Tuesday 30 January 2024

Reforming the Council Tax in Wales: good luck to them

Apparently the Welsh are intending to 'reform' the Council Tax.  Of the 3 options under consideration, one is feeble: simple revaluing all properties.  The 2nd changes the weighting within the 9 existing bands: lower weighting at the lower end, higher at the higher (i.e. slightly more progressive).  The 3rd is the most 'radical': move to 12 bands, also with a weighting shift.

To me, this third option is a real no-brainer and one Osborne should have done in that brief 2010 window when he could have done almost anything he chose and, quite appropriately, his slogan was "all in it together".  Clearly, from his deeds of commission and omission, he never meant that; and the opportunity was lost. 

I'd go further: extend the number of bands almost indefinitely.  We all know the Council Tax is a wealth tax, so anyone who proposes to have palpitations at the very thought of such a thing, can emigrate now on principle.  Ditto progressive taxation.  All these things are matters of degree.  Gratuitous regressivity is nothing to be proud of.

I am sure there are some complexities over estates of such massive dimensions that any proportionate Council Tax would be likely to wipe them out in cash-flow terms (as happened with the first efforts at Estate Duty more than a century ago, under governments a lot less liberal than any post-war government).  OK, then - just 20 bands.  The point remains the same: the current system is ludicrous (hey, it was thrown together by Michael Heseltine on the back of an envelope one weekend!): defensible in only the most weaselly terms.  As are many existing schemes when you look at the detail and the consequences, of course - that's life, that's politics.  No need to stay with them when there are easy fixes, though.  

It will be interesting to see how this goes for the Welsh.

ND

45 comments:

Anonymous said...

I think probably putting in a set of higher bands for highly valued property does make sense, but the other reform that is sorely needed is the small base of people who actually pay council tax.

Council tax benefit was abolished in Wales a decade ago and renamed something else, but at that time there were over 300k households claiming it. And Wales isn't that big a place. So about 20-30% of households paying zero.

This needs to change - maybe a reduced rate of 10% or 25% of normal council tax.

However there is no hope that Welsh Labour will make this sensible and necessary change. They will use money from 'rich' areas like Vale of Glamorgan to subsidise the poorer ones. And whack up CT on second home owners in Pembrokshire.

L fairfax said...

Get rid of it and charge a percentage on the land value would be the easiest idea.

BlokeInBrum said...

Tax wealth, success and hard work and get less of it.
How about we don't assume that citizens are indentured tax slaves to be milked to the max by the state? I do agree with anon though, far to many at the top and the bottom end of the income distribution are able to weasle out of paying their fair share. It should certainly be reformed. How about we charge for each individual instead of on property instead? We could call it something catchy like the "Community Charge" or something. I'm sure Starmer would love it.

Anonymous said...

Ah yes, Community Charge. Poll Tax. That always ends well, doesn't it?

John in Cheshire said...

How about charging households for what they want. Each year send each household a menu of services with the respective cost for each of them and let the taxpayer tick off those items that they want to pay for.

Nick Drew said...

There's a problem with that overall approach: few people would ever tick the box for Defence.

So then you make Defence a compulsory 'service', and then the Police, and then roads, and then ...

Caeser Hēméra said...

A higher number of bands has long been needed, however the problem with wealth taxes is that the payment comes out of income or savings, so you're always going to hit the off buffer of someone with paper wealth, but cash poor.

It's the kind of thing the media love too - 90 year old granny, husband was a war hero, died x years ago, house purchased for very little is now worth a lot through no fault or plan of hers, lived there most of her life, full of memories, here's where we measured the kids height, here's hubby's medals, here's the cute old family spaniel... But here comes Herr Kouncilmann, heart of stone, forcing her out, doesn't need this at her time of life, heart isn't what it used to be, kids have moved abroad...

So avoiding that has to be baked in, otherwise no one is going to copy it.

Anonymous said...

"Get rid of it and charge a percentage on the land value would be the easiest idea."

Problems with LVT.
1. How do you value the land? The govt would presumably be in charge of valuing and would have a huge interest in overstating the value.
2. What happens if land value goes down? The council aren't going to be cutting their cloth to fit - their expenses only ever go up.
3. It's not related to ability to pay. You can sell 0.5% of your house each year.

I think local income tax is the way to go. You live there, you pay the surcharge income tax.

Maybe we take elderly care out of council hands and establish a 'National Care Service' funded by CGT/IHT on homes?

Caeser Hēméra said...

Local income tax sounds intriguing, although I suspect it wouldn't work.

Cities would have a lower rate due to population density and short logistics, rural areas would be screwed as a combination of lower population densities and more complex logistics meant higher amounts were needed.

Death of the British village essentially.

Nick Drew said...

LVT, arghgh!

this is my fault

the late, great Mark Wadsworth devoted a lifetime to promoting LVT. Dive in here, you may never emerge - - - https://markwadsworth.blogspot.com/

I understand the theory: land is finite and impossible to hide etc. But oh boy, the detailed debate goes on forever ...

jim said...

The secret to taxation is to pluck the goose without it hissing or pecking too much.

CH points out the very common 'little old lady' problem. So repartition the tax bands leaving most people alone but paving the way to put the screws on (in a very measured and particular way).

But you can't get blood out of a stone, the housing market is a delicate balance between aspiration, snobbery, jealousy and affordability. We know what to do but getting voted again is the problem. So a few % extra is all that is possible anyway, a bit more on the upper bands maybe.

What is not wanted is an unloading of the bands in some panicked fashion, there is nowhere but down or death for them to go. Many oldies would like to downsize but that runs straight into competition with the young in a very under supplied market. Try buying a decent house in a decent area near shops, doctor, train station etc etc. The little old ladies in large houses are a self solving problem, a bit of a subsidy keeps them going, then screw the new upcomers (if any materialise).

Then I look forward to the new build developers arguing the toss over whether this design or that does or does not fall over the band L boundary. Years of happy fun for the lawyers.

I used to read Mark W on LVT, some days it sounded vaguely sane, but in the end my eyes glazed over.

Anonymous said...

"Local income tax sounds intriguing, although I suspect it wouldn't work."

CH - I think one of the great things about local income tax is that it might actually encourage a bit of competition between authorities. Instead of a flat tax per head, you need to work hard to make your place nice enough for wealthy taxpayers to live. No rich people, no tax money to waste/spend.

Anonymous said...

"The secret to taxation is to pluck the goose without it hissing or pecking too much."

Jim - all this talk of how to tax, but ultimately I think we would probably hit a wall at about 38% of GDP no matter how it is levied. And even that is historically very high indeed. We are currently at around 35 and that extra 3 would really be felt.

Anonymous said...

ND - I could see a LOT of people ticking the "defence" box if it meant RM commandos in big ribs grabbing the invader inflatables and towing them back to France, day after day for years or decades. Not so much for bombing random Yemenis, we tried that in the 60s in the days of Hawker Hunters.

They might then try subs, as coke smugglers do, sadly unidentified subs should be sunk, you'd only need to do one for the message to sink in.

One thing that should be noticed, the YUGE cost of children's services - I think at least one chain of specialist children's homes is owned by overseas private equity, who wouldn't be interested unless there was serious dosh involved.

Anonymous said...

When you think of the huge percentage of GDP taken in tax, then consider the huge number of things that government used to do but doesn't any longer (coal, steel, water, gas, electricity, nuclear, telephones, mail, railways, airlines, buses and coaches, even weather forecasting has gone iirc) it does make you think furiously...

Anonymous said...

add defence research to that list...

Nick Drew said...

@ bombing random Yemenis, we tried that in the 60s in the days of Hawker Hunters

hate to be pedantic ... ((well alright; no I don't)) but that was the Jebel campaign in the North - I think I posted pictures of what the Hunters did to Sulieman's fortress, left there as a shell-ridden lesson to troublemakers**

see 26 Nov 2016 post in this thread: http://www.cityunslicker.co.uk/search/label/Oman

it was BAC Strikemasters against Yemen in the Dhofar campaign

_________
** the visible stick, alongside a well-crafted carrot that has seen peace in that part of Oman for 60 years

Jeremy Poynton said...

"To me, this third option is a real no-brainer and one Osborne should have done in that brief 2010 window when he could have done almost anything he chose and, quite appropriately, his slogan was "all in it together". Clearly, from his deeds of commission and omission, he never meant that; and the opportunity was lost. "

One must add - not a soul, not one, believed Osborne when he said that.

Elby the Beserk said...

"BlokeInBrum said...
Tax wealth, success and hard work and get less of it.
How about we don't assume that citizens are indentured tax slaves to be milked to the max by the state?

1:24 pm"

Oh come on! What's NOT to be liked about being taxed more and more for less and less? 😘😘

Wildgoose said...

Council Tax is all about how much the house is worth. But that's all down to "Location, Location, Location!". Or, in other words, it is mainly about the land that the house is built upon. Ultimately, a Land Tax is the only sensible answer. (See Mark Wadsworth, et al).

BlokeInBrum said...

In Brum we are going to be facing council tax rises >10% next fiscal year due to the last bunch of incompetents bankrupting the place. This is on top of seperate fire and police precepts which also only ever seem to go up while provision only ever seems to go down.
At the same time I look around and see all the massive tower blocks being built in my area to house more and more students and immigrants that are flooding the place. Currently Chinese students seem to be the flavour of the month.
You would think that council taxes would go down when there is a greater density of taxpayers in a given area.
One thing for certain - the council doesn't use its tax receipts to improve the quality of life for taxpayers. Roads are in a horrible state, streets are never cleaned, police are never around when the youth are stabbing each other. But I bet the civil servant and union pensions are well funded.

Caeser Hēméra said...

@BlokeInBrum - social care is the sponge taking up much of Councils outgoings, years back a certain amount of incompetence could be absorbed, now, even a perfectly competent council would find juggling funds complex.

Had successive governments bothered tackling social care and the demographics issue, rather than chucking it on the 'Too Difficult' Jenga pile, we'd probably be seeing the same rises, but from a smaller starting point.

Along with health, immigration, housing, infrastructure, and pretty much anything else other than a reluctant Brexit, flung on the pile with wild abandon, it's only just starting to occur to the Tories that, after over a decade, it might just topple over on them.

Alas, poor Sunak.

Anonymous said...

CH - "social care is the sponge taking up much of Councils outgoings" - see my earlier comment regarding a national care service funded outside of council tax. Suspect most of this is elderly care, but care for disabled/kids is ridiculously expensive due to crazy legal requirements and a mania for contracting out.

BiB - "You would think that council taxes would go down when there is a greater density of taxpayers in a given area." - as you point out, loads of students who use services but pay zero council tax. On my original post I pointed out we need at least some sort of reduced rate so that everyone makes some sort of contribution.

BlokeInBrum said...

That's kind of what my sarky comment about the community charge was getting at. There are an increasing number of parasites leeching off the productive classes now.
Jiggling around council tax bands to extract more from those better off will only raise so much, the problem being that inflation and net zero have hit most ordinary working people quite hard in the pocket, and they are the people paying the bulk of the council tax.
The social cohesion that lets people tolerate a certain level of unfairness in the system is rapidly fraying.

jim said...

The UK seems like a leaky bucket with a small dribble going in it. Either we improve the inflow - get a better job and/or we plug the leaks. I agree the scope for tax increases is fairly small, at least until better job + plug leaks.

Elsewhere I see no one wants to be a welder on £38k but at least some want to be a Diversity & Inclusion manager on £45k. I also notice everyone seems to work for a think tank, foundation or charity. Then I see on the telly heaven knows how many presenters and newsreaders. Bring back the solitary newsreader - dinner jacket, bow tie, gardening trousers & shoes and closedown at 11pm and reopen at 17:30. Or for the more diverse, ball gown, tiara, holey stockings & clogs.

As for Net Zero, you can have it Green, Very Very Expensive or Effective - choose two. Or you could cut the human population - say 4Bn poor ones or 600M fat rich ones, either will work but you will have to keep up the good work.



Matt said...

I have no idea what was wrong with the poll tax. If you use council services, then pay for them. The more of you there are in a house, the more you need the services.

Nick Drew said...

@ If you use council services, then pay for them. The more of you there are in a house, the more you need the services

very many millions of your fellow citizens do not like the idea of this

simples

BlokeInBrum said...

The people participating in the poll tax riots weren't those working a 9 to 5. It was the disaffected youth faced with the prospect of having to pay their way who were making the noise, alongside bolshy Marxist, Socialist and unionist groups using it as an opportunity to give Thatcher and the Tories a good kicking.
Unfortunately like a cancer, the freeloaders are metastasizing, and pretty soon the UK will complete it's journey towards a low-trust, third world society. Any chance of the Tories swapping Sunak out for an actual conservative like Milei?

Sobers said...

"pretty soon the UK will complete it's journey towards a low-trust, third world society. "

Its already there, has been for some time. Its just that not everyone has realised yet, or is actively ignoring the fact.

RS said...

I didn't know he'd died. That's desperately sad.

Anonymous said...

"very many millions of your fellow citizens do not like the idea of this"

ND - presumably the ones currently paying zero CT. Probably also in the 50% of adults that pay zero income tax. I never realised how many of my fellow citizens were radical libertarians who wished to completely remove government taxation!

BlokeInBrum said...

Perhaps it's long overdue that we restrict the franchise and start limiting those who can vote to those who are net payers of tax. Remind me again why we allow Irish citizens living over here the vote?

jim said...

Was slightly involved with poll tax. Thought it sounded a good idea - but soon learned that was naive. The old rates system had a certain social justice to it. The local squire lived in a mansion, the gin & jag set had the 5 bedders, tradesmen lived at the better end of the council estate and the village idiot and the wasters were allocated the rotten end. No one forced you to live in an expensive house, the tax was self selecting and led to a form of social justice. The poll tax quickly became a hot potato and dropped asap by wiser political hands.

There was a notion that council houses were full of workers each with a jag parked outside and living cheap - a fiction of the DM/DT brigade. Put up by some madcap management consultant types riding on Mrs Thatcher's ideas. She was useful for a couple of years then lost the plot.

Wider industrial, demographic and global changes have eliminated much of the old tax base and assorted foolish notions have made matters worse, the tax base has not been rebuilt whilst the cost base has risen and risen. Unhappy days.

Anonymous said...

BiB - before the first world war, there was a property qualification to the vote. You had to own or lease a certain amount of property to be given the vote. This did mean that about only 1/7th of the population had the vote but it was also an effective proxy for tax payers and intelligence.

Back when we limited the franchise to people who paid tax and were reasonably smart, Britain ruled the world. Now we allow pretty much anyone to vote (and it the cases of East London rotten boroughs multiple postal votes) Britain doesn't even rule Britain.

Time to invert the US revolutionaries slogan - "No representation without taxation!"

Matt said...

Society only works when you have corresponding responsibilities to any rights. The expectation/entitlement to a reasonable standard of living, healthcare, support when unable to work, etc should come with the responsibilities of contributing towards them.

Once you break that symbiotic relationship, the whole fabric of society collapses. We now have more people who are net beneficiaries of government than those paying for it.

And it'll get worse, these people will vote themselves even more and we'll end up with the state stealing assets from the rich before it becomes clear the whole country is bankrupt.

Get out while there is still a chance (before the next election ideally).

Anonymous said...

Matt - https://theimaginativeconservative.org/2016/08/rights-responsibilities-political-economy-starship-troopers.html
Rights and responsibilities.

Anonymous said...

ND - can't remember if I asked before, have you read Ranulf Fiennes "Where Soldiers Fear To Tread" about Dhofar in early 1970s? Rattling good read.

Covers his service in Oman during the period when Qaboos took over (with I assume a fair bit of MI6 involvement) and covers the coup, organised essentially because of fears that PFLOAG (Popular Front for the Liberation of Oman And the Gulf) were winning the guerrilla war, and that a Sandhurst-trained son was more likely to stop this than his old-school dad.

Very interesting on leftist revolutionary politics which in those days was extremely anti-Islam (‘opium of the people’ etc) as propagated by the Chinese and Russian-trained guerrillas of the region.

He has a sardonic, dry wit – one of his first sights as he arrives in Oman is seeing the only officer he knows (and the one who suggested he come out there) being carried badly-wounded to the plane he’s just left.

Anonymous said...

Available to read online with an email address:

https://archive.org/details/wheresoldiersfea0000fien

Anonymous said...

Was in the last 6 choices for James Bond (Roger Moore got it), but was rejected by Cubby Broccoli for having “hands too big and a face like a farmer”!

Nick Drew said...

Fiennes - yes I think you did ask me before: check comments in the 'Oman' thread I gave the link for above

formertory said...

Taxation of residential property needs a thorough overhaul (including tax on profits). And Councils need to overhaul their staff benefits packages too. I lived and worked for a while within the fiefdom of a small unitary authority, some of whose Councillors liked to bang the drum about Council Tax paying for Council services. Bollocks. CT receipts were several hundred thousands of £ a year less than the Council paid in "employers" contribution to their staff pension scheme. 21.9% contribution, last time I looked some years ago. Idle, overstaffed, and distinctly parasitic.

I know the views of the late, great Mr Wadsworth inspired a hugely polarised set of reactions but much of that was, I think, because (most) people never really bothered to read his functional description of the tax and its implementation properly. They got as far as tax on land and recoiled. But hey. From a shaky start he largely convinced me; but it's not a position which wins me many friends! He was a good bloke to correspond with.

Anonymous said...

Thanks ND - I thought you'd served out there.

"After an hour moving with great care I smelled the dung fires of the village. The two Baluchis went off quietly to either side. They returned in a while to confirm the other sections had arrived. Then we moved forward. I approached the thorn enclosures from the south as on our previous visit. Ahead was sparse foliage and ant-hills, then the clearing of the village. There was no one about; not even a cow.

Ali Nasser responded to two finger pressures on my National (walkie-talkie) and somewhere to the east of the clearing his men crept forward; Corporal Salim to the west. I gave them five minutes then got up. On my left Hamid Sultan arose cradling the ugly machine gun, a camouflage net over its belt of bullets. To the right fat Said bin Ghia straightened out gleaming with sweat. He was frowning; uneasy. It was too quiet.

I left the last shred of cover and stepped into the clearing. From the west a murderous rattle of bren gun fire stunned me momentarily. I remember seeing the ripple of earth spurts rising like hailstones landing in a quiet pond.

Then the woodpeckers opened up from the other side of the clearing, Soviet RPD automatics, nicknamed due to their rapid rate of fire and the sound of their high velocity bullets. I felt the shockwaves slap by very close. Said bin Ghia screamed and fell to the ground."

Anonymous said...

Off topic (though in ND's bailiwick) - isn't fining manufacturers if they don't sell enough of a particular product an insane bit of market interference?

If they want me to install a heat pump they'll have to offer a hefty subsidy to insulate my 1830s solid wall house, the core of which was bodged with 1980s concrete floors so the damp goes up the walls. Then there's the issue of replacing all the radiators, plus larker bore pipes. Quite a big and expensive job. Otherwise I can buy a new combi oil boiler from, say, Worcester Bosch.

https://www.theguardian.com/business/2024/feb/04/uk-scraps-boiler-tax-after-makers-raise-prices-to-cover-any-fines

"from April, manufacturers of fossil fuel boilers face a quota for heat pump installations relative to their gas or oil boiler installations. Companies are required to match, or substitute, 4% of their boiler sales with heat pumps or face a fine of £3,000 for every installation they fall short by. In readiness for the new targets, manufacturers started pushing up prices last year. In September, Worcester Bosch, the UK’s biggest manufacturer, told the Times its prices were going up by as much as £300 because the UK market for heat pumps was not yet at sufficient scale, which meant it was “inevitable” that it would face fines."

The only people out in the sticks putting in heat pumps are those in well insulated houses, which generally means new structures near to Passivhaus standards.

"The sleep of reason brings forth monsters"

Bill Quango MP said...

Selling our 1860s property the EPC came in at E. That’s not good.

Recommended.
Replace sash listed windows for double glazed.
Air pump
Insulate all internal walls
External walls
Extra loft insulation and ceiling thermal on.
Replace wooden doors for modern
And a few other things.

£50,000 of work, near enough.

Savings per YEAR
Up too £250

so only paying for itself after 200 years.

House I’m in now is all electric.
And it is cold.
And very expensive to run.
£4000 a year for electric.

Which is three and a half times the price of gas to encourage people to switch to…L … hang on..that makes no
Sense

But it is true.
29p for electric
07p for gas

Old Git Carlisle said...

Well stated not surprised our masters don't understand what garbage they spout!