut, but I think they'd do much better to raise the threshold for income tax, rather than faffing around with all these tax credits of one kind and another.
It would mean the people on low incomes would pay less (or no)income tax to start with, rather than paying it and then having to claim it back. Less administration, less chance for mistakes and giving people more control over their own money.
Something like minimum wage x 40 hours a week x 52 weeks a year sounds a good start: if the government thinks a minimum should be set, then it shouldn't take any of it away.
Well I voted for VAT, because I think that direct taxation is fairer. VAT was originally intended to be a tax on luxury goods, but it seems to be on a lot of essential items too.
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no subject
Date: 2007-03-22 02:08 pm (UTC)no subject
Date: 2007-03-22 02:57 pm (UTC)Of course a libertarian like me would argue that council tax is simply a way of paying for a certain level of services provided by your local council. And as poorer people may well use more of those services, I would argue that if they pay less tax and get more services in return (for example, looking at the Caradon District Council leaflet in front of me, 'community services', 'adult social care' and 'children, young people and families), then council tax in real terms is actually progressive.
Our council tax bill this year was a bit over £1,500 (and after the regrading of housing in the near future, I fear it will shoot up as I can't imagine that our house should really count as band E). In return for that, we get police (fair enough - although you almost never see a policeman in the village) and rubbish collection.
no subject
Date: 2007-03-22 03:03 pm (UTC)no subject
Date: 2007-03-22 04:53 pm (UTC)The fact is, people don't just choose exactly what size of house to live in/buy and where, there are so many other factors that come into it. A lot of people find themselves having to buy/rent a house they can barely afford because that's all there is, or the travel to work would otherwise be prohibitive, or it's near the relatives they care for, etc. Then to get the double whammy of being charged more council tax on top of this is just ridiculous.
I quite liked the idea of "local income tax".
I agree it's not an entirely regressive tax (although how many exceptions to that rule does one need before it de facto IS one?) but it's certainly nowhere near a reasonable one.
no subject
Date: 2007-03-22 08:23 pm (UTC)Neuromancer
no subject
Date: 2007-03-23 01:59 pm (UTC)There are plenty of retired people who have already moved out of their family homes into much smaller accommodation: they are still being squeezed by council tax on their fixed incomes (because they didn't have their money in property, it hasn't grown as fast as property prices have done).
Short of moving to an inner city terrace totally inappropriate for aging residents (steps, stairs, steep walks to the shops etc) there is nowhere really left for them to go.
no subject
Date: 2007-03-24 01:09 am (UTC)no subject
Date: 2007-03-24 01:11 am (UTC)(OMG - I can't believe I agree with the 'Lib'Dems on something.)
no subject
Date: 2007-03-22 02:20 pm (UTC)I have no idea about other groups of people (self employed, businesses etc), I gather the NI situation is even more complicated, although not whether it is better or worse than taxing for such people. Care to enlighten me?
no subject
Date: 2007-03-22 02:22 pm (UTC)no subject
Date: 2007-03-22 02:36 pm (UTC)My guess would be that not constantly changing things and having to update all the advice and information and stuff would improve efficiency quite a bit all on its own.
no subject
Date: 2007-03-22 02:36 pm (UTC)no subject
Date: 2007-03-22 03:22 pm (UTC)Especially if after the 4 years they have to spend 2 more actually paying attention what what we professionals have to say about things, and only then can they make changes.
no subject
Date: 2007-03-22 04:40 pm (UTC)no subject
Date: 2007-03-22 08:25 pm (UTC)no subject
Date: 2007-03-22 03:38 pm (UTC)no subject
Date: 2007-03-22 04:57 pm (UTC)If it can't be got rid of altogether, I think the IH band should be a bit higher though and/or the level of IH lower, and that there should be some way of paying it over time rather than having to sell the property that you have just inherited. (Likewise for other things that are inherited such as art works, racehorses etc). Otherwise, what is the point of saving things and money?
no subject
Date: 2007-03-22 04:58 pm (UTC)no subject
Date: 2007-03-22 05:28 pm (UTC)no subject
Date: 2007-03-22 09:03 pm (UTC)no subject
Date: 2007-03-23 10:06 am (UTC)no subject
Date: 2007-03-23 11:57 am (UTC)no subject
Date: 2007-03-22 04:55 pm (UTC)no subject
Date: 2007-03-22 07:38 pm (UTC)It would mean the people on low incomes would pay less (or no)income tax to start with, rather than paying it and then having to claim it back. Less administration, less chance for mistakes and giving people more control over their own money.
no subject
Date: 2007-03-22 08:27 pm (UTC)no subject
Date: 2007-03-23 12:09 pm (UTC)Something like minimum wage x 40 hours a week x 52 weeks a year sounds a good start: if the government thinks a minimum should be set, then it shouldn't take any of it away.
no subject
Date: 2007-03-23 01:34 pm (UTC)no subject
Date: 2007-03-22 09:32 pm (UTC)