In his latest piece, JOHN RUDDY offers a progressive alternative to the current council tax system

 

There is now widespread agreement that the current system of local government finance is a mess, and needs reform. However, there seems to be little agreement on what should be done. One of the options, and my personal favourite, is a Land Value Tax. The trouble is, this would be difficult to bring in overnight, and of course there is the thorny issue of Council Tax benefit – or rather the disappearance of it.

How about something which could be done relatively quickly, would retain existing benefits for those most in need, and even go some way towards easing the burden of the cuts on local authorities?  This could be a temporary measure while much bigger reform is thought through. The suggestion I have is to increase the number of bands at the top end of the council tax scale.

Currently there are eight bands, A-H and tax is set for Band D properties, with other bands being a fraction of the Band D rate. Band A properties, for instance are 6/9ths of the Band D rate, while Band H are 18/9ths (or twice) the rate. I’ll use Angus Council as an example, partly because I have the figures to hand, but also because I live there. According to the Tayside Valuation board, Angus has 54,458 properties rated for Council tax, and the Band D rate is £1,072 per annum. However, the area has predominately smaller homes, as there are over 15,000 in the smallest band and only 166 in the top band. So making a larger number of bands might not have much effect, but we’ll see.

Let’s begin by splitting every band above Band D into two. So Band E becomes E & F and so on, right up to the new Band L, which will have only 83 homes in. Let’s also step up the fractions in the same way as they are now at the top end, with each band being 3/9ths more than the previous one from Band I upwards. If we keep the rate at £1,072 for a Band D home, we find that we now raise an additional £3.6million. For 2012/13, Angus Council has to make cashable efficiencies (cuts) of £2.5million.  So by this simple expedient, we can negate the need for any financial cuts – and even allow money to help improve the services it delivers.

If we were to cut the rate by £50 a year, we still raise an extra £949,000 – that’s enough to cancel out all the cuts to the Education department next year. But we also find that 85% of homes in Angus – over 46,000 are better off. Some people will find their council tax bills go down by as much as £6 a month. The additional burden falls squarely on those in the largest houses.

So we have a solution that is much fairer than the current set up – whether you have a freeze or not – and has the ability to cushion the austerity blow being delivered to local authorities. How’s that for being a progressive beacon?

 

Originally from Devon, John Ruddy now lives in Angus. He was an agent for Scottish Labour at the Holyrood election and is a Unison shop steward. Follow John on Twitter at @jruddy99