Exposed: Labour’s plans for local tax rises

Labour Party documents reveal plans to hike taxes on middle England in any fourth term, it was exposed today.

At their recent Party conference, the Labour Party launched Putting fairness first: Local Labour’s Manifesto for a new term which reveals plans for higher council tax bands, more cuts to bin collections and bin fines, and the roll out of road pricing and workplace parking taxes in towns and cities.  

Council tax banding: Labour’s local government manifesto, with an introduction from Labour NEC member Sir Jeremy Beecham, urges a council tax revaluation and new council tax bands.·         It state: “We think that at the very least, the council tax needs rebanding” recommending “the addition of more bands... to make it a more genuinely progressive tax”. ·         The Local Government Act 2003 already gives the Government power to change council tax bands and ratios as it sees fit. When this law was passed, Labour Ministers hinted at a 10 band council tax system. ·         This was subsequently fleshed out by the Government's Balance of Funding Review and subsequent Lyons Inquiry into local government finance. A ten band system would mean bills (based on current council tax levels) of £3,000 for a home between £310,000 and £440,000; £4,150 for a home between £440,000 and £620,000, and a whopping £6,224 for a home valued over £620,000. ·         The revaluation would also hike up bills; in the Welsh council tax revaluation in 2005, four times as many homes moved up a council tax band as down.  

Bin taxes and bin fines: The manifesto advocates an extension of Labour’s bin bully policies, with “financial incentives and our regulatory powers” to be used against households, and “it makes sense to modify collection frequencies” to “move away from dealing with residual waste in the black bin”. This is a signal for the increase in fortnightly rubbish collections and arbitrary fines for not closing bin lids or putting rubbish out on the wrong day. 

Road pricing taxes: The manifesto also signals a new tax assault on drivers, with the roll out of “road pricing” in urban areas, with no offsetting tax cuts elsewhere. It also signals the extension of workplace parking taxes, currently being trialled in Labour-run Nottingham, explaining “employment sites will also receive greater incentives to reduce car parking spaces”. Caroline Spelman, Shadow Secretary of State for Communities & Local Government, said:“Labour’s town hall manifesto exposes Gordon Brown’s plans for massive hikes in local taxes if he can cling onto power. This is a tax bombshell primed to explode after the general election. “Higher council tax bands will be used to punish families and pensioners who have saved and invested in their homes, with bills being pushed up to the £6,000 mark. “On top of this, local residents will be hit with a new wave of cuts to bin collections, unfair bin fines as well as road pricing and workplace parking taxes. Conservatives will scrap Gordon Brown’s tax plans, and stand up for struggling residents who are paying more and getting less under Labour.” 

Notes to editors LABOUR’S FOURTH TERM LOCAL MANIFESTO At the recent Labour Party conference, the Labour Party’s local government arm quietly published their local government manifesto for a fourth Labour term. The introduction was written by Labour NEC member, Sir Jeremy Beecham and the head of Labour in local government as chair of the Labour LGA Group.  Putting fairness first: Local Labour’s Manifesto for a new term.http://www.labourgroup.lga.gov.uk/lga/core/page.do?pageId=4660527 The manifesto’s proposals include: Higher council tax bands “The Labour Party remains committed to reforming council tax, and as we enter the second decade of the 21^st Century it becomes an even more pressing concern, as current tax brackets remain rooted in valuations set in 1991. We think that at the very least, the council tax needs rebanding. The addition of more bands at both the top and bottom of the scale will help to make it a more genuinely progressive tax” (p. 18). Bin taxes, bin cuts and bin fines “Tories have sought to trash the initiatives of local government to tackle waste management... Local Labour will take the lead on zero waste... We will use both financial incentives and our regulatory powers to ensure that all do their bit when presenting materials for collection” (p.54). “We will continue to move away from dealing with residual waste in the black bin... As the focus moves from primarily collected residual waste (black bag collections) to collecting materials for recycling it makes sense to modify collection frequencies” (p.54-55). Road pricing taxes and workplace parking taxes “Labour will not duck the issue of road pricing in congested urban areas... we will use road pricing... Any revenue will be used to promote quality, sustainable transport” (p.52-53). [i.e. there is no offsetting tax reduction elsewhere]. “Employment sites will also receive greater incentives to reduce car parking spaces” (p.53) 

HOW COUNCIL TAX BANDING WILL WORK Ministers have already changed law to allow rebanding Section 78 of the Local Government Act 2003 already gives the Government power to change council tax bands and ratios as it sees fit. Conservatives in Parliament opposed these new powers – Labour and Liberal Democrats voted to support them (Lords Hansard, col. 339, 10 September 2003). During the passage of the Bill, Labour Ministers suggested that it could introduce a ten-band system of council tax. “It might well be felt appropriate to increase the number of bands from eight to 10 or more… It is right that we make provision—if necessary, and if it is felt appropriate—to increase the number of bands” (Rt Hon Nick Raynsford  MP, Hansard, col. 54, 7 January 2003). Ten band system – Balance of Funding Review Rebanding was actively considered during the Government’s Balance of Funding Review, which recommended: “There is a clear case for reviewing council tax bands and the ratios between them at the time of revaluation” (ODPM, Balance of Funding Review – Report, July 2004, p.10).http://www.local.communities.gov.uk/finance/Balance.htm It outlined proposals, fleshed out by the New Policy Institute, for a 10 band council tax system.http://www.local.communities.gov.uk/finance/balance/bof16.pdf (Scenario 2B, p.20). Listed below is a model of how a ten-band system recommended by the NPI would work, based on current council tax rates. 

 Rebanding should accompany revaluation – Lyons Inquiry In addition, the Lyons Inquiry in local government finance, commissioned by Gordon Brown, recommended:http://www.lyonsinquiry.org.uk/ Council tax revaluation“The Government should conduct a revaluation of all domestic properties for council tax” (Lyons Inquiry, Final Report, March 2007, p.240). Regular revaluations“Subsequent revaluations should take place regularly and automatically at intervals of no more than five years” (ibid. p.240).   “Substantial work was done in preparation for a 2007 revaluation in England (based on 2005 values), including the development of new valuations software in the Valuation Office Agency. This technology provides the opportunity to undertake a revaluation exercise… Moving to more frequent revaluations would promote stronger public understanding” (ibid. p.234). Combination of revaluation and re-banding: The report recommends that re-banding should be done in the context of a revaluation: “It may be better to implement reform alongside revaluation” (ibid. p.237).  Re-banding: The report advocates measures to “alter the ratios applied to each band. This would effectively redistribute the tax burden by requiring the higher bands to pay more” (ibid. p.237). “Two options were modelled as alternatives to the current ratio of 3 to 1 between the amounts payable for band H and Band A properties: a ratio of 5 to 1… and a ratio of 10 to 1” (Lyons Inquiry, Final Report: Appendix C, p.27).

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