Why is it the more your house is worth the more your Council Tax bill is?

You only receive the same public services if you live in a £500K house, or a £90K property, so why higher bills for more expensive houses?

If you live in an expensive house, you are obviously paying more on your mortgage.

How can this be fair?:sad:

basic example of a means tested tax.

why not complain about vat or income tax as well, the more you earn or spend the more you pay in tax but you receive the same services.

Originally posted by Cyclone
basic example of a means tested tax.

why not complain about vat or income tax as well, the more you earn or spend the more you pay in tax but you receive the same services.


Not true with VAT. The more you spend, the more you pay in VAT *AND* the more service/goods you receive.

How can this be fair?

So what do you suggest instead? Something along the lines of a local income tax ?

Originally posted by Siân
So what do you suggest instead? Something along the lines of a local income tax ?

No, a flat rate for every household in the city since we each receive the same services.

So you want to re invent the old Poll Tax wheel :rolleyes:

Originally posted by Siân
So you want to re invent the old Poll Tax wheel :rolleyes:

Why not? Everyone receives the same council services, so everyone should pay the same fee. If you were paying your phone line rental you wouldn't expect to have to pay less because your house wasn't worth much would you?

Originally posted by Siân
So what do you suggest instead? Something along the lines of a local income tax ?

No a flat rate for every household. do more affluent areas get there grass cut more? bins emptied more often? more public services? Do the Police, Fire-service or Ambulance get to their house quicker in an emergency? NO is don;t think so, so my point is why pay more?

We pay bigger mortgages for the privilige of having a bigger house, not to mention all the higher utility bills.

It's a regressive method of taxation as it doesn't take into account income it means that those on lower incomes pay a disproportionate amount of their income.

If you were paying your phone line rental you wouldn't expect to have to pay less because your house wasn't worth much would you?

No, but I could choose not to have one at all if i couldn't afford it :)

so you would argue the same about income tax?

a flat rate because we all receive the same service from the government.

The burden of taxation is weighted to fall more heavily on those who have the means to pay it.

Originally posted by Siân

No, but I could choose not to have one at all if i couldn't afford it :)


Ok, short of suggesting you should become homeless if you can't afford the council tax, I suppose you've got me there. :D

I still think a flat fee for council tax works better though, and I definitely think the current system is unfair given that pensioners may have paid off a mortgage throughout their life and be living in an expensive house yet have no income.

Originally posted by Cyclone
so you would argue the same about income tax?

a flat rate because we all receive the same service from the government.

The burden of taxation is weighted to fall more heavily on those who have the means to pay it.

Yes, I would argue this, but in reality it would never be practical, someone has to pay for all the non-tax payers in this country.

The point I am trying to make is that we are taxed to the 'hilt' in this country and we already pay once (income tax) so why be penalised again with council tax? The Governement should allocate more budget to local councils, then they wouldn't be so strapped for cash and pass the burden onto us.

still think a flat fee for council tax works better though

I'm sure certain Tory party members would put you straight there :P

definitely think the current system is unfair given that pensioners may have paid off a mortgage throughout their life and be living in an expensive house yet have no income.

Which is why I asked about the idea of a local income tax as a fairer way forward :)

(didn't think anyone in their right mind would want to try the Poll Tax again)

Originally posted by Siân

Which is why I asked about the idea of a local income tax as a fairer way forward :)


The problem with a local income tax is that it seems so inefficient to effectively be doubling up on the same tax. A better solution would be to scrap local taxes completely and add a tiny amount on to income tax so that the IR, rather than the local council, collects the tax from people. This would then be distributed to the local councils. How does that sound then??

Originally posted by t020
The problem with a local income tax is that it seems so inefficient to effectively be doubling up on the same tax. A better solution would be to scrap local taxes completely and add a tiny amount on to income tax so that the IR, rather than the local council, collects the tax from people. This would then be distributed to the local councils. How does that sound then??

That sounds like a sensible idea to me!! Anyway off to bed now.

Bye

Originally posted by Cyclone
so you would argue the same about income tax?

a flat rate because we all receive the same service from the government.

The burden of taxation is weighted to fall more heavily on those who have the means to pay it.


Income tax is used as a wealth distribution mechanism as well as payment for service provision. Council tax on the other hand is, AFAIK, supposedly to pay the council for the services it provides you as a resident in their borough.

Originally posted by t020
The problem with a local income tax is that it seems so inefficient to effectively be doubling up on the same tax. A better solution would be to scrap local taxes completely and add a tiny amount on to income tax so that the IR, rather than the local council, collects the tax from people. This would then be distributed to the local councils. How does that sound then??

This method has been mooted before. The main problem with it is that all local authorities will have all their decisions made by central government. The idea of a locally raised council tax is that local people can decide at the ballot box where their money is spent.

Originally posted by Cyclone
The burden of taxation is weighted to fall more heavily on those who have the means to pay it.

Unfortunately, in this case, the nominal value of one's house has does not always truly reflect one's means to pay.
There do exist a large number of people in houses that have risen in value but who themselves have low or even no income.
Is it fair that they should be forced to sell their house in order to reduce their local tax bill?

Originally posted by cgksheff
Unfortunately, in this case, the nominal value of one's house has does not always truly reflect one's means to pay.
There do exist a large number of people in houses that have risen in value but who themselves have low or even no income.
Is it fair that they should be forced to sell their house in order to reduce their local tax bill?

changes in value are not taken into account until you move. So there is no one in that situation.

ALEX - you realise that the governments money comes from us, so giving the councils more from central government would in no way reduce the overall tax burden that we bear.

Originally posted by max
This method has been mooted before. The main problem with it is that all local authorities will have all their decisions made by central government. The idea of a locally raised council tax is that local people can decide at the ballot box where their money is spent.

I don't understand why this would have to be the case though. Surely the money could just be evenly distributed to each council (say, by population of borough) and then the council be able to spend the money however they / the local voters like?

Originally posted by t020
...a flat rate for every household in the city since we each receive the same services.

We don't though. My household consists of one person (me). I recieve less services from the council than the family over the road. My bin is emptied once a week, but it's only about a quarter full. Their bin is bigger, and overflowing by bin day.

I don't use the education services, or social services at this point in time. I don't use playgrounds, I don't use council provided leisure facilities. The other family do.

So why should I pay the same as them? Under the current system I don't - I get a 25% discount. Would you keep this discount for one-person households?

Originally posted by Andy
We don't though. My household consists of one person (me). I recieve less services from the council than the family over the road. My bin is emptied once a week, but it's only about a quarter full. Their bin is bigger, and overflowing by bin day.

I don't use the education services, or social services at this point in time. I don't use playgrounds, I don't use council provided leisure facilities. The other family do.

So why should I pay the same as them? Under the current system I don't - I get a 25% discount. Would you keep this discount for one-person households?

My solution has 'evolved' since then. :)
See above for details.

Originally posted by t020
I don't understand why this would have to be the case though. Surely the money could just be evenly distributed to each council (say, by population of borough) and then the council be able to spend the money however they / the local voters like?

Again, it would be nice if this were to happen. Even now when 80%+ of the council's revenue comes from central government the vast bulk of it goes on legally required expenditure such as education and social services. This doesn't leave much flexibility for local decision making.

If 100% of the council's revenue came from central government then there would be even less local choice as to where it was spent.

Originally posted by max
Again, it would be nice if this were to happen. Even now when 80%+ of the council's revenue comes from central government the vast bulk of it goes on legally required expenditure such as education and social services. This doesn't leave much flexibility for local decision making.

If 100% of the council's revenue came from central government then there would be even less local choice as to where it was spent.

I know what you're saying, I just think there COULD be a way of getting the money from central to local government without dictating spending policy (in theory...).

Originally posted by ALEX1995

The point I am trying to make is that we are taxed to the 'hilt' in this country and we already pay once (income tax) so why be penalised again with council tax?

We are taxed at every tick and turn; taxed when we earn it, taxed when we spend it, taxed when we save it and then they tax us on it when we die :rant:

Originally posted by Cyclone
changes in value are not taken into account until you move. So there is no one in that situation.

ALEX - you realise that the governments money comes from us, so giving the councils more from central government would in no way reduce the overall tax burden that we bear.

Yes I am fully aware that Government money comes from us, I am a Civil Servant and am privy to the 'money' that the Government wastes in this country.

The Government should reaccess where their priorities are and distribute the money accordingly, instead of where they are hoping to gain points to win the next election, it is all so political? When you work in Central Government it all becomes clear how the Government works (whatever party is in power).

It's not really about what is fair to the general public, it's about progressing their political career.

so if you know how inefficient central government is why are you advocating the removal of local funding from councils and a shift to entirely centrally funded ones?

Originally posted by Cyclone
so if you know how inefficient central government is why are you advocating the removal of local funding from councils and a shift to entirely centrally funded ones?

He agreed with me, and that wasn't strictly what I said. The Inland Revenue, who have a good, efficient record of tax collection, would be responsible for collecting the extra tax, an perhaps they could distribute it immediately to the local councils without the government having any influence on how the councils should spend/waste it.

Originally posted by t020
He agreed with me, and that wasn't strictly what I said. The Inland Revenue, who have a good, efficient record of tax collection, would be responsible for collecting the extra tax, an perhaps they could distribute it immediately to the local councils without the government having any influence on how the councils should spend/waste it.

Thanks for your support. It amazes me how things get twisted on this site. The IR do have a good efficient record of tax collection. (I don't work for the IR, but another Government Department).

and he is a she!

Originally posted by ALEX1995
Thanks for your support. It amazes me how things get twisted on this site. The IR do have a good efficient record of tax collection. (I don't work for the IR, but another Government Department).

and he is a she!

i'm not trying to twist anything.
I'm discussing the issue with you. If you didn't want a critical appraisal of what you say then you're posting in the wrong place.

So, apart from the fact that 'it's unfair' to pay more for the same services, what is the reason behind wanting to change it.

We've established that all taxation that isn't flat rate is unfair in some sense because people who have more pay more.
But we've also established that that's a) the way it's done b) the only way it can possibly work c) equally unfair if everyone paid a flat rate (you might argue on that last one, I can explain it if you disagree).

Originally posted by Cyclone
i'm not trying to twist anything.
I'm discussing the issue with you. If you didn't want a critical appraisal of what you say then you're posting in the wrong place.

So, apart from the fact that 'it's unfair' to pay more for the same services, what is the reason behind wanting to change it.

We've established that all taxation that isn't flat rate is unfair in some sense because people who have more pay more.
But we've also established that that's a) the way it's done b) the only way it can possibly work c) equally unfair if everyone paid a flat rate (you might argue on that last one, I can explain it if you disagree).

We also established that taxation on the basis of house value is unfair (e.g. pensioners), which is how I arrived at scrapping local tax altogether and tagging it to income tax for the IR to collect and then distribute to councils, without intervention. I think that's the most sensible solution.


A more radical approach to tax which I thought about earlier today, and I haven't had time to think all of this through and all of the implications, which is where you will help, is to:

- completely scrap council tax, NI contributions and Income Tax
- based on normalised data, from current consumer spending Vs current council, NI and income tax, recalculate VAT so that it becomes substantially higher and amounts to the same

The result would be that you don't pay tax on your earnings, but the more you spend (which implicitly applies to the better off), the more tax you pay.

The main problem so far is dealing with tourists - they'd have to be eligible for VAT free. Inflation shouldn't be a problem because although everything would go up in price, so too would everyones disposable incomes. Tax collection would be much easier, saving millions, and the only way to dodge the tax would be to thieve.

Pick holes, I'm sure there will be many, it was just an idea open to discussion.

selling things under the counter. if there's enough of an incentive.
The retailer sells it at a mark up from purchase price, but not as much as vat would add. the customer gets it cheaper than paying vat. The government gets no tax from it.

The same issue can occur with income tax, but the system is already in place to monitor this and will only happen with very small companies anyway.
There aren't numerically speaking as many small companies to dodge income tax as there are potentially small businesses to dodge it when selling to the public. I think.

I see your point about pensioners, but presumably if they are on a restricted income then they qualify for a reduction in council tax. Which is all that's required to sort out the problem. In fact anyone on a limited income (ie receiving help) is elligble for reduced council tax aren't they?

Originally posted by Cyclone
selling things under the counter. if there's enough of an incentive.
The retailer sells it at a mark up from purchase price, but not as much as vat would add. the customer gets it cheaper than paying vat. The government gets no tax from it.

Yes, VAT collections would need to be closely monitored with heavy fines for those that abused the system.


Originally posted by Cyclone

I see your point about pensioners, but presumably if they are on a restricted income then they qualify for a reduction in council tax. Which is all that's required to sort out the problem. In fact anyone on a limited income (ie receiving help) is elligble for reduced council tax aren't they?

Tagging to income tax however would reduce the red tape involved in doing this. Means testing would not be necessary.

Originally posted by Cyclone
selling things under the counter. if there's enough of an incentive.
The retailer sells it at a mark up from purchase price, but not as much as vat would add. the customer gets it cheaper than paying vat. The government gets no tax from it.


Fair point, but not likely to happen in most high street shops and supermarkets. The managers would be closely monitoring their staff since they would have stock records and amount sold etc so know how much VAT they should have.

It might happen with small businesses if they wanted to fiddle the books, but I'm sure there would be ways to monitor this.

Cyclone's point about low income attracting Council Tax rebates does clear up my earlier thoughts about "high value house & low income".
There are still some who are caught at the lower end where a claimant may end up with a higher net disposable income than a non-claimant who pays full whack. But this also applies elsewhere.

With regard to moving towards "sales tax", many areas of the USA work this way.
Many say it is more equitable. I think it has good points in its principle. The more that you spend, the more you contribute. In theory this usually means that the richer contribute more.

The biggest drawback to introducing it here is bringing insecurity into the budget. With current council tax they have total control of how much they can raise.
Relying on sales tax is a lot more complex. You have to stimulate growth & spending for it to be successful.
Need more Council Tax? Just raise it because their is nothing the punters can do in the short term.
Need more Sales Tax? You can't just increase the levy as people may just spend less. You have to create situations where more can be spent. Isn't this what we should be aimimg for?

That's a good point cgksheff, I hadn't thought about that aspect.

Looks like we're back at tagging a tiny bit extra on to income tax then.

I thought that the US traditionally had very low or zero levels of sales tax, they are lower than VAT in every state i've ever looked at (not that many, i've only bought a few things from the states).

Originally posted by cgksheff
Cyclone's point about low income attracting Council Tax rebates does clear up my earlier thoughts about "high value house & low income".
There are still some who are caught at the lower end where a claimant may end up with a higher net disposable income than a non-claimant who pays full whack. But this also applies elsewhere.

With regard to moving towards "sales tax", many areas of the USA work this way.
Many say it is more equitable. I think it has good points in its principle. The more that you spend, the more you contribute. In theory this usually means that the richer contribute more.

The biggest drawback to introducing it here is bringing insecurity into the budget. With current council tax they have total control of how much they can raise.
Relying on sales tax is a lot more complex. You have to stimulate growth & spending for it to be successful.
Need more Council Tax? Just raise it because their is nothing the punters can do in the short term.
Need more Sales Tax? You can't just increase the levy as people may just spend less. You have to create situations where more can be spent. Isn't this what we should be aimimg for?

I am not sure what the best system should be.

I am not saying that the states have got it working properly either.
They have have a Federal Income Tax going to the centre as we have.
But then individual states set their own levels of local taxes: some income based, some sales based and some a mixture of both.
As you say, I think all the sales taxes are lower than ours (none more than 10%).
It is recognised though that the rates of State & Local taxes are an influence on attracting & rejecting workers and business.
California combined State & Local Income and Sales taxes are in the order of 18% (in addition to Federal Income Tax).
In Alaska they are Zero.

In the UK I would suggest that the local taxation has very little influence on worker migration (it is much the same all over the country). Our influences tend to be Salary Levels, Housing and Transport Costs.

Local business rates are not used much by councils as a tool any more as they are paid on to The Treasury and we have to beg for them back again.

Another thought is about the risks involved in changing systems. If councils are allowed to change and they get it wrong it will be the better off that can move away to avoid the problem. The poorer and worse off will not have that luxury!