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Burying the Lyons review?

When I heard that the Lyons review was to be published today, I wondered whether they were trying to bury the Budget with the Lyons review, or bury the Lyons review with the Budget.

I think I know the answer. Whitehall loves reviews of local government - but hates them to go anywhere.

counciltax203.jpgIndeed, a little known fact, the Lyons review itself was launched the day the last big review of council tax ended. Which was just ahead of the last election.

If politicians duck the issues of local government finance, it's because the public appear to scream more loudly when changes in council tax affect them, than with other taxes.

Which is a bit odd, as council tax raises less than 5% of the total tax take, and housing is not exactly overtaxed compared to other things we buy. And at least houses can't escape tax - we know exactly which council they sit in.

So why do we hate it? Probably because it's the only tax sent to us with an annual bill. So it's very visible.

Plus, having any tax on property allows newspapers to run lurid headlines - "Now they want to tax home improvements."... "They're taxing you for living in a good neighbourhood"鈥 "They're taxing your beautiful view... "

Of course, taxing all these things that make up the value of a property, is kind of what property taxes do. But it sounds awfully unappealing.

But above all, we appear to dislike taxes that are not related to cash. We know we can pay income tax, cos it's taken out of some income. Or VAT, cos we're at the shops spending money. But council tax gets levied on people even if they have only a modest amount of cash to pay it.

This mostly affects elderly people living in large houses, and it's never seemed much consolation that they can trade down to smaller places, or claim council tax benefits.

So, for all these reasons, the unpopular tax gets ignored. In the hope it'll go away. We shy away from even having a revaluation, evidently preferring to not to tax your scenic view, but to tax the scenic view you had in 1991.

We're not alone: Famously, Ireland was using 100-year-old property values into the late 20th century. Holding out that long just makes the eventual revaluation all the more painful.

Which is why our local property tax in one form or another is reviewed, re-assessed, occasionally replaced, only to find itself back, and unreconstructed.

Can the Lyons review do any better than those that have gone before?

Comments   Post your comment

  • 1.
  • At 09:21 AM on 21 Mar 2007,
  • jim evans wrote:

Thirty million people suffered under Stalin, in Britain 62,000,000 are suffering especially the pensioners.

  • 2.
  • At 09:34 AM on 21 Mar 2007,
  • Keith wrote:

The odd thing is that house selling prices are public knowledge on the internet. Why not just use those figures as a basis? There are of course 'unique' homes but they must make up a small percentage.

  • 3.
  • At 09:48 AM on 21 Mar 2007,
  • Keith wrote:

Local taxation to support local services sounds fine in theory.

However, in practice only 25% of local government spending comes from local taxation. The vast majority comes from central government grants whose rules are fiddled for party political gain.

Likewise, local democracy to decide local issues sounds great.

However, every year more and more of the decisions are made in Westminster. A few years ago local government was derided as only actually being responsible for refuse collection. Now, central government is even interfering in when our bins will be emptied!

Why do we continue with this sham of local government?? Westminster should either give the local government the authority to make local decisions (including business rates) or finally subsume these functions and fund them out of general taxation. This half-way solution brings the whole concept of local government into disrepute.

Keith.

  • 4.
  • At 09:53 AM on 21 Mar 2007,
  • Steven Manson wrote:

Oh Evan, I do love your use of the word "cos", suddenly 大象传媒 correspondents come across more "human"!

  • 5.
  • At 09:53 AM on 21 Mar 2007,
  • RichB wrote:

Isn't this a perfect example of the counter-productive political tactics practiced by Gordon Brown that Lord Turnbull criticized this past week. OK, so calling Brown a Stalinist was maybe a wee bit hyperbolic, but, clearly, Brown is simply using a "celebrity review" to emasculate policy makers within the Treasury, preventing any real reform from happening at the same time that he presents himself as a champion of reform. Lord Turnbull's comment seems appropriate: "The chancellor has a Macavity quality. He is not there when there is dirty work to be done."

  • 6.
  • At 09:58 AM on 21 Mar 2007,
  • Dave Webb wrote:

I think what annoys people about Council tax is not the principle of paying taxes locally to support local services, but the apparent waste of much of their money on beaurocracy and silly politically-driven schemes.
A few years ago I volunteered to join a local consultative panel of the district council. One of the items on which our views were sought was whether we would like a particular (worthy) new service if it added, say, 拢10 to our council tax, or whether we would like to keep our council tax at its current level and not have the new service. I wrote back to ask why there was not a third option - that of the council reviewing its current expenditure with a view to finding savings to fund the new service without asking us to stump up another 拢10 each. Sadly, in its reply the council didn't seem to understand this approach fully, and I feel that is an all to common fault with local expenditure: there is too much emphasis on asking for new money for new services and not enough on constantly reviewing existing services to ask if they are still neccessary or whether they can be made more efficient. I suspect that is part of the reason why council tax rises by significantly more than inflation each year.

  • 7.
  • At 10:05 AM on 21 Mar 2007,
  • Tom wrote:

Sorry to post off topic, but it is impossible to see how to make contract with Evan in any other way.

Why has the 大象传媒 not mentioned that Lord Geroge yesterday said to the Treasury select commitee that the current consumer credit boom is unsustainable?

  • 8.
  • At 10:07 AM on 21 Mar 2007,
  • peter samson wrote:

"I wondered whether they were trying to bury the Budget with the Lyons review, or bury the Lyons review with the Budget."

Perhaps the same way the bbc are burying the comments Lord George made.

That he had to deliberately fuel a consumer boom to boost house prices and personal debt so that the UK would avoid recession.

This is from the Monetary Policy Committee governor from 1993-2003.

And yet not even a mention of this by the 大象传媒, even Sky managed to report on it.

  • 9.
  • At 10:11 AM on 21 Mar 2007,
  • Andre Davies wrote:


Sorry to hijack, but, the BOE takes Property Blame story just isn't appearing on 大象传媒 Mr Davies!

so.... the most senior official in charge of monetary policy should admit that the MPC was not tracking RPI as we have always been told was the BOE target but actually trying to stimulate economic growth to reverse the potential effect of the dotcom crash.

so...the Treasury ramped public spending up at the same time as a loose monetary policy was adopted. This surely means BOE was not independent all and explains the whole House Price Increase phenomenon. Many millions of people are already suffering the after effects of this policy and many millions more are going to do so.

  • 10.
  • At 10:28 AM on 21 Mar 2007,
  • Doug wrote:

Interesting as usual Evan, but surely there's no need to write "cos" when "because" is still part of normal spoken English.

  • 11.
  • At 10:50 AM on 21 Mar 2007,
  • wrote:

The UK is rapidly becoming an "over-expensive" place to live & it does not look like improving anytime soon. My wife & I have decided to emigrate early in 2008 because quite frankly we are sick of having our hard-earned money thrown down the drain by an incompetent government. The immigrants coming over to the UK are getting an easy ride & this is through my tax code ultimately. So, goodbye Tony... & good riddance Gordon....i'm off!!!

  • 12.
  • At 11:13 AM on 21 Mar 2007,
  • ron leake wrote:

Evan, you say that the council tax is the only one to arrive with an annual bill but how about the road fund tax and the 大象传媒 tax ?

  • 13.
  • At 11:16 AM on 21 Mar 2007,
  • wrote:

To be fair to the Treasury, it has become traditional for major reviews to be published, and announcements to be made, on (or very close to) Budget Day. For example, last year's 9000-word speech used the word 'today' 52 times. And the previous Lyons Review on relocating civil service jobs (whatever happened to that?) was published barely two days before the 2004 Budget.

So it's a bit harsh to (pre-emptively) accuse them of burying this. Even if they are, the media should have enough experience to be keeping its eyes peeled, today of all days.

  • 14.
  • At 11:23 AM on 21 Mar 2007,
  • wrote:

To follow on from Andres point above, the BoE widely accept that the CPI figure is bogus as a measure of inflation and that it's worth is further devalued due to manipulation of the basket of goods to include items that will only go down i.e. sat nav, ipods etc combined with the increased weighting in energy knowing that all projection show it coming down over the next few months, it has become a farse.

Gordon's ability to manage the ecconomy is comparible to Enron; based solely on false accounting. UK Plc has some very dark times ahead.

  • 15.
  • At 11:38 AM on 21 Mar 2007,
  • Robert Borruso wrote:

Millions of people in this country 鈥 especially 鈥榟ard working families鈥 politicians love so much can either not afford to get on the property ladder at all or cripple themselves financially doing so. So why, well its supply and demand the pundits say too many people chasing too few houses. Which is odd as population has remained more or less static over the past decades. The reason is lower occupancy levels, how many retired couples or single people are living in three and four bed houses and can afford to do so simply because they bought them years ago when houses were more affordable. So build more houses well, that鈥檚 not acceptable because for the misconception that we鈥檙e an overcrowded island (look at Holland higher densities much more equitable housing market 鈥 but I digress). So a way to protect our 鈥榩recious countryside鈥 and give a the much lauded nuclear family a helping hand is to make owning lots of empty bedrooms more difficult. So perhaps a tax based less on the size of your assents and more on the size of your house? 鈥渢ax the bedroom hogs!!!鈥

  • 16.
  • At 11:50 AM on 21 Mar 2007,
  • Ian wrote:

According to Jim Evans, 62,000,000 are suffering. As I assume he is referring to the population of the UK and referring to Council Tax, so is he suggesting that 62,000,000 pay council tax including children, homeless people and people on council tax benefit?

in order to compare like with like, he would have to find the population of russia during Stalin's reign. I have taken 1952 as the last full year of his reign which appears to come to a figure in excess of er.... 100,000,000 still nearly double that of the UK at this moment in time.

  • 17.
  • At 12:00 PM on 21 Mar 2007,
  • Andrew Swindley wrote:

i'm glad somebody else rebuked you about the ose of 'cos'. Tush, tush Evan!

  • 18.
  • At 12:17 PM on 21 Mar 2007,
  • Richard wrote:

The Labour government has made central dictats about what local government does and then does not follow through with the funds.
Secondly it gerrymanders funds to its favourite authorities (ie Labour in the big cities and north) and punishes the other authorities (ie mostly Tory in the South East) .
Local government, especially in Tory areas is forced to raise Council Tax or cut services making it unpopular. Like Hampshire's 4.9%...compare this with Scotlands 1.9% !! For these reasons the Lyons report is a red herring as all Labour want to do is find ever more ingenious ways of raising tax, preferably not from its supporters.

  • 19.
  • At 12:24 PM on 21 Mar 2007,
  • Chris Smith wrote:

Property value has no bearing on the services we expect or get from the council. Just because a property is valued at a higher level than 10 years ago does not mean it should be re banded. The value attributed to a band should be reassessed but the band attributed to a house should not.

  • 20.
  • At 01:01 PM on 21 Mar 2007,
  • ian sargeant wrote:

property values have no baring on ability to pay either.

why should I - shortly to become a father of two with my wife not working and the eldest at a 60 quid a day nursery - have to pay the same as the family down the road - mother and father + 2 kids all working.

  • 21.
  • At 01:29 PM on 21 Mar 2007,
  • TomR wrote:

Why does revaluation need to take place? The actual rate of council tax has risen steadily while valuations have remained static.

The cynic in me expects that far more properties will be rebanded upwards than those dropping a band, so the net effect will be an increase in a council's tax take.

Have council costs risen at the same rate as house prices? I don't think so.

  • 22.
  • At 01:44 PM on 21 Mar 2007,
  • Andy wrote:

It took Lyons three years to come up with those proposals. Pathetic! Yet another missed opportunity to sort this mess out. How about this for an alternative?

Land (not property!) ought to be taxed to discourage homeowners and businesses from wasting or hoarding such a precious and finite resource.

Unfortunately, the property taxes we have are not fit for this purpose. Walk around any urban area (even prosperous ones or Inner London) and the amount of dereliction and unoccupied property beggars belief.

Replace all existing property taxes with a land use tax based on the amount/area of land that you own. Deal with the winners/losers issue by having a long period of transitional relief (20-30 years). Progress might be slow but evolution not revolution seems to be the only way out of this one.

Finally, why does the Government assume local services need to be financed by a property based tax? Isn't this a hangover from medieval times?

I'd support a land use tax collected by HMRC for HM Treasury to spend and an income tax supplement to fund local services (also collected by HMRC as agents of the local authority).

Never gonna happen though is it? I wonder what the Duke of Westminster and other property hoarders think of my proposal?

  • 23.
  • At 02:00 PM on 21 Mar 2007,
  • Dylan wrote:

Worth mentioning that when you say "we even avoid valuation" on council tax, thats not strictly true for the whole of the UK - Wales properties were re-valued and rebanded in a storm of controversy a little while back. Those of a cynical persuasion might say it was done in Wales first because it was seen as a "safe" Labour stronghold and consequently "low-risk"...

  • 24.
  • At 02:40 PM on 21 Mar 2007,
  • ken wrote:

Council Tax.

Pardon me but I think everyone, except the one poster who suggested councils look at saving on exiting committments before bringing in new ones , is missing the point.

It's time to sit down and say what we want from out councils. The basic services like fire service, police, roads with buses on them, decent schools, rubbish collection and so on.

The first thing most councils could do is strip out the rubbish and all those srange policies for equality of this and that which serve to waste money.

We are tied up with bureaucracy which wastes money and spawns legions of council workers who so far as I know don't actually achieve much for residents.

As for bandings, the worth of a house does not not decree what I use in services. Lets say I had a house worth 拢200K in 1990 and it is now worth 拢400K today (I'm just making up numbers). Now, if the family is still in that house we'll be doing pretty much the same right?

Even if I moved and have a 拢600K l'il mansion of my dreams ...it's still the same people in the family doing the same things. Even if we had a couple more kids....I'm not burdening the council with them am I?

Sorry for the rant but this whole situation angers me. Councillors off on freebie trips here and there...for what? A zilion little council agencies for this and that, none of which do much for anyone.

Whatever the view is out of my window, whether I live in a big or smaller house make no difference to what burden i place on council services.

Sure water, gas, power and so on I might consume more of in the larger place but I pay for them. Hospitals I pay for in general taxes so it fire, police and other local services I'm coughing up for.

I don't think I get my money's worth though. Rant over :)

  • 25.
  • At 02:01 PM on 22 Mar 2007,
  • Don wrote:

Bring back the poll tax! Call it something else to take out the inevitable unthinking and over-emotional responses, but let's at least calmly consider the benefits of a local tax which is the most equitable method yet devised of paying for locally provided services.

  • 26.
  • At 02:02 PM on 22 Mar 2007,
  • Dr Philip Whiteman wrote:

It took so long between commissioning and publication after endless delays, one has to seriously ask why on earth did such a major review produce so little in the way of recommendations. I suspect that the problem lay at the heart of HM Treasury and DCLG suppression of Lyons producing anything that could be deemed even partially radical such a local income tax or any form local taxation. This is despite Prof Sir Michael Lyons being commissioned by government to review local government finance.

So if it was not suppression, the only other reason behind such a bland report can be Prof Sir Michael Lyons was a safe pair hands.

  • 27.
  • At 02:50 PM on 23 Mar 2007,
  • Dean Field wrote:

I dont mind paying higher council tax - I live in redbrige and I have always been impressed with the professionalism of the council services I have received - this all costs money so I think it is money well spent.

I favour having one tax - income tax and this would help distribute wealth up north where it is needed.

I do object to the potential of carrying the additional burden of the Olympics - which like all these things you can bet that extra money is being spent in one form or another - what is it with the labour government are they using Keynsian to stimulate the economy or just wasting my money again on a another white elephant - East London where major capital investments go to die.

  • 28.
  • At 05:17 PM on 24 Mar 2007,
  • Tim Young wrote:

I agree entirely with Andy that a land value tax would be a good idea. The three main reasons are that it would (1) shift more of the burden of taxation onto wealth, which is relatively lightly taxed, (2) represent a charge for the use of a rationed resource, and (3) rationalise development.

It is nonsense to suggest that a property tax is unrelated to ability to pay. Most people who own an expensive house do not have a comparable mortgage, so their net wealth is large. Wealth is surely related to ability to pay. I grant you that it might not be related to their convenience to pay though!

Why do people expect to pay council tax according to their use of local services when no other tax works like that? According to this week's budget, the three largest items of public expenditure are, in order, health, education and defence. I am fit as a fiddle, got no kids, and am well hard, so I object to paying income tax.

  • 29.
  • At 10:43 AM on 30 Mar 2007,
  • Doug Collier wrote:

Hi

I have heard Evan previously expounding the theory that to buy a property know safeguards the investor from potential future rises in the housing market.

Where is the caution as to rising repayment costs? With such large amounts being loaned, the very likely rise in interest rates, and therefore the potential for negative equity, Evan's advice omits the necessary health warnings.

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