Parish councils could be responsible for local income tax
The Liberal Democrats’ local government spokesman has said that the first tier of local government, the parish councils, could be made responsible for collecting local income tax.
One of the Lib Dems key policies is the scrapping of council tax, which they view as unfair, and replacing it with local income tax. It has been assumed that such a tax could be collected through the PAYE income tax system, but the policy’s leading proponent has now suggested it could be collected at a far more local level.
Ed Davey told delegates at a fringe meeting organised by the National Association of Local Councils (NALC) that a local income tax could be introduced quickly, and collected and calculated on a parish by parish basis.
Noting that many “first tier” – or base level – councils have been concerned about whether they would receive any benefit from a local income tax Mr Davey said there was “no reason” why a process could not be set up, allowing the estimation of the income tax base by parish.
He acknowledged that such a system would be more expensive, but he argued that if local democracy is “really believed in” such an approach should be welcomed. He argued that a review of the powers of town and parish councils is long overdue, and that there is a case for increased powers. Parish councils currently have no taxation powers, and generally tend to deal with maintenance issues, such as of cemeteries and village greens, as well as making local representations on planning issues.
Under such a system, the Inland Revenue’s database would be improved, so that it is able to link the postcodes of all those paying tax with precepts under each councils jurisdiction.
Lambasting the council tax, Mr Davey told delegates that research by his teams shows that the upcoming council tax band revaluation will amount to the biggest stealth tax by the Government in this Parliament.
He urged listeners to see the policy as part of a package of Liberal Democrat reforms. While some households would lose out under the policy, they would gain from other reforms, such as the abolition of tuition fees and free care for the elderly, he said.
