Most obvious of course is that it still exists almost 200 years after it was introduced to fund the Napoleonic Wars – which we won ages ago anyway.
One big problem with Income Tax is that it is normally collected by people who live a long way away from where we do. What’s worse is that they have totally different ideas of how they should spend our money.
So – make it local!
How would this work? Well, at the moment Income Tax is collected centrally, and Council Tax is collected locally. Problem is, the Council Tax is topped up with money that comes from rebates from the centrally collected Income Taxes.
Inefficient? Of course it is. Why not just let each local community collect the taxes they need to pay for the services they provide by collecting the income tax themselves?
So, every County/Unitary authority would set it’s own income tax rates payable by all residents of their area. At election times the politicians would be judged on how well they managed our money, and whether the services they provided were too expensive, or not. If the population believed what they got for the money they were charged the politicians would be reelected, if not, they wouldn’t.
If you thought you lived somewhere that charged too high a rate of income tax, you could move to somewhere cheaper. Of course, house prices would also be affected, as who would want to live in a particularly highly taxed area?
Local taxes would be spent on everything except for National Security and International Affairs. Oh, and maybe on National infrastructure like motorways, railways and airports.
But local spending would go on local roads, education, local health services (which would not get any money from large and inefficient centralised centres in London); police and emergency services would be managed from the localities as they are now, but without the need to go to London with a begging bowl for top up funds; it would be much easier to raise funds for local issues that were unique to your areas.
If you live outside of London, how do you know how much of your tax bill goes to subsidising things such as the Covent Garden Opera House for the benefit of people who live hundreds of miles away? Maybe your own local theatres and arts providers could do with the money instead?
If you live in London, are you happy for your tax money to be spent on large regional aid projects “oop North” in places you wouldn’t even want to drive through in an APC?
If you live in an unemployment black spot, wouldn’t you like your local authority to be able to charge lower taxes to encourage companies that brought employment to the area?
Would you be more interested in local politics if it affected your income tax bill?
If schools in your area are failing, wouldn’t you like to be able to increase their budgets and provide an education system more tailored to local needs – eg increase the amount of computing and/or maths and/or commerce and/or vocational skills – and wouldn’t you like to be able to increase the budgets to the schools in your area without needing to have to beg? Imagine, each pupil with their own school provided laptop…
If the health service in your area didn’t have enough scanners, you could allocate funds to make sure they were provided. You wouldn’t have to close hospitals or their wards if you didn’t want to.
Your MP (who you probably never hear of right now, except at election time) would become less important than your local councillor who you would see a lot more of as he wouldn’t be so close to Covent Garden any more.
So, you may ask, how is this all financed? First of all, there’d be the same amount of money coming in in total as there is today; it just wouldn’t have to go via London. Cutting out the trip to London and back would eliminate one layer of cost from the equation, and London costs – as we all know – are higher than anywhere else in the country, so the savings would be big.
Let’s face it, the rest of the country currently pays for the London weighting on civil service salaries; move these jobs to local councils and you’d have cheaper administration costs immediately.
Democracy would also be improved because the control of money would no longer be in the hands of people who had very little connection with your area, but in the hands of people who lived, worked, and travelled in the area every day.
People would have a sense of ownership.
There are working examples of this kind of set up – in Switzerland. It works very well, it keeps taxes low, services high, and competition between areas maintainis high levels of employment too. In fact it works so well the EU is actually complaining about the Swiss tax system, saying it is “unfair”! Just because the French and Germans are too monolithic and in need of restructuring to efficiently manage their own economies.
If you dislike the EU because it is too big, too bureaucratic, then why is the UK system that is centralised on London any different?
Local spending should be controlled by locals. It’s your money, so why give it away to strangers?