General Election Address: Scrap the Unfair Council Tax

Charles Kennedy sets out the Liberal Democrat committment to scrap the unfair Council Tax and replace it with a local income tax based on people's ability to pay. 15 million families will receive a tax cut under the Liberal Democrats.

Council Tax is the most unpopular tax in Britain today because it is fundamentally unfair.
It is based on property prices not on income.
It is regressive.
Tax should be based on people’s ability to pay.
The Council Tax penalises pensioners and low income families.
It’s a tax where the poorest 20% of pensioners pay nearly 6 times more as a proportion of their income than the richest 20% of our population.

Under our plans for a local income tax, 15 million families will pay less.
6 million pensioners would pay no local tax at all.
And a family on the typical British household income of around £23,000 would pay £450 less.

Exactly what you would save depends on where you live, how much you currently pay in Council Tax and the number of earners in your household.
So there is no single break even point for everyone.

But as a guide, if you are paying the average band D Council Tax of £1214, a working couple’s income would need to be over £42,000 a year before they would pay even a penny more.

But only about one in ten families has two full time earners.
Some families have one parent working full time and another part time. Or a mother staying at home to look after children.
People move in and out of work as their circumstances change.
They earn more as they get older, or get promoted, and then their incomes fall when they retire.
Local Income Tax means you will pay more when you can, and less when you need to.

That’s so much better than Council Tax, where bills just keep rising every year, with no regard for personal circumstances.

The independent Institute of Fiscal Studies calculate that nearly half of all families would gain, a quarter would be unaffected and a further quarter would pay a little more.

Let me be clear.
There is not a council in the country where more will be raised under local income tax than would be the case under Council Tax.
In fact local income tax will be lower overall than Council Tax.
We are devoting more than £2bn a year from the proceeds of our new top rate of tax to hold down local taxes. Because of this, the overall burden of local income tax will be less than the overall burden of the unfair council tax in every single local authority in the country.

And because Local Income Tax will be administered by the Inland Revenue, we would save £300m a year cutting local bureaucracy according Chartered Institute of Public Finance and Accountancy.

Scrapping the Council Tax and replacing it with a local income tax is not a leap in the dark.
Local income taxes are used all across the world, in America, Sweden, Norway, Japan, and Denmark to name a few.
What is to stop Britain from making it work?

Our opponents have no solutions to the Council Tax.

The Conservatives are hopelessly out of touch. In attacking our proposals, they recently claimed that the average British family earns £55,000 a year – when the real figure for household income is about £23,000. Labour are slightly more in touch. They seem to think that average household income is £41,000 per year.
It just shows how removed from reality the other main parties are.
They don’t see how unfair the Council Tax is.

Labour are also keeping very quiet about what will happen when the Council Tax is revalued later this year.
Bills will be based on the value of your home this April rather than what it was worth in 1991.
If the experience in Wales is anything to go by, Council Tax revaluation will mean millions of families will get much higher bills and yet the unfairness of the Council Tax system will remain.

The Conservatives have announced a U turn today.
They now say they will cancel this revaluation.
This is naked opportunism.
They are dodging the logic of their support for the unfair Council Tax.

But they can’t wriggle out of the fact that, at this general election, there are two parties who support the Council Tax – Labour and the Conservatives.
Two parties of essentially the status quo.
Given this positive and constructive policy proposal, in this campaign I am not going to accept criticism from Labour and the Conservatives on this issue. They have presided over the old rates system, then the poll tax – and now the council tax.
They will apply sticking plasters but won’t heal the wound itself.

Only the Liberal Democrats are proposing a fair and permanent solution.
At this election, if you want an end to the unfair Council Tax, the Liberal Democrats are the Real Alternative.

ENDS

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