Ask EU: Local income tax ?

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Q. There has been a lot of fuss about local income tax round these parts recently (after all, Devon is the home of the militant pensioner.....one of the reasons the house prices are so high). Does anyrat know (and I guess I am looking at the lib-demrats here) what the proposals for local income tax actually *are* (apart from, presumably, that Sylvia Hardy (the enfant terrible of council tax refusniks) won't have to pay it)? Hopefully this thread won't get too party political, because as I understand it, all the parties are going to pretty much jump on the lib-dem bandwagon on this one. I would just like to know how much more I am likely to be hammered, really. And I can't find any concrete details on the lib-dem website. And no-one I know actually knows the details of the proposals (including it would seem lib-dem council hopefuls who keep writing letters about it to the local paper but never include any actualy, you know, details).

A. | what the proposals for local income tax |actually *are* The Lib Dem proposals or the Labour proposals? http://www.axethetax.org.uk/pages/how.html refers for the LD proposals. A tax rate of approx 3.75% on taxable income below £100k. The precise rate would be set by your local authority. The LIT stops at £100k, because incomes above £100k are taxed by the Lib Dem policy to increase a further tax band whic is intended to pay for reducing council tax before LIT can be implemented; and to pay for abolishing university tuition fees and for free personal care for the elderly, as is currently the case in Scotland where the Lib Dems are in coalition government. NB, this is still a lower tax burden than was in place for most of the Thatcher years. The tax would be taken by the Inland Revenue through existing tax collecting procedures, which would represent a saving to local authorities who no longer need to administer council tax (and more significantly, council tax benefit -- those on low incomes just wouldn't pay LIT just like they don't pay IT, because they haven't exceeded their personal allowance.) The axe the tax website includes a calculator for you to calculate how much you're likely to be hammered for. http://www.axethetax.org.uk/pages/taxcalculator.html -- approx 70% of households would be better off under the proposals, but that clearly means some won't. Mine only just does, and if either of us gets a rise shortly, we start to be very slightly worse off. Households that are unlikely to gain are those without children, those with higher than average incomes, students with jobs (although see our tuition fees policies for mitigations...) Those who will gain are the average and lower earners, and those who don't earn at all. LIT is only intended to replace the portion of local authorities' income that presently comes from the Council Tax, and not the average 75% that councils receive directly from central government. Labour appear to have taken on board the fact that repeated council tax rises are deeply unpopular, and have started a review of local taxation that won't report until after the General Election is done and dusted. I understand it is likely to report in favour of a hybrid of a property tax and local income tax. One further issue of concern about council tax is rebanding. The band your property is in now relates to its value in 1991. A lot has happened to the housing market since Chesney Hawkes was in the charts, and the relative values are not still the same. Rebanding is set to happen in the near future. It has already been completed in Wales, where most properties ended up in a more expensive band than the ones they were in before. Hope this helps. I'm not much of an economist, and there are some bits of this policy that are beyond me. However, the above should be what you hear from most people who are the ball and in the Lib Dems. If you have specific q's, I can try and answer them. -As for specific q's.............do you know why the lib-dems are so against including consideration of the type of property in determining how much tax should be paid? The whole council tax revolt started with the Devon pensioners, many of whom (and by this I mean the spokespeople who are always on the local news) live in huge houses which are inappropriate for their family size. I would have thought an equitable solution to the issue would take size and value of property into account. I don't mind paying more tax. But not more than double what we pay at the moment.

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