The New Ratings System

There's so much wrong with this new system of valuing places for council tax. Our Lords and Masters seem to have bolted together a series of mutually contradictory ideas in order to maximise the tax take (big surprise, eh?).

Here:

People who live in areas with good schools, clean streets and low crime rates face huge increases in their council tax bills.

In one way you can say that's a good idea. Such things depend purely (from the point of view of the valuation of the land) upon exactly where the land is and so get close to the Georgist ideal of taxing the value of the unimproved land. The justification here is that it is the larger society around your plot of land that makes it a desirable area, and thus the land valuable, so it's a good thing to tax to pay for that wider society.

However, they then go on:

Sophisticated computer equipment will be used in the forthcoming revaluation of all 21 million homes in England, and will allow a precise value to be put on each home, not only by its size and features but also its location.

Bzzzt. Wrong! If you are going to tax the value of the land, do so, but the point is that you do not then tax what people put upon it. If someone is being taxed for sitting on half an acre of Chelsea then that's fine, but as we are taxing the value of that half acre, because it is in Chelsea, then the tax should be the same if it is a 2 bed cottage, 12 flats or a 6 bed house. That's actually the point: that we're taking the land occupied, not what is done with it.

There's another problem:

It has been estimated that if the Ulster system is applied to England, the worst hit households in the country would be in Kensington and Chelsea, where the average bill could go up by almost four times, from £1,222 to £5,872.

Other councils which would have rises of at least £1,000 in average bills include Westminster, Wandsworth, Camden, Hammersmith and Fulham, Richmond upon Thames, Islington, South Bucks, Windsor and Maidenhead, Mole Valley, St Albans, Winchester, Brentwood and Epping Forest.

The point and aim of local taxation is to pay for local services. Duh. So tax should stay within the area in which it is raised. Not, I hope, a controversial point? So if Kensington and Chelsea whacks up it's average bill by a factor of five then the council will be overflowing with cash, correct? This will be spend on more local services which will make the place even more desirable, putting up next year's bill.....and so on. Those places with right scummy buildings (Tower Hamlets) will have very little money, thus fewer services so next year there will be lower taxes and so on....

That's if there is one national rate or percentage applied against the valuations. Which is what it appears will be done. Quite obviously nobody is that stupid so what will actually happen is that there will be reductions in the central Govt grants to those rich areas and rises in them to the poor: more geographic redistribution, which is very much against the point of having local taxes and local politicians accountable for them.

Will benefit Labour areas at the expense of Tory ones as well, of course.

Finally, there's a completely different point. If you have to pay more to live in an area with good schools, and less to live in one with bad ones, why is this being done through the tax system at all? Why not just charge people directly?