Pincer movement.

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bluelobster.jpgPressure against local income tax continues to grow in the Liberal party following the Vince Cable briefing. Jonathan Calder, the party's so-called "blogfather", has a piece in today's Observer criticising local income tax and arguing instead for some kind of property-based tax. His Damascene conversion followed a Tory lady explaining the following to him:

"Do you realise why the rates are unpopular? It's because you can't hire a sharp accountant to get you out of them, the way you can with income tax." 

Quite. Just one element of that evasion, the so-called non-dom loophole, cost us £3.8bn last year. The total amount avoided by those with sharp accountants was a massive £13bn. Just think - a sum so gargantuan that you could build three Forth road bridges with it. Or you could repair the existing bridge 1,300 times over

Would the subset of those serial evaders resident in Scotland evade a local version of income tax less effectively or more effectively? My money's on "more", given the widespread incompetence local authorities have demonstrated around Council Tax.

On the other side of the argument, Andy Kerr has followed Iain Gray's lead and accepted that Council Tax must go, which has been blindingly obvious to the rest of us since about 1993. Kerr's talking vaguely about proposals from the Burt Report, which recommended a tax set at 1% of house values. 

Labour Ministers, including Kerr, rejected the report even before it was published, less than two years ago. It's curious that he should want to go back to it, given that, but I'm sure he knows what he's doing.

Burt also considered Land Value Tax, and concluded that:

"Although land value taxation meets a number of our criteria, we question whether the public would accept the upheaval involved in radical reform of this nature, unless they could clearly understand the nature of the change and the benefits involved." (p120, Burt Report, 686M pdf)

OK, so I promised to set out the nature of the change and the benefits involved. I will do so, I guarantee. But again, not today. In the mean time, isn't it interesting (if you're a tax wonk) to see how support is draining away from both Local Income Tax and Council Tax?

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This page was published on August 10, 2008 7:16 PM.

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