Jane Bradley: Le Perthus, the French village so rich it doesn't need taxes
As a resident of the Edinburgh council area, where we have had to sign up to start paying for garden waste collections for the first time this week, it was somewhat galling to hear about the lucky villagers of Le Perthus in the south of France.
In a somewhat unprecedented move (in a country where local taxation is standard, at least), the tiny connurbation near the Spanish border has been told that its residents should not pay council or property tax next year – simply because it is too rich.
The village, which has just 586 residents, benefits hugely from its location, which in days gone by, made it a convenient centre of contraband trading. Today, thousands of people park there every year to allow them to cross the border into Spain on foot to take advantage of cheaper priced goods – à la Calais “booze cruises” of the 1980s – generating a massive £700,000 annual revenue for the local council, which is nearly £1,200 per inhabitant. In total, the authority is sitting on more than £900,000.
Despite the enormous income, residents are due to pay more than £320,000 in council and property taxes this year, which the local prefecture could now cancel, if it follows the audit office’s advice. Sounds wonderful.
Of course, we all know about countries where income tax stands at zero – the so-called tax havens of the likes of United Arab Emirates, Oman, Bahrain, Qatar and the Cayman Islands.
For most of us, however, the requirement to pay up is standard in some form, whether through property taxes or residential one like our council tax. Local taxes date back as far as the Roman times, when people who owned land were made to pay the “tributum soli” tax.
Just two years ago, it was revealed that some UK councils were sitting on millions of pounds of funds, yet simultaneously cutting essential services. The local government department of the Westminster Government found that 165 local authorities had cash reserves equal to more than 20 per cent of their annual budgets and urged them to draw on these rainy-day funds to meet short-term costs and pressures.
One council, Greater London, had £1.6 billion in reserve: not that much more than Le Perthus, really, especially when you consider that the population of Greater London is more than 14,000 times higher.
Most local authorities these days, however, are struggling to make ends meet. In Scotland, we can only dream of such riches as the authorities in Le Perthus enjoy. Councils are this year bearing the brunt of austerity cuts.
A report published by the Accounts Commission in April found that the Scottish Government cut its funding for local authorities by 9.6 per cent in real terms between 2010/11 and 2018/19, leading to what it described as “major challenges” in maintaining services. Council staff numbers have fallen every year since 2009, with the total headcount dropping by 31,000 by the end of 2017.
In May, another study found that almost £750 million had been axed from budgets for Scottish frontline services like schools and social care, while squeezes can be felt in almost every area of council-provided services. The cost of musical instrument tuition in state schools has rocketed in recent months, with some councils bringing in fees for the first time, while others have as much as doubled existing charges. As mentioned earlier, Edinburgh council has introduced a £25 annual fee to have garden waste collected, arguing that it is “not a statutory service”. Except, of course, that they couldn’t even get that right and many people who tried to sign up (and pay for) for the service by the 22 July deadline found that the website and payment system had crashed – and now have to wait til October to register in the second round, having likely spent well over £25 worth of their own time attempting to navigate the system. Indeed, the Accounts Commission last year found that several Scottish councils are two to three years from draining all their savings in a bid to bridge funding gaps – unlike the stuffed coffers of Le Perthus.
Yet, even there, the streets are not entirely paved with gold, much to the consternation of local residents. Despite the enormous amount of wealth in its coffers, the council of Le Perthus is reticent to spend the cash: instead, Scrooge-like, it seems to enjoy watching it stack up.
For that reason, the local audit office has recommended that taxation “should be reduced to zero for council and property taxes because the contributions of citizens must have a quid pro quo, and that of course is expenditure”.
Last year the council spent less than £5,000 of £240,000 earmarked for public facilities because the mayor and councillors failed to reach agreement on budgets.
Residents have complained that plans for a new children’s park, a medical centre and a library have all been blocked by the Ebeneezer-style council leaders in recent years.
While some residents have been reportedly delighted that they will be exempt from tax this year, others have complained that the money should not still be in the council’s bank account – and should instead be invested to improve their daily lives.
The local authority in Le Perthus still has to make the decision as to whether or not it will follow the audit office’s advice or whether it will continue to tax its citizens.
If I lived in Le Perthus (and I have to say, I’m tempted), I would be happy to keep paying my taxes, if only they started spending some of the money on me.
Or if they really don’t want it, they could chuck some over here – and give us our free garden bin collections back.