No Representation without Taxation?

The dilemma over local government composition and funding was amplified by COVID-19 but at the outset the politics are deeply confusing. Traditionally, centralised control was the left-wing approach with the Soviet-style Command Economy as its beleagured flagship. With the demise of the Soviet-Union this idolised communist utopia, already seen as undemocratic and dysfunctional was consigned to the dustbin of western thinking. As ever, a blind-spot exists when it comes to China - this is economically, militarily and politically foolhardy but a topic for another day.

The right-wing would, traditionally pursue a more libertarian agenda with freedom being preserved against the encroachment by the state. In that context one might expect Johnson, Raab et al to dismantle the central state apparatus first by neutralising the power of the Whitehall mandarins by transferring their staff to local delivery offices thus dividing and conquering the manpower and hence the unions. This would bolster local communities and reverse a half-century of decline but has not yet happenend - but I wonder what Michael Gove has up his sleeve now he has moved to the Ministry of Union (aka quashing independence), Levelling Up (via controlled devolution), Housing and Local Communities (aka Local service delivery via national and local state owned operators, charities & private organisations)...

Local authorities are generally thought of as dustbins, parking fines and adult social services. The first two are emotive but. with social care being backed into the Department of Health, we havent seen the last of the funding challenges this semi-nationalised service-line faces. Raising national taxes isn't popular and the recent "NHS" increase in National Insurance was a risky policy even in the shadow of the pandemic and by an administration with an unusually solid majority. It is unlikley to to be the tool of choice for the next administration regardless of composition yet it is inevitable that more cash will be required.

Local Council Tax (LCT) has been left untouched since Thatcher with the successive governments of Blair Brown Cameron and May all postponing LCT Revaluation. The current system of banding is thus bizarrely based on a property value calculated using the attributes of the property today including local amenities and other relevant factors which is then deflated to a pseudo-valuation at 1970's house prices for that Billing Area. This is potty and only serves to maintain a healthy work stream of banding challenges for members of the Royal Institite of Chartered Surveyors (RICS) whether their members work for the Valuation Office Agency (part of HMRC) or act for the home-owner. RICS have a very nice property nestled between HM Treasury and the Supreme Court placing them within spitting distance of Parliament! Uniform Business Rate has been a national effort for a while and collection is already set to be absorbed into Corporation Tax by HMRC.

So the last piece in the jigsaw is the future of local taxation. By empowering local authorities to raise taxes ostensibly to fund adult social care and delivered as part of the levelling up agenda this forgotten tax area offers the current or future regimes a useful mechanism. This would probably see a re-imagination of LCT which is seen by most as a consumption tax (bins) but is in reality a wealth tax being based on the theooretic asset value. Any new local tax system is likley to expand the range of duties but a simplified system of property tax will likely remain earning it the badge of progressive taxation.

To provide a context it might be helpful to relay that I noticed whilst in Denmark a property that would attract say ￡2000 pa LCT attracted an annual property tax of c.￡15,000. This is unlikley to be a drastic first step here in the UK and so extending local revenue attribution could be seen via local income tax or sales tax(VAT). Both could be readily enabled electronically as HMRC have fulfilled such for income tax in Scotland and the new FreePorts will require a VAT and excise application in the very near future. Brexit removes the UK's membership of the EU VAT club and so a re-imagination is likely to be favourably viewed by the current regime in No. 10.

Of course Downing Street will want to remain in control and so Policy will become the prerogative of a much scaled down Whitehall. All conducted under Cabinet Office control and Treasury scrutiny but with local delivery or Operations replacing the national workhorse Departments. These could then be cherry-picked for private operators to streamline and a hybrid delivery mix will address local variations and in theory could offer consumers a better more bespoke and pro-active service.

Of course no taxation without representation implies that people would have the right to a democratic local authority and hence some say in both the taxation rates and its expenditure.This might just mke local politics worthwhile again.

I have kept this to a few paragraphs but would welcome any thoughts?

Prompted by and with acknowedgement to Tom Forth: https://tomforth.co.uk/whylocal/