IOW CTAG Local Government Funding Policy Proposal

LOCAL GOVERNMENT FUNDING

IOW CTAG POLICY PROPOSAL

Whereas the present Council Tax is widely perceived as unfair, and the distribution of central government Grants is considered both unnecessarily complex and politically divisive; and whereas local taxes and expenditures have been inexorably rising year by year at around three times the rate of inflation, with local government blaming central government and central government blaming local government:

We the Isle of Wight Council Tax Action Group propose that:

1) Only the Westminster Parliament shall have tax-raising powers.
2) Council Tax and Non-Domestic Rates shall be abolished.
3) The standard rate of Income Tax shall be increased to 25%.
4) Parliament shall mandate what services local government must provide.
5) Local Councils shall receive a Central Government Grant for each mandated service strictly in proportion to the number of persons to whom it is provided.
6) Local Councils may undertake optional activities not mandated, which shall then be funded by public subscription or other purely voluntary or commercial means.
7) No one shall be prohibited from offering services in competition with the council, nor may anyone be required to pay for any council services they do not use.
8) Parliament should consider removing services such as education and health from local authority control and turning schools and hospitals into independent trusts, which should then either continue to receive grants on the strictly proportional basis described, or become self-funding in an open market.

Notes:
(i) The abolition of council tax and non-domestic (business) rates, coupled with an increase in the standard rate of income tax to 25%, would overall be approximately revenue neutral.
(ii) Tax and grant rates would be uniform throughout the country, eliminating special pleading and log-rolling, and avoiding economic and political distortions and dislocations.
(iii) Local councils would remain democratically accountable for the manner in which they spent their grants, and the effectiveness with which they provided both mandated and optional services.

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