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Local Taxation

Part of the debate – in the House of Commons at 3:32 pm on 4th July 2005.

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Photo of Caroline Spelman Caroline Spelman Shadow Secretary of State (Office of the Deputy Prime Minister) 3:32 pm, 4th July 2005

I beg to move,

That this House
notes with concern the increasing burden of local taxation;
awaits the outcome of the Lyons Inquiry but rejects the proposals for a local income tax;
asserts that a local income tax would entail higher taxation on hard-working families and crippling compliance costs on local businesses and would undermine the incentive to work;
believes that council tax must be reformed, with the introduction of an automatic discount for pensioners and other measures, but rejects proposals to move from a local services tax based on fixed property bands to a wealth tax;
calls on the Government to reject the Mayor of London's proposals for a regional income tax in London and to cancel its plans for a council tax revaluation and higher bands in England, which would be a further stealth tax, particularly on those living on fixed incomes.

We sought this debate on local government taxation because the subject of council tax and local government finance was notable by its absence from the post-general election Queen's Speech, although it is anticipated that the Government will take measures to reform local government finance in this Parliament. We seem to have been waiting interminably for the outcome of the Government's review of local government finance, and while the issue of council tax burns the Government continue to fiddle—in this case, the figures.

It is the moment when people write their cheques for the council tax that they associate most directly with the role of local government. However, that is an increasingly misguided association, because since 1997 the Government have riven apart the connection between council tax and the provision of local services. It is certainly not the case that the cost of local services is met by local taxpayers; now, local taxpayers merely top up the Chancellor's coffers. From the Chancellor's point of view it makes perfect sense: by turning local authorities into tax collectors, he hopes to escape the blame for a whopping 76 per cent. increase in council tax.

However, the electorate are increasingly sophisticated. According to MORI, 78 per cent. of the population blame national Government for council tax increases—and they are right. Furthermore, they know that the figures are being fiddled. The Government have systematically engineered the redirection of central funding from efficient Conservative-run councils to inefficient Labour-run councils.

At the same time, the Government have set about loading unfunded cost burdens on local authorities and transferring costs and duties from national Government to local government. I call that stealth taxation by statute. The net effect is that receipts to the Treasury from council tax have increased by more than £9 billion since 1997. Without doubt, council tax has been used as the ultimate stealth tax. While pensioners protest on the streets, the Chancellor is coining it.