We need your support to keep TheyWorkForYou running and make sure people across the UK can continue to hold their elected representatives to account.

Donate to our crowdfunder

Local Taxation

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

Alert me about debates like this

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

The hon. Gentleman and I have to accept that neither of us knows the answer to that. The divergence in income levels might be higher than the divergence in property prices, and were that the case there would have to be even more resource equalisation.

Local income tax fails to address the real problem in local taxation, which is that far too high a proportion of the funds spent by local government is not raised locally but distributed from national Government. That leads to all sorts of anomalies in the local taxation system. In the case of my own county council, Surrey, I discovered that a significant amount of its expenditure every year goes towards building cycle lanes, which it has to do on the basis of central Government diktat, not what the voters of Surrey chose as their priorities in electing it. Another significant factor for Surrey county council is that if it gets a bad grant one year, it may find that it has to put its taxes up even though it has been very prudent in managing money.

In dealing with the issue of local taxation, we must ensure that people can vote for a local council that then reflects their choices. We need to reconnect local taxation with the people who pay for those services. In general, councils that tax and spend wisely tend to get voted in—coincidentally, they tend to be Conservative—and those that do not tax and spend wisely do not get voted in. People do not feel that local councils do a job that they can relate to directly or that their choices as voters will have a direct impact on the delivery of local services. That is the real issue, not whether we have a council tax or a local income tax.