Call for council tax rethink
Special InvestigationBy Graham DinesPolitical EditorCOUNCIL leaders across the region, reeling from the Government's decision to divert cash aid to the North and the Midlands, believe the time is fast approaching when a system of local income tax should be introduced.
By GRAHAM DINES
COUNCIL leaders across the region, reeling from the Government's decision to divert cash aid to the North and the Midlands, believe the time is fast approaching when a system of local income tax should be introduced.
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Spiralling levels of council tax, which means all band D taxpayers in Essex and Suffolk will have to pay from April more than £1,000 a year, have brought anger from pensioners' groups and people on either fixed incomes or dependent on plunging Stock Market values to pay their bills.
A system of local income tax – which would largely unaffect people who are retired – has long been favoured by the Liberal Democrats as the best way to pay for local services such as schools, car homes, libraries, and roads.
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Senior local government politicians in Essex and Suffolk believe action has to be taken before council tax reaches the same level of unpopularity as Margaret Thatcher's infamous poll tax.
The call for a rethink on how local government is funded came as a special East Anglian Daily Times investigation revealed the rise in Suffolk County Council's council tax bill for this year was the second highest among 19 similar shire counties in England.
The bill for Suffolk County Council is due to rise by 18.5% – compared with 16.9% for Essex, 16% for Norfolk and 9.2% for Cambridgeshire – only topped by 19.6% increase planned by East Sussex County Council.
That has prompted some disgruntled residents to launch a campaign against the county council tax hike.
A group of villagers from Hartest have started The Shirt Off My Back campaign, which wants outraged council taxpayers to send their shirts to their district or borough council in protest.
Lord Hanningfield, the Conservative leader of Essex County Council, which has a budget in excess of £1.2 billion, said he wanted local income tax to be considered.
"It works well in Sweden, would be easy to collect and would protect the elderly and those on fixed incomes," he explained.
"One thing is certain – people will not tolerate massive rises in council tax year after year. It is just not sustainable and pensioners cannot cope with the financial burden being placed on them."
Lord Hanningfield added: "We believe the Government has been unfair to Essex, diverting resources to other authorities.
"But ministers are also heaping the responsibility for funding key services on to local government – out of Essex's £1.2bn next year, £1bn will go to paying for education and social care."
Colin Sykes, the Liberal Democrat leader of Colchester Borough Council, also backed local income tax.
"Taxation for local services should be based on a person's ability to pay and not on the size of the property in which they live. Council tax is regressive and depends on what type of property in which you live," he said.
Another Liberal Democrat, Mid Suffolk District Council's leader Penny Otton, added: "Local income tax would be fairer and much more simple to administer.
"Council tax has outlived its day. The Tories brought it hastily in to rid themselves of the unpopularity of the poll tax and I don't think it was properly thought through.
"With local income tax, councils would be in charge of our own destinies and spending the money on our electors, who would hold us properly to account at the ballot box."
Labour county councillor Jane Hore, leader of the joint administration running Suffolk County Council, which is putting up council tax by 18.5% from April, said it was difficult to explain to householders the rate of inflation did not relate to the hugely-increased costs facing local government year after year such as pay and supplies.
"People want top quality services and the reality is that they have to pay for them. I would support an investigation into an alternative to council tax, especially one that does not mean those on fixed incomes bear the brunt of increased costs," added Miss Hore.
"A review is due to start in April of local government finance, but we are soon due for a revaluation of property and that focus everyone's minds on council tax."
Roy Nowak, the Labour leader of St Edmundsbury Borough Council, said he would support an investigation of introducing local income tax as long as it considered the inequalities that would be thrown up.
"There will be problems in the North and the Midlands where incomes are lower than in the South and the East. Services cost about the same wherever they are provided, but average incomes aren't the same."
Mr Novak, a supporter of elected regional assemblies, believed the pressure for change would follow quickly any decision to introduce devolved government.
Although Peter Gardiner, leader of the Labour-controlled Ipswich Borough Council, believed there was a case to be made for councils raising more money locally and being more democratically accountable, he welcomed the Government's adjustment of the grant formula to take account of local pressures.
"We were fairly satisfied with the Government's settlement, but we are suffering from the years when we did not get what we were entitled to under the old grant formula," he said.
"Our services are growing, which is what the people of Ipswich want. We undertook a consultation exercise around Christmas and asked 5,000 residents if they were prepared to pay extra for quality services. The overwhelming response was 'yes'."
Nationally, the Liberal Democrats are supporting calls for local income tax. Edward Davey, who shadows Deputy Prime Minister John Prescott, said: "We believe there are two essential measures the Government must adopt.
"First, Labour must scrap the Tories' council tax with a local income tax based on people's ability to pay. Second, they must give local people more power to decide how their taxes are spent.
"The public wants local decisions taken by people who live in their street, not Downing Street. It is neither fair nor democratic for central Government to dodge its financial responsibilities, while forcing local council taxpayers to pick up the bill."