Top 5 financial things to do before labour get in?

[alscar]

Hustle_ said:

We have guaranteed income tax rises under the current mechanism every year until 2028 courtesy of the conservatives, they are relying on basically ignorance to get that through under the radar.

None of the parties can campaign on tax cuts the way things are. The conservatives attempt looks disingenuous.

True to your first point but the extra money that also needs to be raised won't come from "simple earnings "income tax per se.
No party can or should campaign on tax cuts.
Let's be realistic , what else can Rishi say ?!

[Condi]

You would hope that Labour look to make tax more progressive.

Council tax is a huge area which needs looking at, prices are still based on 1992 values which are now 32 years out of date and do nothing to reflect the changes in house prices between then and now. You end up with strange situations whereby someone in Blackpool or Barnsley is paying more in council tax than someone living in Clapham for a similar sized house.

[LimaDelta]

Do we think GBP will weaken against EUR, or is that already priced in? EUR fell slightly in recent days due to the French election predicted results. The lowest it has been in over two years.

[SpidersWeb]

Condi said:

Council tax is a huge area which needs looking at, prices are still based on 1992 values which are now 32 years out of date and do nothing to reflect the changes in house prices between then and now. You end up with strange situations whereby someone in Blackpool or Barnsley is paying more in council tax than someone living in Clapham for a similar sized house.

The issue with council tax is NOT the values of the properties and they are based on 1st April 1991 (not 1992) values. That is an utter red herring.

The issue is the range of bands and the nature of council funding, and the latter of those means that somewhere like Westminster earns a huge amount from parking revenue and has to pay damn all for all the social care issues that are exceedingly expensive to most councils, and thus can keep its council tax low.

Now if you replaced council tax with a 'property tax' of lets say 1% of its value every year payable to central government and distributed to local authorities according to the needs of the residents, would that be fairer?

Those in Blackpool or Barnsley might be happy to see their council tax reduce from £2,100 a year to around £1,750, but I can't see many in Westminster being that happy their council tax increasing from £800 a year to £17,000 a year.

[98elise]

Condi said:

You would hope that Labour look to make tax more progressive.

Council tax is a huge area which needs looking at, prices are still based on 1992 values which are now 32 years out of date and do nothing to reflect the changes in house prices between then and now. You end up with strange situations whereby someone in Blackpool or Barnsley is paying more in council tax than someone living in Clapham for a similar sized house.

How does that work? The house in Clapham would surely have been more expensive in 1992.

There is no reason why you should pay more for council services just because you live in an area where houses are expensive.

[98elise]

SpidersWeb said:

Condi said:

Council tax is a huge area which needs looking at, prices are still based on 1992 values which are now 32 years out of date and do nothing to reflect the changes in house prices between then and now. You end up with strange situations whereby someone in Blackpool or Barnsley is paying more in council tax than someone living in Clapham for a similar sized house.

The issue with council tax is NOT the values of the properties and they are based on 1st April 1991 (not 1992) values. That is an utter red herring.

The issue is the range of bands and the nature of council funding, and the latter of those means that somewhere like Westminster earns a huge amount from parking revenue and has to pay damn all for all the social care issues that are exceedingly expensive to most councils, and thus can keep its council tax low.

Now if you replaced council tax with a 'property tax' of lets say 1% of its value every year payable to central government and distributed to local authorities according to the needs of the residents, would that be fairer?

Those in Blackpool or Barnsley might be happy to see their council tax reduce from £2,100 a year to around £1,750, but I can't see many in Westminster being that happy their council tax increasing from £800 a year to £17,000 a year.

Why should it be linked to house value? Take say a nurse living in London vs one living in Blackpool or Barnsley. Why does the one living in London need to subsidise the one living in Barnsley?

[fat80b]

I imagine that any reform of council tax is actually quite hard to do.

I did read a suggestion that this is how they would enact a wealth tax and that for the "wealthy", council tax would jump to ~12K per year instead of the ~3K it is atm.

I would imagine that if pensioners were suddenly asked to pay 4X more council tax, we might see them take to the streets........

[alscar]

fat80b said:

I imagine that any reform of council tax is actually quite hard to do.

I did read a suggestion that this is how they would enact a wealth tax and that for the "wealthy", council tax would jump to ~12K per year instead of the ~3K it is atm.

I would imagine that if pensioners were suddenly asked to pay 4X more council tax, we might see them take to the streets........

But only if the weather is nice.
Would agree totally that it will be hard to do and there is also the not so small fact that increasing Council tax if done across the board will impact all homeowners including their supporters.
Against this increase will be the need to actually be Labour and raise money - Pension changes , IHT changes and CGT changes if/ when they happen will only raise so much.
They have also ruled out wealth tax so I can only conclude that Council tax will increase but probably only by a maximum of x2.

[SpidersWeb]

98elise said:

Why should it be linked to house value? Take say a nurse living in London vs one living in Blackpool or Barnsley. Why does the one living in London need to subsidise the one living in Barnsley?

Why does the amount of income tax I pay have to be linked to my income. Why does a well paid person need to subsidise is disabled person who is unable to work?

The concept of council tax being for services that you receive is utter utter nonsense - for example why does my income tax pay for nationally distributed job seeker benefits, but my council tax pay for housing benefit?

The amount of individual services that I benefit from council tax equates to bins and roads, and since they are not fixing the roads can I have that bit back along with education, anything social, and anything else the council spends money on.

Or... the country accepts that everything like education and social care is a national issue and is paid out of national taxes.

[Condi]

There are lots of people calling for council tax reform, including foundations and views on both the left and right of the political spectrum.

The Institute for Fiscal Studies
https://ifs.org.uk/articles/council-tax-needs-urge...

Welsh Government changing their system from 2028
https://www.gov.wales/council-tax-reform

The Economist declares it "not fit for purpose"
https://www.economist.com/britain/2024/01/25/brita...

Financial Times
https://www.ft.com/content/9f14dab5-7304-4d4a-9021...

etc etc

[r44flyer]

SpidersWeb said:

Why does the amount of income tax I pay have to be linked to my income. Why does a well paid person need to subsidise is disabled person who is unable to work?

The concept of council tax being for services that you receive is utter utter nonsense - for example why does my income tax pay for nationally distributed job seeker benefits, but my council tax pay for housing benefit?

The amount of individual services that I benefit from council tax equates to bins and roads, and since they are not fixing the roads can I have that bit back along with education, anything social, and anything else the council spends money on.

Or... the country accepts that everything like education and social care is a national issue and is paid out of national taxes.

Society? Living together as a populace where, surprisingly, not everyone is the same, or as fortunate as you? Sometimes people subsidise others, suck it up?

Job seeking is a national concern, managed by national policy with benefits from funds from the nation as a whole. Housing benefit is managed by local councils with local budget and strategy which is very specific to the available housing stock in the region, and its demographics.

[SpidersWeb]

r44flyer said:

Society? Living together as a populace where, surprisingly, not everyone is the same, or as fortunate as you? Sometimes people subsidise others, suck it up?

Yes exactly! It is a national issue, not a local issue, so the whole country should contribute to that subsidy not just those living in that area.

r44flyer said:

Job seeking is a national concern, managed by national policy with benefits from funds from the nation as a whole. Housing benefit is managed by local councils with local budget and strategy which is very specific to the available housing stock in the region, and its demographics.

And if job seeking and housing is a national concern then why is paid for by council tax from those living in the area, rather than being paid for out of the national pot of taxation.

There are a few, a very very few, things where those living locally directly benefit from something and should pay for it, but those things are few and far between - and those things don't include, education, police, fire, social care, roads, bins, etc.

[r44flyer]

SpidersWeb said:

And if job seeking and housing is a national concern then why is paid for by council tax from those living in the area, rather than being paid for out of the national pot of taxation.

There are a few, a very very few, things where those living locally directly benefit from something and should pay for it, but those things are few and far between - and those things don't include, education, police, fire, social care, roads, bins, etc.

Housing has to be managed by local councils, it's too big and complex to be managed nationally. They have a local budget to fund local initiatives based on their own management of available housing stock on their patch, that they should know very well. They are responsible for their own people. The higher the local population the higher the council tax take to fund their inevitably higher percentage of people who require housing benefits of some variety. If they need more money they apply to government to raise the rates.

Job seeking benefit etc is also directly related to the size of local population. Higher population means a statistically higher demand for benefits related to job seeking. It's again an effort to compartmentalise the management of the systems, it's too big to do it entirely nationally. See also fire/police etc. One county generates so much from its population and it has a budget to manage as a result. It incentivises local government initiatives to generate employment opportunities. National funding has to be applied for in the event of a shortfall. They can't just mismanage and apply for all the extra cash they want. Although they do their best...

What you benefit from in terms of council services... remember that what you think you don't get is not the same as what you think you're meant to get and the council aren't very good at doing it.

Edited by r44flyer on Friday 14th June 19:36

[SpidersWeb]

r44flyer said:

Housing has to be managed by local councils, it's too big and complex to be managed nationally. They have a local budget to fund local initiatives based on their own management of available housing stock on their patch, that they should know very well. They are responsible for their own people. The higher the local population the higher the council tax take to fund their inevitably higher percentage of people who require housing benefits of some variety. If they need more money they apply to government to raise the rates.

Job seeking benefit etc is directly related to the size of local population. Higher population means a statistically higher demand for benefits related to job seeking. It's again an effort to compartmentalise the management of the systems, it's too big to do it entirely nationally. See also fire/police etc. One county generates so much from its population and it has a budget to manage as a result. It incentivises local government initiatives to generate employment opportunities. National funding has to be applied for in the event of a shortfall. They can't just mismanage and apply for all the extra cash they want.

Managing things locally and funding things locally are two entirely separate things.

Yes things may need to be managed locally, but there is no good reason for the funding for most services to rely mainly on obtaining that funding locally through council tax, rather than instead those locally managed services being funded nationally.

If an area has more demand on say policing than another, it shouldn't be that the local residents who pay for that policing (or suffer a worse police service if it cannot be paid for), but that an adequate level of policing should be provided everywhere from national taxation.

[r44flyer]

It's only about managing the funds and the provision on a basis that doesn't mean Whitehall doing all the sums.

Local councils collect and manage the funds. They present to central government, but largely get on with it themselves to service their local population, and manage their own budget. Again, they can't do a half arsed job knowing that central government will pay for any and all shortfall, or they just wouldn't bother, go bankrupt and blame the national leadership.

You're saying central government should collect and provide funding for all areas of the country to give equal services to all. How do they divide it up? Number of people in the county? Number of people on benefits? Total council tax take? You're back to management on a local level by councils who know their patch and their local issues.

[Michael_B]

SpidersWeb said:

And if job seeking and housing is a national concern then why is paid for by council tax from those living in the area, rather than being paid for out of the national pot of taxation.

There are a few, a very very few, things where those living locally directly benefit from something and should pay for it, but those things are few and far between - and those things don't include, education, police, fire, social care, roads, bins, etc.

Other countries manage quite well with precisely those things being managed and funded locally. Of course, you need actual representative and direct democracy, rather than outdated adversarial FPTP, for it to work. Of all the tax I've paid for the past 25 years, 85% of it goes to local government (an entity which represents 6% of the national population), and the other 15% goes to the national government.

The Republic and Canton of Geneva manages education[1], police[2], prisons, energy/utilities provision, unemployment benefits, social care, roads and bins (fire brigades are actually a communal/parish council affair), and also manages general tax[3] policy too. Federal responsibilities (where the other 15% of my tax goes) are monetary policy, armed forces, foreign relations, post/telecoms, immigration, motorways, railways and customs duties. All the rest is devolved to 26 individual authorities across a population of 8.7 million, and seems to work OK so far.

Elections and referenda are held at all three levels (federal, cantonal and communal) to decide issues for which those authorities are responsible (including tax rises/cuts.) So you get to choose who taxes you, and by how much, and can then judge how well they are doing it. I vote in referenda four times a year (each time on 6-8 subjects, at all levels), then at a national level/cantonal every four years, and locally for my 'conseil municipal' every five years.

Real local democracy empowers the people at a local level. I don't really ever wonder if my tax francs are subsidising a homeless and/or low-paid person at the other end of the country. Then again, personal allowances are set at such a level that 30% of the local population pay no tax at all; I am fortunate enough to be well into the other 70%.

Every tax payer receives a personal note from the local Minister of Finance each year, thanking him/her for contributing to the 'collectivité.' Paying tax should be a privilege as well as an obligation. Yes, it's "my money" but I have no issue with being required to support the local community and infrastructure with a reasonable contribution.


[1] If you qualify as a teacher here, you'll need to do further training to be able to teach in the public sector in other parts of Switzerland.
[2] If you train as a policeman here, you'll need to do further training to serve in law enforcement in other parts of Switzerland.
[3] Personal and corporate tax is quite different from one canton to another, including income, property, wealth, inheritance, capital gains, etc. So if you win the lottery here, then move to Bâle-Ville before the end of the year: it is the only canton where gambling wins are zero-rated and not taxed as regular income!

[SpidersWeb]

r44flyer said:

You're saying central government should collect and provide funding for all areas of the country to give equal services to all.

You say that as if everyone in the country receiving an equal service wherever they live in the UK is a bad thing.

Michael_B said:

Other countries manage quite well with precisely those things being managed and funded locally.

Does Switzerland which you are quoting have differing regions of wealth where the local authority area in one part has for example average property values ten times higher than another, and the differing social needs that come with those variations in wealth - if not what Switzerland does is irrelevant to the issues in the UK.

[Michael_B]

SpidersWeb said:

Does Switzerland which you are quoting have differing regions of wealth where the local authority area in one part has for example average property values ten times higher than another, and the differing social needs that come with those variations in wealth - if not what Switzerland does is irrelevant to the issues in the UK.

The cheapest house prices here are about CHF3k/m2 (La Chaux-de-Fonds, Le Locle) to CHF>20k/m2 in the major city centres. Where I live (rural outpost in the Geneva canton) it's around CHF10k/m2 but creeps up the closer one gets to the city centre; 10 minutes up the road it's more like 15k. So perhaps not ten times, but definitely 5 or 6 times for a normal family apartment/house.

UK government statistics for England show that the highest average house price (in London) is just shy of £500k and the lowest (in NE England) about £160k, so not quite the ten times you state above, more like three. Switzerland also has a system of 'péréquation' where the richest cantons subsidise the less well-off ones (with their vastly differing social needs) which is again, voted on by the people at a local and national level.

Having lived half my life in one country and half in the other, my wife working for Geneva social services with families in extreme social need (including asylum seekers), and my daughter being a social worker based in London Bridge, managing a dozen key workers dealing with vulnerable children across several boroughs, I've anecdotally seen the effects of each electoral and political system.

For the past ten years I've also spent 2-3 days per week at my place in France, which suffers from the same over-centralised democratic structures as the UK, and which is also in the midst of political chaos (snap election, rise of the extreme-right, etc). I am also the chairman of a company in Italy and spend a deal of time there, where the far right has been in power for a while now. My son married into a Tuscan family a few years ago, whom we regularly visit and often hear of the wonders of the Italian social/political system.

The UK is not alone in having vast differences in regional wealth and resources; how it chooses to manage them is limited/defined by the political system in place. Unfortunately, if Labour does indeed win a large majority next month, it is unlikely that they will propose and vote for a fairer electoral system, or indeed more subsidiarity and allow local/regional authorities to manage their inhabitants' affairs in a more equitable and accountable manner.

Despite being out of the country for 25 years, a change in the law allows me to vote once again in UK general elections, as an overseas voter in the constituency where I was last registered. One day I may return to England, and as a UK/Swiss dual citizen with a right of abode in both countries, I will indeed cast my vote in Weybridge and Runnymede. Perhaps it will make no difference... but if we all thought that way, no-one would bother voting at all !

[SpidersWeb]

Michael_B said:

UK government statistics for England show that the highest average house price (in London) is just shy of £500k and the lowest (in NE England) about £160k, so not quite the ten times you state above, more like three.

Westminster council has an average house price of £1.6m and there are plenty of councils with an average house price of £160k, so yes there are council areas with differences of up to ten times.

This means that Westminster council with such wealthy residents has few of the issues that those councils with a a much more deprived population have, and thus is able to set its council tax at a fraction of what the other councils have to.

Is it fair that the wealthy residents of Westminster get to pay so little and the areas with the more deprived populations have to pay so much?

[Michael_B]

SpidersWeb said:

Is it fair that the wealthy residents of Westminster get to pay so little and the areas with the more deprived populations have to pay so much?

Not at all, hence why a system of subsidies/equalisation (like happens here) would be part of the answer. But this doesn't mean that more local democracy in terms of funding and management is not a good idea. Unfortunately the UK's experience of regional authorities with tax-raising powers has not been that great so far, but it doesn't mean that it's not fundamentally preferable to a distant and centralised government taxing everyone the same and then making decisions for everyone in all corners of the country.

Coincidentally, back in 1990 when the poll tax was introduced I was living in Kingsbury, in the borough of Brent, where it was initially set at £~550. A few months later I moved to a flat (with the future Mrs B) in West Kilburn[1] a few hundred metres south of Queens Park station. With a W9 postcode it was just inside the City of Westminster, where poll tax was indeed one of the lowest in the SE at just over £200. That was the era of the infamous Dame Shirley Porter responsible for the 'homes for votes' and other scandals.

[1] But most people there maintained it was still Maida Vale