29 May 2012
Cllr Clarence Barrett (Residents' Association) is Leader of the Opposition on the London Borough of Havering. He is also Chairman of the Urban Commission and a full-time accountant
A recent report by the TaxPayers' Alliance and the Institute of Directors suggested that local authorities should be able to raise half their income from local taxes.
A potentially significant income stream that comes to mind, and can be argued as local tax, is stamp duty on residential purchases. The tax was invented by the Dutch in 1624 and first levied in the UK in 1694 by William and Mary.
Like income tax, which was introduced to pay for the war against Napoleon, stamp duty proved to be such a nice little earner for government that it was never repealed.
While the tax was initially targeted against the wealthy, like inheritance tax, it has now become a tax on the masses with the Treasury raising about £6 billion a year.
But why should all the duty go to the Chancellor? If a proportion went directly to the local authorities in which the duty was raised, it would help alleviate the financial pressures brought about by budget reductions and help meet the cost of increasing pressures.
For example, there are around 4,500 property transactions a year in my own borough which raises about £15 million for the Treasury. Based on those figures, if a proportion was deemed 'local', say 20 per cent, that would release some £3 million per annum.
Of course, there are challenges in adopting such a system. For example, it is subject to the fluctuations of the property market; if the Treasury loses out on any of these receipts then it may cut back on grants elsewhere; and there would be sharp variations in different parts of the country.
However, the basic premise that at least a proportion of stamp duty should be diverted to the local authorities in which the duty is raised seems reasonable, for what is, after all, very much a 'local ' tax!
31 July 2012