Council tax is the new poll tax. It’s time for reform

A poll tax protest, Hackney, March 1990. Image: Getty.

Rummage around in the “too difficult to touch box” of policy issues and somewhere near the bottom you’ll find a slip marked “council tax reform”. But as that tax is increasingly becoming as unfair as the poll tax it replaced, politicians need to be bold and reform this failing tax. Here’s why.

The poll tax was a political disaster which is widely credited with precipitating the downfall of Margaret Thatcher as Prime Minister. In response to the failed poll tax, the current council tax system was introduced in 1993 as a pragmatic fudge. Now politicians fear touching the issue again.

But council tax increasingly resembles the unpopular poll tax which it replaced. A new report by the Institute for Public Policy Research (IPPR) out yesterday highlights how this system of taxation is failing.

It is increasingly a regressive tax, with those living in the lowest-value homes paying a higher proportion of council tax with regard to property value, than those living in the highest value homes. A household in a Band A property in London would on average pay nearly five times what a Band H household would pay as a proportion of property value.

The council tax system also takes too little account of people’s ability to pay and punishes the poorest. The devolution of council tax benefit in 2013, together with the cut in the funding provided for it, means that people on the very lowest incomes are paying council tax for the first time since the poll tax – and bills are rising.

IPPR research found that the burden of council tax on London’s poorest households is more than six times greater than those on the highest incomes – and that was before the latest round of increases. At the same time, the number of those in arrears and facing prosecution has also dramatically risen.


Furthermore, the current system is an increasingly unsustainable source of local government finance, not least due to its regressive features, discounts and exemptions. Meanwhile, upward pressures on local government spending are rising.

Council tax, like the poll tax before it, is punishing those on the lowest incomes, and it’s time for an overhaul. There is public appetite for fundamental reform and politicians should no longer ignore the issue. Council tax needs to be reformed to create a more progressive, fair and sustainable system.

In our report focused on the system in London, we propose that the first step should be to devolve council tax to London’s government, as also proposed by the London Finance Commission. London’s unique housing market and strong sub-national governance make it well suited to a pilot devolution deal which could later be rolled out across the country. A reformed system needs a sub-national approach, rather than the current overly centralised one.

Second, action should be taken urgently to protect those on low incomes. A capital-wide council tax benefit system is needed to support London’s most vulnerable households. This will ensure no minimum payment is required of those on the lowest incomes and restore eligibility for support to at least their pre-2013 levels.

Third, in the long-term council tax should be replaced with an annual flat-rate tax proportional to present day property values. This should be levied on owners rather than occupants. A rate of 0.25 per cent would raise the same funds for London as the current system, but 80 per cent of households would benefit from paying lower tax.

Any reforms should also be accompanied by an improvement in public services to ensure the reform commands political and public support.

Reform of council tax will not be easy: there’s a reason why it has remained unreformed in England for nearly three decades. But it’s time that politicians abolished this failing tax, just like the poll tax before it.

Luke Murphy is associate director for energy, climate, housing and infrastructure at the Institute for Public Policy Research.

 
 
 
 

What it's been like living in one of the few places that never locked down

People enjoy sunny weather in Tantolunden park in Stockholm on May 30, 2020, amid the novel coronavirus pandemic. (Henrik Montgomery/TT News Agency/AFP via Getty Images)

While most of the Western world was confined to their homes for the better part of two months this spring, my friends and I in Stockholm continued hanging out. In stark contrast to most other places, we went to restaurants (occasionally, outside when possible), to one another’s houses (in our yards when possible), and even sent our kids to school. As the rest of the world opens up again, not much will change in Stockholm.

As an American expat living in the Swedish capital, I was initially angry at Sweden’s response to the Covid-19 pandemic. In my home country, early outbreaks in locations such as Seattle, New York City and the San Francisco Bay Area led to strict rules that were soon mirrored in many other states and cities. The Swedish strategy, meanwhile, boiled down mostly to recommendations: If possible, work from home; avoid unnecessary travel within the country; engage in social distancing; and if you’re above 70, stay home. I felt that, in the face of a global pandemic, a country known for its generous welfare policies – that took such good care of its citizens – wasn’t doing its part to protect us.

My friends and I are mostly expats with young families who, early on, pulled our children out of school against official policy. (Schools here only closed for those 16 and over.) We eagerly waited to hear what further action our current country would take. Surely a country known for its progressive social policies would take fast, decisive action to protect its citizens?

The regulations that were put into place in Sweden amounted to restricting public gatherings to no more than 50 people (reduced from 500, which concert halls skirted by restricting entry to 499), limiting restaurants to table service only, and no visiting retirement homes. People here did take the work-from-home guidelines to heart – no one I knew was going in to work. But bars and restaurants were full. My Instagram feed was a highlight reel of acquaintances clinking champagne flutes at the city’s major clubs and restaurants.

After the first few weeks, I slowly started meeting up with friends again. I sent my kids back to school, where they intentionally spent most of the day outdoors and drop-offs were restricted to outside only (parents weren’t allowed to enter the building). I was careful to take precautions like bringing hand sanitizer to playgrounds and wiping my hands after opening and closing the gate to school. Hardly anyone wore masks to the grocery shop or inside stores – the few times I’ve seen people wearing them I’ve done a double take. One busy Friday night in late April at the local supermarket there was a line out the door and someone regulating the number of customers allowed inside at the same time. I took a photo and sent it to my family in the US saying “Sweden finally catching up with the rest of the world!” (I haven’t seen entry to that store being regulated since.)

When I spoke to Swedish friends about the strategy many agreed with the relaxed approach, mentioning that other countries’ draconian measures would be unnecessary in Sweden. A recent poll showed that just 11% of people in Sweden felt they did not trust state epidemiologist Anders Tegnell, who is leading the strategy. In this country, the onus was placed on citizens themselves to follow recommendations. It's about personal judgement and individual responsibility within a framework that rested on mutual trust, rather than top-down control. Swedes’ high level of interpersonal trust and trust in authority was often cited in the press as the characteristic enabling the relaxed Swedish strategy in tackling the virus, as opposed to social distancing becoming a matter of surveillance and policing like in Spain or Italy, where any nonessential socializing was forbidden.

In early May, Sweden's ambassador to the US Karin Ulrika Olofsdotter said in an interview with the Washington Post that some media outlets made it look “like everyone in Sweden is out drinking and partying,” she said. “That is not the case.” But that was certainly how it felt to me. According to research by Esteban Ortiz-Ospina and Max Roser in 2016, in countries such as Norway, Sweden and Finland, more than 60% of respondents in the World Value Survey think that people can be trusted. And in the other extreme, in countries such as Colombia, Brazil, Ecuador and Peru, less than 10% think that this is the case.


Of course, many places in the US also took a similarly relaxed approach to tackling the pandemic, with conservative lawmakers and anti-lockdown activists citing Sweden as taking the right approach. Sweden, rarely finding cheerleaders among conservative US circles, suddenly stood as an example to follow. But since then, places such as Arizona, Texas and Florida have all seen significant spikes in cases following reopenings and are being deemed the new epicentres of the virus – while Sweden’s numbers have stabilised. According to some reports, the death toll in Sweden is one of the highest in the world per capita, but the total number of Swedish deaths remains at just above 5,000, compared to over 120,000 in the US, over 43,000 in the UK, over 28,000 in Spain and over 34,000 in Italy. The mortality rate in Sweden and the number of new intensive care cases in the country declined in the last week and contagion rates here are now “stable” according to the WHO.

Although it didn’t always feel like it at the time, Sweden issued clear guidance from the beginning, with the expectation that people would choose to follow it. It certainly was my experience that everyone I knew stopped going into the office and started working from home. William Hanage, an associate professor of epidemiology at Harvard’s School of Public Health, attributed Sweden’s slowing of the virus to implementing guidance early on. “Sweden’s policy is unusual in that it took a much less stringent approach to preventing transmission," he says, "but interestingly it implemented those measures at a very early stage in the pandemic, before large amounts of community spread had occurred.”

Now I go outside and all too often realise I’ve left my hand sanitiser at home. I even met a friend for lunch outdoors at a busy cafe one particularly sunny day, and another indoors one Friday night for dinner. In May I had a birthday bash in my garden with a dozen or so friends and we ended up at the local bar. I always felt guilty after, as if I’d done something wrong that I couldn’t tell my family in Baltimore about. When I watched international news or spoke to family back home I would feel a certain cognitive dissonance between my own seemingly low-risk reality and what I knew to be happening in the rest of the world. My family in the US calls me skeptically questioning why I’ve had people over in my garden, or been out to eat. I can’t explain the lack of logic that permits an entire city’s citizens to operate life as normal in the midst of a global pandemic. But Stockholm has become a bubble of exactly this.

Being relatively young and healthy, I’m not so worried about getting sick. Even though young and healthy people have gotten seriously ill, there haven’t been any reported cases at my kids’ or any of my friends’ kids’ schools. Nobody I know in Stockholm knows has gotten sick, allowing me to feel a certain distance from it. But my husband’s parents are in their mid-70s and weren’t able to see their grandchildren for two months save for a few visits to their hallway, where we wave and blow kisses to them standing at the door.

I’ve been grateful – but also felt a sense of guilt for – my freedom here. When there are no hard and fast rules about how to act, it’s easy to constantly question yourself: Is it really okay to be outside, sitting at this full cafe? Is it okay to invite a few friends over for a birthday? Is it okay to send my kids to school? These questions have surely gone through minds around the world in the past several weeks, and now it’s clear that that behaviour had dire consequences in some cities and not others.

While Swedish social media at times suggests an endless friend-filled party at summer homes and popular hangouts, the reality here is a balancing act between personal judgement and the freedom to continue life as normal. Self-regulation is what it comes down to in Sweden, anyway.

Elysha Krupp is a writer and editor currently living in Stockholm.