The Scottish First Minister should not deal in half-measuresby John McTernan / March 4, 2016 / Leave a comment
Read more: How Nicola Sturgeon sold out
Council Tax—can’t live with it, can’t live without it. Property taxation to raise finance for local authorities is one of the most unpopular taxes, because it is the most visible. Every year you get a bill and every month you make a payment. Most households pay more in income tax, National Insurance and VAT, but those are concealed charges. Tax and NI go before you get your pay. VAT is embedded in the price you pay for goods. But because it annoys people—especially the middle classes—most politicians have become fixated with fixing local taxation.
Margaret Thatcher ended the old rates system replacing them with the poll tax. That proved to be the end of her, and they were rapidly brought back in the form of the Council Tax. Which to make it more palatable was accompanied by a hike in VAT so that grants to local government could be substantially raised. This lowered the amount councils needed to raise locally so helped make council tax bills lower than the rates would otherwise have been. Likewise the SNP came to government in Scotland committed to abolishing council tax and replacing it with a local income tax. Their rhetoric was fierce—Nicola Sturgeon condemned the Tories as “anti-Scottish” because they were pledged to keeping council tax. The SNP’s commitment was absolute—council tax would be scrapped.
The problem was that introducing a local income tax produced far too many losers—even after fiddling the figures. As Louis XIV’s Finance Minister Jean Baptiste Colbert famously said, the art of taxation “consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing.”
Local income tax failed this basic test—and along with other grandiloquent SNP promises, like wiping out student debt, it was dropped. Instead of LIT the SNP adopted the Tory policy of a council tax freeze. This has had a minor impact on households—saving an average household 10 or 20 pounds a year—but a major one on councils whose services are straining under cumulative cuts. So, suddenly, nine years after…