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Local Taxation

Part of the debate – in the House of Commons at 6:29 pm on 4th July 2005.

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Photo of Jeremy Hunt Jeremy Hunt Shadow Minister (Work and Pensions) 6:29 pm, 4th July 2005

I am most grateful to you, Madam Deputy Speaker, as I have spoken only three times in this House and each time you have been in the Chair. I am beginning to think that you must be my lucky charm, and I hope that you will call me many times in the future.

There is no doubt that council tax has several difficulties, including those to do with its structure. However, it is not, as Liberal Democrat Members claim, a wholly regressive tax. Some taxes are purely regressive—road tax, for example. The air passenger levy is a purely regressive tax because one pays exactly the same no matter what one's income or wealth. Council tax is mildly, although not perfectly, progressive, because, broadly speaking, the bigger and more expensive the house one has, the more one pays.

When I was campaigning to win my seat in the last general election, I met a pensioner whose council tax was higher than his pension. There is no doubt that that is a problem. However, it is a question not only of the structure of the tax but of its level. In many places, including my constituency, council tax has doubled since 1997. If one has a mildly regressive tax and then proceeds to double it, a small injustice becomes a big injustice, and that is what has happened. In my constituency, the local income tax cost the Liberal Democrats votes. That was not only because teachers, doctors and nurses saw that their tax would increase, but because in places where Liberal Democrats ran the council, they increased council tax. In my area of Waverley, they increased it by nearly double the rate of Guildford next door. People felt that it was hypocritical of the Liberal Democrats to say how awful council tax was for pensioners, and then, when they had a chance in power to do something about it, to increase it in ways that were painful to those same pensioners. The danger with local income tax is that one not very successful system will be replaced by one that is even less successful.