Explore the evolution of the Council Tax and the history of local taxation

Topics: Taxation in the United Kingdom, Tax, Taxation Pages: 5 (1961 words) Published: May 26, 2014
Taxation has been a feature in society since the earliest records, even being referred to in early historical texts such as the Bible. Since the initial existence of taxations there have been various systems both across and within countries and cultures. In the United Kingdom taxation is implemented at both a national level such as national insurance and income tax, based on an individual income and local taxation. Local taxation has existed for many years with various reforms due to enduring controversy and dissatisfaction. This essay aims to explore the history of local taxation with a focus on the evolution of council tax and considers if a fair system has yet been achieved for local council finances. The origin of local taxation in Britain can be traced back to medieval times, where local parishes would charge “tithes” to the congregation. A “tithe” would relate to a tenth of agricultural produce or personal income of the individual concerned, more a reflection of our modern income tax. This ad hoc system became more systemised and recognisable of our current council tax system in the 1600s with the introductions of the rating system which was to remain in place relatively unchanged for a duration of nearly 400 years. The rating system or the rates was a property based tax which was calculated by assessing the rateable value of an individual’s home. Rateable value was determined by the size and/or valuation of the property, the rates were then charged dependant on this evaluation of property. Several problems were apparent in the rating system. The main drawback of the rating system was that it did not consider how many individuals were occupying a property, nor did it consider the income of inhabitants. This meant that a household with only one occupant on a low income such as a pensioner could be paying the same amount of tax as a household with several occupants with high incomes at their disposal. This example clearly demonstrates how quite unjustly occupants with higher incomes could pay less than an individual living on their own. However an economic advantage of the system was that it was easily administered which therefore saved local authorities money and guaranteed that every household would be billed regardless of how many individuals resided at the property. This simplicity also meant local authorities had an easily predictable source of income. However in light of the limitations of the rating system it was eventually abolished by Margaret Thatcher’s Conservative government in 1990. The system introduced in replacement of the rates was the Community Charge, also referred to as the “poll tax” by the opposition. Community charges were charged per person as opposed to previous system which was assigned per property. In theory this system meant that each individual with an income paid an equal contribution. Along with this new method rebates and exemptions were introduced in an effort to address the inability of certain groups to pay e.g. the unemployed. In contrast some groups for the first time became eligible for local taxation, such as students and those on low incomes, though students did benefit from a 75% reduction. The advantage in theory of the Community Charge was that everyone would pay their way, thus providing the government with more income from this form of tax. Indirectly the charge also placed onus on the individual to get involved with how their money was being spent in the community, giving them a greater sense of control and involvement in their local area. However dissatisfaction with this arrangement was substantial and has been viewed as contributing to the resulted loss of confidence amongst Conservative members of Parliament at this time. Many people refused to pay, as responsibility was with the individual to register to pay for their taxes so many who opposed the idea of a Community Charge could become invisible to the billing authorities by dropping off the electoral register,...

Bibliography: Morrison, J. (2009) Public Affairs for Journalists, Oxford: Oxford University Press
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