Why ‘unfair’ council tax must go and politicians should stop being so scared

Police and anti-poll tax demonstrators clash during the so-called 'Battle of Trafalgar' in London in 1990. Picture: Steve Eason/Hulton Archive | Getty Images

The council tax was, basically, a quick fix introduced by the Conservatives in 1993 in the wake of riots sparked by the innocuously named community charge – better known as the ‘poll tax’ – that helped bring down Margaret Thatcher.

Few expected it would last more than 30 years. However, perhaps daunted by the violence, politicians have tended to shy away from further changes. In 2007, the SNP election manifesto condemned the council tax as “unfair” and promised to replace it with a local income tax at 3p in the pound. As we know, this never happened.

The nationalists were quite right. Council tax is unfair. There are people living in large family houses who find themselves struggling to pay the tax when their financial circumstances change, such as after retirement. This can mean they are effectively forced to move away from their home of many years. It is one thing to choose to ‘downsize’, quite another to be compelled to do so by the government.

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Ability to pay

Furthermore, while council tax consumes a small percentage of the income of the wealthiest 10 per cent of households, it represents a substantial proportion of the poorest 10 per cent’s income. If you are wealthy, it is a relatively trivial expense, if you are poor, it is a substantial burden and one that helps keep people trapped in poverty.

Both these problems highlight a simple fact: council tax does not reflect someone’s ability to pay it, which should surely be a key factor in the design of any system of raising revenue.

In an article we publish today, Professor Kenneth Gibb, an expert in housing economics at the University of Glasgow who has literally written a book on the subject, describes council tax as “seriously flawed” for several reasons and criticises the lack of progress to replace it. “Many argue that it is just too difficult, there are many losers from reform, and it would be electorally too damaging. This leads to endless non-decision,” he writes.

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He suggests a series of citizen’s assemblies to debate local taxation and help build a “credible proposition that can be sold to cautious decision makers”.

A local income tax still seems like the simplest and fairest system, which would likely also make it the easiest reform to sell to a sceptical public, but we are happy to consider other alternatives. One thing, however, should be clear: the council tax must go!