City Council Lib Dems back abolition of Council Tax

12.00.00am BST (GMT +0100) Tue 23rd Sep 2003

On the day when the Liberal Democrat Conference in Brighton has proposed the abolition of council tax, the city's Lib Dem council leader has voiced his support to scrap the tax.

According to Cllr Ian Nimmo-Smith, the Lib Dem leader of the city council,

"We support national Lib Dem policy on abolishing the unfair and expensive council tax system as agreed today at Brighton, and call for its replacement by fairer systems of local income tax and local business tax.

The City Council will be making this case to the Office of the Deputy Prime Minister (a.k.a. John Prescott) as part of their current consultation called the 'balance of funding review' - i.e. who should pay for what, and how, in providing local services".

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The national conference motion is set out below:

Conference notes that successive Conservative and Labour Governments have chosen to increase indirect taxes whilst cutting income tax, with the result that the richest 20% now pay just 34% of their income overall in tax, whilst the poorest 20% pay 41% of their income in tax.

In particular, Conference notes that:

a) Council Tax, which is unrelated to ability to pay, has increased on average at more than 5% a year since 1997 and by 13% this year - an increase of over 50% since Labour was elected as a result of new requirements imposed on councils and inadequate government grant increases.

b) A further 10% Council Tax increase at least is expected by the Chancellor for the next two years.

c) Council Tax is the least fair major tax, already taking 5.1% of the incomes of the poorest tenth of people compared to 1.2% of the incomes of the richest tenth of people even after Council Tax Benefit has been taken into account.

d) Two million needy households are poor enough to get Council Tax Benefit, but do not claim it because it is either demeaning or too complex, whilst £560 million a year is wasted simply administering the Council Tax and Benefit system that could be better spent on services or cutting local tax.

Conference therefore calls upon the Government to work to reform and simplify the tax system, in particular to create a fairer distribution of the tax burden so that hard-working families on ordinary incomes do not have to pay higher percentages in tax than the very rich, and to start this process by:

1. Abolishing Council Tax as soon as is possible, and replacing it with a fair local income tax related to ability to pay, supported by a fair national grant system reflecting local income levels to ensure that a similar level of service requires a similar level of Local Income Tax in each area.

2. Devolving to local authorities the approximately half billion pound saving (from not having to operate a separate council tax and benefit system) for the benefit of local communities.

3. Create a fairer local business tax system by giving local authorities control over their local business rates, and allowing them to put rates on a Site Value Rating basis.