Council tax becoming the new Poll Tax claims IPPR

21st century socialism

The first premise of all human existence is … that man must be in a position to live in order to make history. But life involves before anything else eating and drinking, a habitation, clothing and many other things” (K Marx and F Engels, The German Ideology (1846), International Publishers, New York, 1947, p.16).

A short column in the FT on Saturday 18th May notes the publication of a report by the Institute for Public Policy Research (IPPR) into council tax inequality. The report, focused on London but taking into account some statistical evidence for the whole of Britain concludes that council tax is beginning to look a lot like the ill-fated Poll Tax which caused Margaret Thatcher so many problems thirty years ago.

The UK is ranked by the OECD as having, after France, the greatest reliance on property taxation of all OECD country respondents as a proportion of GDP. For 2017, property taxes accounted for around 4.2 per cent of GDP, more than twice the OECD average.

The IPPR report states that today’s system of council tax leaves those living in the lowest-value homes paying a higher proportion of council tax with regard to property value, than those living in the highest value homes. This is particularly acute in London where property investment has taken house price prices to ludicrous levels. The study found that a household in a Band A property in London would on average pay nearly five times what a Band H household would pay as a proportion of property value. The poorest Londoners pay 8.1% of household income in council tax, whilst those in the top income decile contribute just 1.3% of their declared earnings.

“Those in the lowest-value homes in London are paying a higher proportion of council tax with regard to property value than those in higher-value homes… To the extent that the distribution of property values is a proxy for wealth, this is not fair… The regressive nature of the present council tax system is embedded in its design… The highest-value property in Band H will attract a maximum of three times the tax on the lowest-value homes, even though (based on the current banding system) the high-value home is worth at least eight times the low-value one in 1991 property prices. As a proportion of property value, lower-value properties pay a larger proportion than higher-value properties.”

Arrears

“Across England”, according to the report, “officially recognised annual total council tax arrears increased from £836 million in 2013/14 to £944 million in 2017/18. Moreover, the total arrears outstanding in 2017/18 were £3 billion, up from £2.5 billion in 2013/14. Research by the anti-poverty charity Zacchaeus 2000 Trust (Z2K) has also found that a number of councils are using bailiffs, and claimants are being charged court costs on top of their arrears… At the most extreme, 305 people were given custodial prison sentences for non-payment of council tax between 2013/14 and 2017/18, with another 6,278 receiving suspended sentences…”

Council tax

No tinkering with the present system of taxation will be enough to stop the steady slide of hundreds of thousands of workers and middle classes into absolute destitution and misery. The crisis of overproduction, its consequent lay-offs and redundancies destroy the purchasing power of the masses who are also crushed under the weight of rising prices and taxation which they can no longer afford. Millions of workers today are a pay cheque away from ruination. Raising taxation of empty homes in London does nothing to undermine the financial power of the landlord and capitalist class, it does nothing to alleviate the underlying cause of the people’s misery – capitalism. Only under socialism, where the private ownership of the land by a tiny few is replaced with a socialist system of land ownership and taxation, where the recurrent crisis of capitalism is done away with and replaced by planned production can the working man and woman finally find themselves liberated.

Note

The IPPR is from a social democratic think-tank with a long history of providing Labour IPPR logoparty class collaborators with policy proposals designed to paper over the cracks of an increasingly divided and unequal society, its chair of trustees is Lord Adonis and in 2016 it appointed Tom Kibasi its Director. Mr Kibasi has worked for the Rockerfeller Foundation and the Bill Gates Foundation.

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