Wednesday 8 October 2008

Osborne on council tax: how to respond

Shadow Chancellor George Osborne’s attempt to freeze council tax bills was not quite the political game-changer of his inheritance tax gambit last Autumn. But when attention returns to the heat of the domestic political battle, the government will need to work out how to respond.

There are several unanswered questions about the Osborne policy – rather more of a political gambit than the guarantee it sounded like on first hearing. But it could provide the opposition with an effective short-term pre-election political soundbite - despite doing nothing to deal with more fundamental issues of how we pay for local services.

In a new piece published by SocietyGuardian today, Chris Leslie and I set out a strategic response - setting out how the government could also address the financial pressures on Council Tax payers, but as part of a transition to a sustainable reform to deal with the perceived unfairness of this most visible of taxes.

Our proposal is a ‘fairness’ package which would ask only very top earners – on incomes over £250,000 – to pay more, which would fund transitional relief of £200 per Council taxpayer and in doing so make a fairer and overdue revaluation and rebanding possible.

Chris has an impeccably New Labour pedigree (in the nicest possible way) as one of the youngest members of the ‘class of 1997 and a former Minister. While he ran the Brown leadership campaign, his work as Director of the New Local Government Network has won respect on a cross-party basis for leading debate in the field.

For all of that, the Treasury and Downing Street will no doubt take some convincing on the politics of higher taxes at the very top for a ‘fairness’ reform of council tax. But there is now a strong case for taking the issue out of the ‘too difficult to think about’ box, and setting out a coherent reform strategy which addresses the financial, policy and political challenges of making reform possible.

George Osborne has provided no longer-term strategy beyond his two year freeze. Let’s hope that his intervention might yet provoke the government into doing so.

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